Stryker ($SYK) is paying $13.2 million to resolve SEC allegations that it bribed health care professionals and government officials to gain business in Argentina, Greece, Mexico, Poland and Romania.
But as the Securities and Exchange Commission noted in its announcement of the deal, the Michigan devicemaker may be paying the fine, but neither admits to, nor denies the charges.
A Stryker spokesperson issued a statement to FierceMedicalDevices noting that Stryker has cooperated fully, providing "detailed reports and supporting documents to the SEC and DOJ" since they asked the company in 2007 to "investigate possible improper payments in connection with the sale of medical devices outside the United States."
The spokesperson also noted Stryker's SEC settlement, that the U.S. Department of Justice closed its own investigation in to the issue, and that the company has taken steps to prevent future problems.
"Stryker has enhanced its company-wide anti-corruption compliance program that includes enhanced corporate policies and processes, financial controls and governance systems," he said.
The SEC, in its announcement of the settlement, had plenty to say on the matter.
"Stryker's misconduct involved hundreds of improper payments over a number of years during which the company's internal controls were fatally flawed," Andrew Calamari, director of the SEC's New York regional office, said in a statement.
The SEC's allegations go back to alleged payments made by Stryker's subsidiaries dating back to 2003 in order to win or keep lucrative sales contracts. Regulators don't mention what specific products were involved, but they allege that Stryker pursued a variety of questionable practices, including payment of travel expenses for foreign officials. In one case, regulators claim Stryker covered a six-night stay at a New York City Hotel, two Broadway shows and a 5-day trip to Aruba in 2004 for the director of a public hospital in Poland and her husband, allegedly in exchange for future business.
In another instance, the SEC alleged that a Stryker subsidiary told a law firm in 2006 to pay $46,000 to an employee of the Mexican government, in exchange for the winning bid on a contract. According to the SEC, the subsidiary covered the law firm's expenses, and counted the money as "a legitimate legal expense."
Stryker made $7.5 million in ill-gotten profits from the practice, the SEC claimed, and tried to cover up $2.2 million in bribes by counting them as other things such as charitable donations, consulting, travel expenses or commissions. Reuters reported that the payments took place from 2003 through February 2008. Specifically, Stryker had been charged with violating the Foreign Corrupt Practices Act.
Stryker recently reported $2.5 billion in net sales during the 2013 third quarter and $103 million in net earnings. The earnings level dropped more than 70% over the same period a year ago, in large part because of costs relating to recalls for the company's Rejuvenate and ABG II all metal hip implants.
- here's the full SEC release
- check out Reuters' take