Law360 (April 20, 2022, 4:28 PM EDT) — Stericycle has settled a previously disclosed bribery case with U.S. and Brazilian authorities that will see the global waste management company pay out more than $84 million in penalties and retain an independent compliance monitor for at least two years, according to announcements Wednesday.
The company will pay a criminal penalty of $52.5 million to the U.S. Department of Justice, approximately $28.2 million to resolve a parallel investigation by the U.S. Securities and Exchange Commission, and has so far paid an additional $9.3 million to Brazilian authorities in related proceedings.
The DOJ and SEC put the total penalties at $84 million, which an SEC spokesperson said represents the global resolution with the DOJ, SEC, and Brazilian authorities and takes into account certain offsets.
Under a three-year deferred prosecution agreement, Stericycle admitted that it conspired to corruptly pay approximately $10.5 million in bribes to foreign officials in Brazil, Mexico, and Argentina to retain business and other advantages, earning at least $21.5 million in profits from the scheme, the DOJ said in an announcement.
“Today’s resolution demonstrates the Department of Justice’s continuing commitment to combating corruption and protecting the international marketplace,” said Assistant Attorney General Kenneth A. Polite Jr. of the DOJ’s criminal division.
Stericycle also maintained false books and records to conceal the corrupt payments, according to the department.
The deferred prosecution agreement allows the company to avoid indictments in exchange for following the rules for the three-year period, agreeing to flag any potential problems as they arise, and cooperating fully with the DOJ’s fraud unit through interviews and document requests.
“The company shall timely and truthfully disclose all factual information with respect to its activities, those of its subsidiaries and affiliates, and those of its present and former directors, officers, employees, agents, and consultants,” according to the agreement.
The Illinois-based company had previously revealed the DOJ and SEC penalties in its late February annual report, when it noted that the settlement based on violations of the anti-bribery provisions of the Foreign Corrupt Practices Act were imminent.
On Wednesday, Stericycle also announced the deal and said it “primarily accrued” the penalty amounts in the third and fourth quarters of 2021.
“Resolving this legacy matter represents another important milestone in Stericycle’s business transformation journey,” Cindy J. Miller, president and chief executive officer at Stericycle, said in the announcement.
“Over the past several years, we have focused on fully remediating the issues identified during the investigation,” Miller said. “This includes instituting new policies, procedures and internal controls and building a culture of compliance, integrity and accountability that aligns with our core values across our entire global operation.”
The DOJ said it has agreed to credit up to one-third of the $52.5 million criminal penalty against fines the company pays to authorities in Brazil, including the approximately $9.3 million amount already paid to Brazilian authorities.
Stericycle also consented to the SEC’s cease-and-desist order and agreed to pay the approximately $28.2 million in disgorgement and prejudgment interest. Up to approximately $4.2 million of that can be offset through disgorgement paid to Brazilian authorities.
The conduct in question occurred between at least 2012 and 2016, and the company used code names to pay the bribes, including “alfa,” which is short for a sweet cookie known as alfajores that is popular in Argentina, the SEC noted in its announcement Wednesday.
The scheme also included “sham third-party vendors who used false invoices to conceal cash payments to government clients,” the agency said. The company also failed to have sufficient internal accounting controls — including a centralized compliance department — to prevent or even detect the misconduct.
The SEC order requires the company to undertake a range of compliance fixes through an independent compliance monitor, which must be hired within 60 calendar days of Wednesday’s order and be retained for at least 24 months.
The monitor will be tasked with reviewing Stericycle’s policies and procedures, and making recommendations to improve its compliance program that must be agreed upon and adopted by the company, according to the order.
“Should the company learn of credible evidence or allegations of corrupt payments, false books, records, or accounts, or the failure to implement adequate internal accounting controls, the company shall promptly report such credible evidence or allegations to the commission staff,” the order adds.
Stericycle is represented in-house by Kurt M. Rogers and by Timothy J. Treanor, Stephen L. Cohen, Michael D. Mann and Julia Mirabella of Sidley Austin LLP.
The DOJ is represented in-house by Paul A. Hayden and Jil Simon of the Criminal Division’s fraud section.
The SEC is represented in-house by Jeffrey Cook, Christine Lynch, Lina Fernandez, Andrew Schiff, Eric Busto, Jessica Weissman and Glenn Gordon.
The U.S. government’s case is United States of America vs. Stericycle Inc., case number 22-cr-20156, in the U.S. District Court for the Southern District of Florida.
The SEC order is In the Matter of Stericycle Inc., case number 3-20826, before the Securities and Exchange Commission.
–By Al Barbarino. Editing by Dave Trumbore.
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