2 Indicted in Bribery Of Foreign Official
HealthSouth Ran Saudi Hospital
By Jay Reeves
Friday, July 2, 2004; Page E03
BIRMINGHAM, July 1 -- A grand jury indicted two former HealthSouth Corp. executives in a bribery scheme involving the company's $50 million contract to run a hospital in Saudi Arabia, prosecutors said Thursday.
The charges were in addition to those filed previously against two other HealthSouth officials who agreed to plead guilty, and they bring to 20 the total number of former HealthSouth employees charged since fraud was exposed at the company last year.
Robert E. Thomson, a former president and chief operating officer of HealthSouth's inpatient division, and James C. Reilly, a lawyer who was vice president for legal services, were each named in a four-count indictment. They were charged with conspiracy, traveling outside the country to commit a crime and a securities violation.
Thomson, 56, and Reilly, 48, allegedly participated in a scheme in which HealthSouth agreed to pay kickbacks of $500,000 a year for five years to a Saudi official in exchange for the company receiving the contract to manage a 450-bed hospital in Saudi Arabia.
U.S. Attorney Alice H. Martin said investigators learned of the deal from the new management at HealthSouth, which is trying to reconstruct its books after years of what the company and prosecutors have called systematic fraud.
Sixteen former HealthSouth executives have been charged with participating in a conspiracy to inflate the company's earnings by billions of dollars to meet Wall Street forecasts, and all but former chief executive Richard M. Scrushy pleaded guilty and are cooperating with investigators.
Scrushy has pleaded not guilty and blamed the fraud on people who worked for him. Scrushy is free on $10 million bail, awaiting trial.
Two other former HealthSouth executives, Thomas W. Carman and Vincent Nico, pleaded guilty this year to paying bribes in the Saudi Arabia deal. While the scheme was uncovered during the broader investigation, authorities have said it was not directly related to the overstatement of earnings.
© 2004 The Washington Post Company