Here’s a status report about three of the new FCPA-related investigations that companies have disclosed in 2023. The investigations involve Stryker Corporation, Azure Power Global Limited, and Stanley Black & Decker, Inc.
Michigan-based medical device maker Stryker first disclosed its new investigation in May. That disclosure, and the next one three months later, are brief and contain few details.
Here’s the second disclosure. There’s a small but potentially important difference in it from the first disclosure. In the opening sentence, the company refers to activities in “certain foreign countries” (per my emphasis), while the initial disclosure refers only to “a foreign country.”
We are currently investigating whether certain business activities in certain foreign countries violated provisions of the Foreign Corrupt Practices Act (FCPA) and have engaged outside counsel to conduct these investigations. We have been contacted by the United States Securities and Exchange Commission, United States Department of Justice and certain other regulatory authorities and are cooperating with these agencies. At this time we are unable to predict the outcome of the investigations or the potential impact, if any, on our financial statements.
As Harry reported in May, Stryker has resolved two prior FCPA enforcement actions, in 2013 and 2018.
In 2018, the company paid the SEC a $7.8 million penalty to settle FCPA books and records and internal accounting controls offenses in India, China, and Kuwait. Stryker agreed to the settlement without admitting or denying the SEC’s findings.
In 2013, the company paid the SEC $13.2 million to resolve FCPA violations in Argentina, Greece, Mexico, Poland, and Romania, where it bribed doctors and administrators at government-controlled hospitals. Stryker wasn’t required to make any admission regarding the SEC’s findings. But the SEC ordered the company to retain an independent compliance consultant.
If Stryker’s new investigation results in an FCPA enforcement, it will become only the second corporate defendant with three FCPA enforcement actions, along with Swiss conglomerate ABB Ltd.
The second investigation I’m covering today is likely to be the most impactful for the company.
Azure Power Global Limited is an Indian renewable power provider based in New Delhi. It disclosed its new investigation in an SEC filing in January 2023, under the heading “Whistle-blower Allegations and Special Committee Investigation.”
The company has now said it received a second whistleblower complaint. Its investigation — “with the assistance of legal counsel and forensic accounting support” — particularly concerns “(i) certain alleged corrupt activities of third-parties in connection with one of its projects and (ii) certain asset acquisition transactions.”
Azure Power said it is cooperating with the DOJ and SEC and making voluntarily disclosure to them.
In May, the company announced the appointment of a new CEO and CFO.
In July, investment publication Seeking Alpha reported plans by the NYSE to “begin proceedings to delist Azure Power Global (NYSE:AZRE) from the Exchange, and trading in the stock will be suspended immediately.”
The Seeking Alpha report continues:
Azure Power (AZRE) had told the NYSE it would be unable to complete its annual report on Form 20-F for FY 2022 with the Securities and Exchange Commission by the August 16 deadline, and it has appointed a new accounting firm to finish the overdue statements; it appointed a new CEO and CFO in May.
The Indian renewable power company has been embroiled for many months in an investigation into alleged “corrupt activities” in connection with one of its projects.
Azure (AZRE) has offered few specifics about the allegations it is investigating, although they also include “certain asset acquisition transactions.”
Connecticut-based power tool maker Stanley Black & Decker, Inc. disclosed a new investigation in February, according to FCPA Tracker.
In two-sentences, it said it has “identified certain transactions relating to its international operations that may raise compliance questions under the [FCPA] and has voluntarily disclosed this information to the [DOJ] and the SEC. The Company is cooperating with both agencies in their investigations.”
In a May follow-up disclosure, Stanley Black & Decker reported a major development. It said it has submitted to the SEC an offer that reflects “an agreement in principle . . . to settle the matter.” The disclosure said the offer is subject “to certain contingencies” such as SEC approval.
However, the company’s next FCPA disclosure in August and most recent filing on October 30 didn’t refer to the earlier settlement offer at all, according to data from FCPA Tracker.