Health Care, Law, and Manufacturing

Medical manufacturer settles bribery case for $13.3M

October 25, 2013
| By AP |
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Medical manufacturer settles bribery case for $13.3M
The headquarters of the U.S. Securities and Exchange Commission in Washington, D.C. Photo via commons.wikimedia.org

A medical manufacturer in southwest Michigan will pay the U.S. government $13.3 million to settle allegations it made illegal payments to government employees in five countries.

The Securities and Exchange Commission said Kalamazoo-based Stryker subsidiaries made $2.2 million in illegal payments to government employees in Mexico, Poland, Romania, Argentina and Greece between August 2003 and February 2008.

The SEC said Stryker made the payments to get or retain business, but it recorded them as legitimate consulting and service contracts, travel costs, charitable donations and commissions.

For example, the SEC said that "in exchange for the promise of future business from the director of a public hospital in Poland, Stryker paid travel costs for the director and her husband in May 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 Thursday that Stryker made $7.5 million in illicit profits as a result of the payments.

Stryker will pay the U.S. Treasury $7.5 million, plus $2.3 million in interest. It will also pay a $3.5 million civil penalty.

Stryker had anti-corruption corporate policies, but didn’t do enough to implement them and make sure its regional and country operations followed those policies, according to the SEC.

“Stryker’s misconduct involved hundreds of improper payments over a number of years, during which the company’s internal controls were fatally flawed,” said Andrew M. Calamari, director of the SEC’s New York regional office. “Companies that allow corruption to occur by failing to implement robust compliance programs will not be allowed to profit from their misconduct.”

Stryker said the SEC and the U.S. Department of Justice began investigating the payments in 2007, and it has improved its anti-corruption programs. It said the Justice Department has closed its investigation.

Shares of Stryker rose 10 cents to $74.07 in afternoon trading Thursday, after earlier hitting $74.16, its highest price since October 2007. The company reported this month that its third-quarter earnings were down 70 percent from the last year.

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