Stryker Case

IRAC Brief: Stryker Corporation and the Securities and Exchange Commission Legal risks associated with domestic and international business are a challenge for today’s business managers. A company must possess strong internal controls to prevent deceptive bookkeeping and corrupt business practices as part of their overseas operations. Stryker Corporation experienced this firsthand as part of their international business practices, recently challenged by the Securities and Exchange Commission (SEC). In the following reflection, Team A applies the IRAC method of case analysis to examine Stryker’s handling of violations related to the Foreign Corrupt Practices Act (FCPA). The authors will address the four necessary components of the IRAC acronym: issue, rule, analysis, and conclusion. Careful analysis of IRAC findings will aid Team A’s understanding of the importance of internal controls in managing legal risk in overseas business.
Issue
The payments were recorded as appropriate expenses in Stryker’s books and records. However, the Securities and Exchange Commission (SEC) investigated Stryker Corporation and determined that their bookkeeping records documented corrupt business practices with their international operation. The SEC investigation revealed that Stryker Corporation profited $7.5 million dollars from illegal brides to government officials to obtain business with subsidiaries in Mexico, Poland, Romania, Argentina, and Greece. Stryker was ordered to take corrective action to appropriately continue their international operation. The order also required that Stryker work with the investigation staff, receive counsel, and implement a compliance program for their international operations. They must also submit documents as well as translate the information within the documents. Stryker will pay a $3.5 million dollar fine that will accumulate to $9.8 million with