A former finance director at medical waste disposal company Stericycle faces Department of Justice (DOJ) charges for his alleged role in a bribery scheme that led the company to an $84 million settlement regarding violations of the Foreign Corrupt Practices Act (FCPA).
Abraham Cigarroa Cervantes, of Mexico, worked as finance director of the Latin America division of Stericycle. He was charged by the DOJ with one count each of conspiracy to violate the FCPA’s anti-bribery and books-and-records provisions, according to an indictment announced in a press release Tuesday.
Stericycle’s 2022 settlements resolved allegations it paid bribes to win government contracts in Brazil, Mexico, and Argentina. The company agreed to pay a criminal penalty of $52.5 million under a deferred prosecution agreement (DPA) with the DOJ, in addition to paying $28 million to resolve a parallel investigation by the Securities and Exchange Commission (SEC). The company also settled with Brazilian authorities as part of its resolution.
The details: Stericycle paid approximately $10.5 million in bribes from 2011-16 to foreign officials to obtain and retain business and other advantages for the company in connection with its waste management services, according to the DOJ. The alleged scheme generated approximately $21.5 million in profits.
Cigarroa was accused of working with coconspirators to conceal the bribery payments, including through use of code words and euphemisms.
“Cigarroa and others allegedly maintained false books, records, and accounts that did not accurately and fairly reflect the transactions and dispositions of Stericycle’s assets, causing Stericycle to falsely record bribe payments as legitimate expenses in its consolidated books, records, and accounts,” according to the DOJ. “Cigarroa also allegedly submitted and maintained falsified Sarbanes-Oxley certifications and business unit representation letters falsely attesting that the books, records, and accounts were accurate.”
If convicted, Cigarroa faces a maximum of five years in prison on each FCPA violation count.
Compliance considerations: The SEC said in 2022 it found Stericycle “failed to have sufficient internal accounting controls in place, such as a centralized compliance department, to prevent or even detect the misconduct and failed to implement its FCPA policies or procedures prior to 2016.”
As part of its DPA, Stericycle agreed to continue to cooperate with the DOJ in criminal investigations related to the alleged bribery scheme.
The company is still in the middle of a two-year compliance monitorship related to the case and will undertake compliance with self-reporting obligations through 2025, it said in its annual report filing last month.
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