Thursday, October 29, 2020

Mexico sues medical tech firm Stryker over alleged bribery scheme

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Mexico’s federal health agency last week sued Stryker (NYSE:SYK) over an alleged bribery scheme, accusing the company of bribing officials at the Instituto Mexicano del Seguro Social to reap more than $2 million in illicit profits.

The lawsuit, filed Oct. 18 in the U.S. District Court for Western Michigan, claims that Kalamazoo, Mich.-based Stryker induced and participated in the breach of fiduciary duties, committed fraud and violated Mexican laws that regulate commerce with the public sector.

The lawsuit cited Stryker’s October 2013 settlement, for $13.2 million, of U.S. Securities & Exchange Commission charges that it broke the Foreign Corrupt Practices Act in five countries including Mexico and a second, $7.5 million SEC settlement last year over alleged bribery in three more countries.

The complaint alleges that Stryker used its Mexican subsidiary to pay tens of thousands of dollars in bribes “to illicitly obtain contracts with IMSS,” reaping more than $2.1 million in profits from the allegedly illegal contracts.

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” The same officials who should have challenged Stryker’s illegal conduct were the officials who received Stryker’s bribes. As a result, IMSS was unable to bring this lawsuit until the recent change in governmental administration,” the complaint alleged, referring to the election last year of President Andrés Manuel López Obrador.

Many of the bribes were paid through a Mexican law firm that padded its invoices to conceal the scheme, the lawsuit alleged.

“Pursuant to Mexican and United States law, Stryker’s breaches of the Mexican government procurement procedures voided Stryker’s contracts, and therefore, Stryker should be required to return all proceeds received from IMSS, retaining at most the actual production cost of the equipment it delivered,” according to the complaint.

The lawsuit seeks actual and punitive damages, the recovery of any IMSS funds received as a result of the alleged breaches and to void the contracts signed under the alleged scheme.

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Stryker also faces a lawsuit over alleged bribery brought by a group of Brazilian insurers.

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