Analogic, an airport security and medical-imaging technology provider, disclosed in a Form 10-Q this week that it’s likely to face sanctions by the Department of Justice and Securities and Exchange Commission for violations of the Foreign Corrupt Practices Act.
As initially disclosed in its annual report for the fiscal year ended July 31, 2011, Analogic identified certain transactions involving its Danish subsidiary BK Medical, and certain of its foreign distributors, that potentially violated Danish law, the FCPA, and company policies. These included transactions in which the distributors paid BK Medical more than amounts owed, and BK Medical transferred the excess amounts, at the direction of the distributors, to third parties identified by the distributors.
“We have terminated the employment of certain BK Medical employees and have wound down the relationships with the BK Medical distributors that were involved in the transactions,” the company stated. “We have concluded that the transactions identified, to date, have been properly accounted for in our reported financial statements in all material respects. However, we have been unable to ascertain with certainty the ultimate beneficiaries, or the purpose of these transfers.”
Analogic said it voluntarily disclosed the matter to the Danish government, the Department of Justice, and the SEC, and are cooperating with these agencies. The company further stated that the Justice Department and SEC have “substantially completed their investigation into the transactions at issue and that it is reasonably likely that one or both of these entities may seek to impose sanctions and/or penalties on us in connection with a resolution of their inquiries.”
Analogic said it has, so far, incurred inquiry-related costs of approximately $1.1 million in connection with this matter.