22. Contingent liabilities
The detail and estimated maximum amounts of contingent liabilities are set out below. The directors are of the opinion that provisions are either adequate or are not required in respect of these matters, as it is either not probable that a future sacrifice of economic benefits will be required, or the amount is not capable of reliable measurement.
US Department of Justice Inquiry
In March 2004, the Company was informed by the US Department of Justice (DOJ) that Cochlear Americas, a wholly-owned subsidiary, is subject to an inquiry under federal healthcare laws in the US that deal with the Medicare and Medicaid programs, including some with potential criminal and civil sanctions. Discussions with the DOJ are ongoing, but at the date of this report, no specific claims have been made. The Company is cooperating fully with the inquiry and has engaged a nationally recognised law firm with specialised expertise in US healthcare law.
In prior years, the Company has recorded a provision in respect of estimated cost of responding to the investigation.
Based on the information available at the date of this report, the financial impact of the investigation has been adequately provided for.
In the directors’ opinion, disclosure of any further information of the above matter would be prejudicial to the interests of the Company.
Cochlear Limited has provided guarantees to Westpac Institutional Bank for loan facilities provided to Cochlear Sweden Holdings, Cochlear Americas and Cochlear Europe Limited, all wholly-owned subsidiaries.
The Cochlear Sweden Holdings facility is a multi currency facility with a limit of euro 94.4 million, or equivalent thereof. The outstanding balance of the loan at reporting date was SEK 866.5 million (euro 94.4 million).
The Cochlear Americas facility is for USD 12.0 million. The outstanding balance of the loan at reporting date was USD 12.0 million.
The Cochlear Europe Limited facility is for GBP 7.5 million. The outstanding balance of the loan at reporting date was GBP 7.1 million.