Stryker (NYSE:SYK), one of the world’s largest medical, reconstructive, and surgical technology companies, has recently been arguing against the Obama administration’s new healthcare taxes, but the company may have bigger problems to worry about. The Associated Press reported on Monday that Polish prosecutors are investigating whether the medical equipment company offered bribes to hospital officials in order to win contracts.
Here’s how the Polish government’s investigation has progressed:
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Leszek Golawski, a prosecutor in the southern city of Katowice, told the AP that dozens of private apartments and offices have been searched over the past several months to find evidence to support the allegations. He did not divulge whether the evidence collected from hospitals and Stryker documents could lead to indictments, but so far the case involves close to 100 people and 51 hospitals.
CHEAT SHEET Analysis: How will these allegations affect Stryker’s stock?
One of the core components of our CHEAT SHEET Investing Framework focuses on catalysts that will move a company’s stock. The Polish government’s recently-launched investigation is the second time Stryker has been investigated for bribery in that country this year. While the earlier charge, which included a prison term for a local hospital director found guilty of accepting bribes, was initially overturned, that case has now been reopened. If Stryker is indicted in both cases, the company could potentially face a large charge that will pull down the company’s earnings in the next quarter, which will be compounded by the added expenses from the new medical device tax scheduled to begin in January.