OSI Systems Accused of Obtaining Major Contract Through Corruption
According to the complaint, on August 21, 2013, OSI (NasdaqGS: OSIS) announced that it had entered into a 15-year agreement to provide turnkey cargo and vehicle security screening services in Albania. The anticipated gross revenue from this contract was between $150 and $250 million over the term of the agreement. OSI Systems officials failed to account for and disclose that OSI transferred 49% of its project company associated with the Albania contract—the entity to which all rights and obligations under the contract belong and therefore worth millions—to a holding company owned by an Albanian doctor for consideration of less than $5.00. Muddy Waters Research brought this information to light on December 6, 2017, when it reported that OSI obtained the contract in Albania through corruption. Muddy Waters has also accused OSI of engaging in improper sales and cash payments to government officials, which makes the company vulnerable to potential civil and criminal liability. On this news, OSI Systems’ stock fell $24.55 per share, or over 29%, to close at $59.52 per share on December 6, 2017.