In a recent securities filing, Michigan-based medical-device maker Stryker Corporation disclosed that it had been contacted by the US Securities and Exchange Commission and the US Department of Justice regarding possible violations of the Foreign Corrupt Practices Act (“FCPA”). In its Form 10-Q filing, Stryker revealed that it had engaged outside counsel to conduct an investigation into whether “certain business activities” in an unidentified foreign country may have violated the FCPA. Stryker stated that it was cooperating with the DOJ’s and the SEC’s investigations.
Stryker has two previous FCPA-related settlements. In 2013, the SEC accused Stryker’s subsidiaries in Argentina, Greece, Mexico, Poland, and Romania of making unlawful payments totaling approximately $2.2 million. According to the SEC, the illegal payments included paying for expensive trips and entertainment for public health officials that lacked any business purpose, a donation to fund a “pet project” of a doctor at a public hospital, and cash routed through a law firm to a government official. The SEC alleged that Stryker incorrectly recorded these payments in the company’s books and records as “legitimate expenses.” Without admitting or denying the allegations, Stryker paid about $13 million to settle the matter.
In 2018, Stryker reached a settlement with the SEC and, without admitting or denying the SEC’s findings, agreed to pay a $7.8 million penalty to resolve allegations that the company violated the FCPA. The SEC alleged that Stryker had implemented insufficient internal accounting controls that were unable to “detect the risk of improper payments” made in connection with the sale of Stryker products in India, China, and Kuwait. The SEC also accused Stryker’s India subsidiary of failing to maintain complete and accurate books and records, inaccuracies that were then consolidated into Stryker’s financial statements.