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Harry Cassin
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Stryker pays $13.2 million in SEC settlement

The SEC said Thursday that medical device and equipment maker Stryker Corporation will pay $13.2 million to resolve FCPA violations.

Michigan-based Stryker bribed doctors and administrators at government controlled hospitals in Argentina, Greece, Mexico, Poland, and Romania, the SEC said. The bribes totaled about $2 million and were ‘incorrectly described as legitimate expenses in the company’s books and records,’ according to the SEC.

Stryker will disgorge to the SEC $7.5 million and prejudgment interest of $2.28 million. It is also paying a penalty of $3.5 million.

The SEC settled the case through an administrative order and didn’t file a civil complaint in court. Stryker wasn’t required to make any admission of guilt regarding the allegations.

The DOJ didn’t announce any criminal charges against the company.

Other medical device makers have settled FCPA cases. Johnson & Johnson paid $70 million in 2011. Last year Smith & Nephew paid $21 million, and Bioment paid almost $23 million.

Earlier this year, however, Medtronic Inc. and Zimmer won double declinations from the DOJ and SEC.

The SEC said Stryker described the bribes in its books and records as charitable donations, payments for consulting and service contracts, travel expenses, and commissions. The company made $7.5 million in profits as a result of the bribes. It used third parties to make the payments, the SEC said.

Stryker has 22,000 employees worldwide. Revenues last year were $8.7 billion.

Styker first disclosed its internal investigation in 2007. The SEC said the improper payments stretched back to 2003.

In 2006, according to the SEC, Stryker’s subsidiary in Mexico directed a law firm to pay about $46,000 to a Mexican government employee in order to secure the winning bid on a contract. Stryker made $1.1 million in profit on the deal.

In Greece, Stryker’s subsidiary there made a purported donation of nearly $200,000 in 2007 to a public university to fund a laboratory that was a pet project of a public hospital doctor, the SEC said.

In Poland, Stryker paid travel costs for the director of a public hospital and her husband in 2004. ‘This included a six-night stay at a New York City hotel, attendance at two Broadway shows, and a five-day trip to Aruba,’ the SEC said.

The SEC credited Styker for its cooperation and thorough internal investigation. It said Stryker has now ‘demonstrated a commitment to designing and funding a meaningful compliance program in order to prevent and detect violations of the FCPA and other applicable anti-bribery laws.’

Stryker was among several medical device makers who paid $310 million in 2007 to resolve charges of paying kickbacks to induce U.S. doctors to buy their products. Johnson & Johnson and its DePuy subsidiary, along with Biomet, Zimmer, and Smith & Nephew were also part of the settlement.

The SEC’s Release No. 70751 and Administrative Proceeding Order (File No. 3-15587) dated October 24, 2013 is here.


Richard L. Cassin is the Publisher and Editor of the FCPA Blog. He can be contacted here.

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