Stericycle Inc. (Stericycle), an international waste management company headquartered in Lake Forest, Illinois, has agreed to pay more than $84 million to resolve parallel investigations by authorities in the United States and Brazil into the bribery of foreign officials in Brazil, Mexico, and Argentina.
According to court documents, Stericycle entered into a three-year deferred prosecution agreement (DPA) with the Department of Justice in connection with the filing of a criminal information charging the company with two counts of conspiracy to violate (1) the anti-bribery provision of the Foreign Corrupt Practices Act (FCPA), and (2) the FCPA’s books and records provision. Pursuant to the DPA, Stericycle’s criminal penalty is $52.5 million. The department has agreed to credit up to one-third of the criminal penalty against fines the company pays to authorities in Brazil in related proceedings, including an amount of approximately $9.3 million to resolve investigations by the Controladoria-Geral da União (CGU) and the Advocacia-Geral de União (Attorney General’s Office) in Brazil. In addition, Stericycle has agreed to pay approximately $28 million to resolve a parallel investigation by the U.S. Securities and Exchange Commission (SEC).
“Stericycle today accepted responsibility for its corrupt business practices in paying millions of dollars in bribes to foreign officials in multiple countries,” said Assistant Attorney General Kenneth A. Polite, Jr. of the Justice Department’s Criminal Division. “The company also maintained false books and records to conceal corrupt and improper payments made by its subsidiaries in Brazil, Mexico, and Argentina. Today’s resolution demonstrates the Department of Justice’s continuing commitment to combating corruption and protecting the international marketplace.”
“Today’s resolution with Stericycle shows that the FBI and our international law enforcement partners will not allow corruption to permeate domestic or international markets,” said Assistant Director Luis Quesada of the FBI’s Criminal Investigative Division. “The consequences of violating the FCPA are clear: Companies that bribe foreign officials for business advantage will be held accountable.”
According to the company’s admissions and court documents, Stericycle conspired to corruptly offer and pay approximately $10.5 million in bribes to foreign officials in Brazil, Mexico, and Argentina in order to obtain and retain business and other advantages for Stericycle. The company earned at least $21.5 million in profits from the corrupt scheme.
Specifically, between 2011 and 2016, Stericycle caused hundreds of bribe payments to be made to officials at government agencies and instrumentalities in Brazil, Mexico, and Argentina to obtain and retain business and to secure improper advantages in connection with providing waste management services. In perpetrating the scheme, an executive at Stericycle’s Latin America division directed employees in the company’s offices in Brazil, Mexico, and Argentina who paid bribes, typically in cash, that were calculated as a percentage of the underlying contract payments owed to Stericycle from government customers. In all three countries, the co-conspirators tracked the bribe payments through spreadsheets and described the bribes through code words and euphemisms, such as “CP” or “commission payment” in Brazil; “IP” or “incentive payment” in Mexico; and “alfajores” (a popular cookie) or “IP” in Argentina.
As part of the DPA, Stericycle has agreed to continue to cooperate with the department in any ongoing or future criminal investigations relating to this conduct. In addition, under the DPA, Stericycle agreed to continue to enhance its compliance program and to retain an independent compliance monitor for two years, followed by self-reporting to the department for the remainder of the term.
The government reached this resolution with Stericycle based on a number of factors, including, among others, the company’s failure to voluntarily and timely disclose the conduct that triggered the investigation and the nature, seriousness, and pervasiveness of the offense. Stericycle received full credit for its cooperation with the department’s investigation and engaged in extensive remedial measures. Although Stericycle has taken extensive remedial measures, it has not fully implemented or tested its enhanced compliance program, necessitating the imposition of an independent compliance monitor for a term of two years. Accordingly, the criminal penalty reflects a 25% reduction off the bottom of the applicable U.S. Sentencing Guidelines fine range.
In a related civil matter in the United States, Stericycle has agreed to pay disgorgement and prejudgment interest totaling approximately $28 million to resolve an investigation by the SEC. In related proceedings in Brazil, the company has agreed to resolve investigations by the CGU and the Attorney General’s Office.
The FBI’s New York Field Office is investigating the case. Trial Attorneys Paul A. Hayden and Jil Simon of the Criminal Division’s Fraud Section are prosecuting the case. Authorities in Brazil and Mexico provided assistance in this matter, as did the Justice Department’s Office of International Affairs.
The Fraud Section is responsible for investigating and prosecuting FCPA matters. Additional information about the Justice Department’s FCPA enforcement efforts can be found at www.justice.gov/criminal-fraud/foreign-corrupt-practices-act.