Stryker
(NYSE: SYK)
says the U.S. Justice Dept. and Securities and Exchange Commission contacted the company over potential anti-bribery law violations.
The Kalamazoo, Michigan-based orthopedic device maker disclosed these contacts in its first-quarter earnings report released on Tuesday. It said it’s cooperating with both agencies as an investigation ensues. Stryker engaged outside counsel to conduct the investigation. The company said it can’t predict the outcome of the investigation or the potential impact, if any, on its financial statements.
According to Stryker, the investigation centers around certain business activities in an undisclosed foreign country. It aims to evaluate whether Stryker violated provisions of the Foreign Corrupt Practices Act (FCPA). The law restricts companies from bribing foreign government officials to benefit their business interests. This marks the company’s third brush with the FCPA in the last 10 years.
In 2013, Stryker agreed to pay $13.2 million to settle charges by the SEC. The charges claimed it broke the FCPA in 5 countries — Argentina, Greece, Mexico, Poland, and Romania. Subsidiaries in that country “made illicit payments totaling approximately $2.2 million that were incorrectly described as legitimate expenses in the company’s books and records,” according to the SEC. It resulted in $7.5 million in illicit profits, the SEC said.
Then, in 2018, Stryker agreed to pay $7.8 million to settle more SEC charges for FCPA violations. However, it admitted no wrongdoing in this case. Those charges claimed Stryker failed to institute the required fail-safes in its book-keeping procedures for its businesses in India, China and Kuwait. The SEC found that Stryker’s internal accounting controls “were not sufficient to detect the risk of improper payments” in India, China and Kuwait. The agency said Stryker’s India business “failed to maintain complete and accurate books and records.”