US medical devices group Boston Scientific set up a top secret operation in Dublin to copy a key supplier's manufacturing equipment, according to an internal memo released to The Irish Times.
The multi-million euro clandestine operation was uncovered when a US Department of Justice investigation into Boston Scientific "tripped over" the operation while examining documents at its Galway manufacturing plant.
According to the documents, the corporation set up an Irish company, Forwich, to disguise the copying of a coronary stent manufacturing machine developed by an Israeli supplier, Medinol.
Medinol is now suing Boston Scientific for more than €1 billion.
Stents are small wire tubes that are typically used to prop open an artery that has recently undergone surgery. Stents and associated medical products are the main source of income for Boston Scientific.
The copying took place at a plant on the Rock Road in the Sandyford Industrial Estate, Dublin.
Boston Scientific, which employs 3,000 people at plants in Galway, Cork, Tullamore and Letterkenny, gave the copying operation a codename, "Project Independence".
The corporation said it felt forced into taking such drastic action because Medinol had threatened to withhold supply of the stents.
In a memo dated July 11th, 2000, and confirmed by the corporation as genuine, chief executive Mr Jim Tobin told the group's board that he informed Medinol's owners about the secret operation. He did not want them to hear about it from US federal investigators.
An attempt to resolve a dispute with Medinol "was actually working pretty well overall, until the Department of Justice investigation tripped over Project Independence in Galway. Independence was a clandestine attempt, going back to 1997, to assure ourselves of stent supply should Medinol ever see fit to follow through on their occasional threats to cut off supply", the memo stated.
Since informing Medinol of the Irish operation, "the relationship has been completely dysfunctional, with them holding up everything to gain leverage".
Mr Tobin also said in the memo that he told Medinol owners Mr Kobi and Ms Judi Richter that Boston Scientific intended to register Ireland as an alternative stent manufacturer. "That really upset them."
According to a Medinol lawyer, Boston Scientific obtained Medinol's stent machine under the terms of its contract, which allowed use of the machine in Galway. However, the machine was sent to Dublin where a team of engineers spent months working out how to copy it.
Boston Scientific spokesman Mr Paul Donovan last night said the corporation's contract with Medinol allowed it take over production if Medinol could not supply a sufficient number of stents.
He said an offer of approximately $2 billion (€1.6 billion) was made for Medinol. The copy machine never went into commercial use.