Device maker Analogic to pay $15M for bribery violations

Analogic and its Danish subsidiary BK Medical will pay nearly $15 million to settle foreign bribery charges levied against the Peabody, Mass.-based device maker, according to The Wall Street Journal.

BK Medical engaged in hundreds of fake transactions with distributors that funneled about $20 million to third parties, including individuals in Russia and shell companies in Belize, the British Virgin Islands, Cyprus and Seychelles.

A majority of the fraudulent transactions occurred through BK Medical's Russian distributor, accounting for at least 180 payments totaling more than $16 million, according to the Securities and Exchange Commission.

The distributor would ask BK Medical to falsely inflate the sales prices of medical equipment, ignoring already agreed-upon rates. Then, the distributor would pay the inflated price and direct BK Medical to transfer the extra funds to third parties, according to a statement of facts attached to the settlement.

Third-party recipients of the funds included named individuals, shell companies and physicians employed by Russian state-owned entities. BK Medical said it had no relationship with the third parties and did not do due diligence on them, the statement said.

Analogic was in violation of the Foreign Corrupt Practices Act, which prohibits the use of bribes to foreign officials to attract or retain business, as well as the falsification of accounting records to hide potentially illicit payments, according to the report.

The investigation into the violations — which was self disclosed — has been going on since 2011. Analogic previously set aside sufficient funds to cover the penalty, according to Mark Namaroff, director of investor relations at Analogic, The Wall Street Journal reported.

Analogic agreed to pay $7.67 million in disgorgement and $3.8 million in interest to settle the charges from the SEC. BK Medical will pay a $3.4 million penalty as part of a non-prosecution agreement with the U.S. Justice Department, according to the report.

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