Analogic Settles Foreign Bribery Charges Against Distributor

Massachusetts medical device maker Analogic, agreed to pay nearly $15 million to settle civil and criminal actions involving Foreign Corrupt Practices Act violations.

The SEC found the company’s Danish subsidiary, BK Medical, ran hundreds of phony transactions with distributors to funnel roughly $20 million to third parties, “including individuals in Russia and apparent shell companies in Belize, the British Virgin Islands, Cyprus, and Seychelles.”

“Analogic’s subsidiary, BK Medical, allowed itself to be used as a slush fund for its distributors, funneling millions of dollars around the world at its distributors’ direction without knowing the purpose of the payments or anything about the recipients,” the SEC said.

Analogic agreed to pay $7.67 million in disgorgement and $3.8 million in prejudgment interest to settle the charges that it failed to keep accurate books and records and maintain adequate internal accounting controls. BK Medical agreed to pay a $3.4 million criminal fine in a non-prosecution agreement with the U.S. Department of Justice.

BK Medical’s former CFO Lars Frost agreed to pay a $20,000 penalty to the SEC to settle charges that he knowingly circumvented the internal controls in place at BK Medical and falsified books and records.

From 2008 to 2011, Frost personally approved roughly 150 of the faked invoices and submitted false quarterly sub-certifications to Analogic. Analogic discovered the violations and voluntarily divulged them to U.S. and Danish authorities in 2011. — Joya Patel