Stericycle, Inc: The Bribes Were in the Spreadsheet

In the Stericycle, Inc FCPA case, the medical waste company agreed to pay approximately $28.2 million to resolve the Securities and Exchange Commission’s bribery and accounting charges involving Brazil, Mexico and Argentina. By comparison, the later criminal indictment against its former Latin America finance director alleged approximately $10.5 million in bribes for government medical waste contracts.

The alleged operation kept track of the very payments its official books concealed: cash for government officials, vendor invoices for invented services, and spreadsheets connecting the two. For someone who handled those invoices or knew what the spreadsheet codes meant, the explanation was inside the business all along.

Why the Government Waste Contracts Mattered

Government customers supplied the volume that made Stericycle’s regional medical waste business work. The criminal superseding information against its former Latin America senior vice president says approximately 70% of the medical waste collection contracts were with regional government customers. Serving those regions required significant investment, and the company needed the government contracts to sustain the volume.

Those contracts typically lasted a year and went back out to bid annually, according to the information. Prosecutors alleged that the executive approved and directed payments to the officials responsible for awarding them so Stericycle would keep the business. That annual purchasing decision put an official between the company and the customer volume it needed.

The service was medical waste collection. The alleged bribe bought influence over who got to provide it. We see the unfairness plainly: a competing waste contractor had to win the customer’s business while Stericycle allegedly paid the person deciding where that business went.

How the Cash Payments Reached Officials

The finance director’s criminal indictment described hundreds of alleged bribe payments in Mexico, Brazil and Argentina. The Justice Department’s account dates the alleged scheme from 2011 to 2016. Employees allegedly paid officials mainly in cash, calculating the bribes as a percentage of contract payments made by or owed by government customers. That calculation tied the bribe to the customer’s business.

In Mexico, the indictment alleged that sham service contracts with vendors generated the cash. It gives a concrete example from March 2015: the finance director allegedly caused a vendor payment of approximately $3,766, obtained funds from a vendor, and delivered approximately $3,364 in cash to an official at Mexico’s social security agency. The vendor payment and the cash delivery appear as separate acts on the same day.

The same indictment describes the finance director asking that official about a regional tender later that year and receiving a response at his personal email account. Those communications connect the payment story to the public customer’s purchasing process. An invoice can show where company money first went. The people handling the cash and the customer relationship can explain what it bought.

Brazil had its own service disguise. The superseding information against the senior vice president alleged that vendors entered into sham debt-collection agreements, performed no debt-collection services, and issued false invoices used to conceal payments to Brazilian officials. A vendor allegedly supplied paperwork for an expense whose real beneficiary was elsewhere.

The Spreadsheet Kept the Explanation

The alleged parallel accounting system preserved the connection between government customers and bribes. The finance director’s indictment says he maintained spreadsheets tracking payments under the code “IP,” corresponding Mexican vendors, and the false invoice justifications. A person who knew the code could read a different business story from the one in the general ledger.

The indictment also describes an email comparing expenses with and without those payments, broken down by country. Management allegedly received a view of operating costs with the bribes visible as a separate component. We call that a revealing accounting choice: measure the bribes internally, disguise them in the books.

The Securities and Exchange Commission’s April 2022 announcement describes another code, “alfa,” short for alfajores, a sweet cookie popular in Argentina. According to the agency’s account of its order, staff kept and emailed spreadsheets identifying government customers who received bribes. The innocent-sounding label sat beside information about who got paid.

That is why the connection between the customer, vendor and final recipient matters. A sales employee may recognize the government account, a finance employee the payment calculation, and an accountant the service description used to book it. Their knowledge can explain how entries that look unrelated belong to the same transaction.

False Invoices Became Clean Certifications

The indictment alleged that false vendor expenses ultimately entered Stericycle’s consolidated accounts. Its account of April 2016 says the finance director emailed false invoices to Mexican finance employees seeking payment. He then allegedly caused an accounting employee to enter the payments into the general ledger for invoiced services the vendors had not provided. The invoice supplied the explanation that traveled upward with the expense.

The same indictment alleged that the finance director sent quarterly Sarbanes-Oxley certifications and business-unit representation letters to corporate finance and reporting staff in Illinois. These were assurances about the accuracy of the accounts and undisclosed problems in the business. In one representation, the indictment says, he falsely stated that he had:

The finance director who allegedly tracked payments and their false invoice explanations also allegedly signed an assurance denying knowledge of bribery. The books and records problem reached from the local expense entry to what corporate reporting staff were told about it.

Expansion Without the Controls to Match

The Securities and Exchange Commission said Stericycle lacked sufficient internal accounting controls, including a centralized compliance department, and failed to implement its Foreign Corrupt Practices Act policies or procedures before 2016. The individual charging documents add the allegation that the Latin American business expanded through acquisitions while similar payment methods operated across the countries. Growth allegedly extended the operation. The agency said the controls failed to stop the payments.

The finance director’s indictment identifies him as a member of Stericycle’s FCPA Compliance Management Steering Committee as well as its Mexico executive committee. That makes the alleged certifications especially telling. Someone assigned a compliance role was also accused of maintaining the spreadsheets and false accounting that concealed the payments.

The comparison with Fresenius Medical Care shows why an expense label deserves scrutiny. In its Securities and Exchange Commission order, the agency found that employees at a Saudi distributor cashed checks and handed the money back to the general manager. The order describes what happened to those transactions in the accounts:

A 2022 Journal of Forensic and Investigative Accounting case study of Fresenius concludes that managers and employees circumvented internal controls and continued paying bribes despite flagged transactions and policies. The study’s point is useful here: having a warning or a policy in the system does not tell us what the people controlling the payments did with it. In Stericycle’s case, the alleged internal spreadsheets and outward assurances give an insider a specific way to explain that gap.

Olympus Latin America supplies another close comparison. Under its deferred prosecution agreement, the company admitted that payments to a Mexican agent were recorded as administrative or advisory services for public bids, although the services were neither performed nor required. The supposed service gave payments connected to public procurement an ordinary-looking accounting description.

What Stericycle Resolved

The Securities and Exchange Commission announced its resolution on April 20, 2022, covering alleged violations of the Foreign Corrupt Practices Act’s anti-bribery, books and records, and internal accounting controls provisions. The agency allowed up to approximately $4.2 million in credit for gains surrendered to Brazilian authorities. That meant the minimum payment to the agency would be approximately $24 million.

Stericycle’s corporate admission came through a separate criminal agreement. As the Justice Department explains in its announcement of the finance director’s indictment, Stericycle admitted in April 2022 to bribing officials in Mexico, Brazil and Argentina and entered a deferred prosecution agreement.

The Securities and Exchange Commission investigated the company’s bribery and accounting conduct. In the finance director’s case, the Justice Department identified the FBI’s New York Field Office as the investigator.

What an Insider Can Explain

The useful whistleblower evidence in a scheme like this connects ordinary business records to the reason for the payment. A contract renewal, vendor invoice, cash payment, coded spreadsheet and signed accounting assurance can tell different parts of the same story. Your knowledge of the customer or the work supposedly performed may explain the connection that the paperwork conceals.

For a separate claim involving fraud against the U.S. government, a whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers. Foreign bribery information raises a different SEC whistleblower award question. Our whistleblower experts work with you to identify the program that fits your information and build the case.

You Know What the Vendor Was Paid to Do

If you recognized the customer codes, handled the cash or saw invoices for work nobody performed, talk with our whistleblower experts about the payments. We build the case around your knowledge, bring in FCPA whistleblower lawyers who understand cross-border payment and accounting evidence, and stay beside you through the case.