The FCPA – Books, Records and Controls

The FCPA has long been a focus for the Commission. Indeed, since the earliest days of the Division of Enforcement, when then Director Stanley Sporkin began focusing on foreign payments while watching the Watergate hearings, the agency has focused on the books, records and internal control issues related to foreign payments. The Commission’s latest case in this area is no different. While alleging millions of dollars in payments, the Order in the settled administrative proceedings centers on books, records and controls. In the Matter of Stericycle, Inc., Adm. Proc. File No. 3-20826 (April 20, 2022).

This is a proceeding charging the company with violations of the FCPA books, records and internal control and bribery provisions. Stericycle is an Illinois based firm specializing in medical waste services and others. The firm’s shares are traded on the Nasdaq National Market LLC.

The firm began operations in Latin America in 1997. During the period 2012 through 2016 the firm operated through wholly-owned subsidiaries in Brazil, Mexico, and Argentina. The firm established a Latin America division based in Miami in 2013 that had responsibility for and management of the operations, financial reporting and books and records of Stericycle Brazil, Stericycle Mexico and Stericycle Argentina. During that period the firm paid millions of dollars in the form of hundreds of bribe payments to obtain and maintain business from government customers in Brazil, Mexico and Argentina and to obtain priority release of payments owed under government contracts. As a result the books and records of the company were not properly maintained. Overall Stericycle benefited by about $22.2 million during the period.

The Order alleges violations of Exchange Act Sections 13(b)(2)(A), 13(b)(2)(B). In resolving the matter the company agreed to implement certain undertakings which included engaging an Independence Compliance Monitor and reporting to the Commission staff personally. The reports will remain non-public with certain exceptions.

Stericycle consented to the entry of a cease-and-desist order based on the Exchange Act Sections cited above. The company agreed to pay disgorgement in the amount of $22,184,981 and prejudgment of $5,999,258.80. The company will receive a disgorgement offset of up to $4,196,719 (about 1/3 of its net profits from its violations related to Brazil) based on the U.S. dollar value of any disgorgement paid to the Brazilian authorities reflected by evidence acceptable to the Commission staff. No penalty was imposed based on the settlement with the Department of Justice. There the company entered into a three year deferred prosecution agreement under which Stericycle acknowledged responsibility for criminal conduct relating to certain findings in the Order.

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