Generic drug maker Teva Pharmaceutical Industries Ltd. agreed to pay $519 million to settle U.S. charges that it violated U.S. foreign-bribery law in its operations in Ukraine, Mexico and Russia, another black eye for the pharmaceutical industry.
Samuel Rubenfeld and Austen Hufford of The Wall Street Journal have the news:
The Israeli company, which is the world’s largest maker of generics by sales, will pay the largest criminal fine imposed by the U.S. government against a pharmaceutical firm for violating the Foreign Corrupt Practices Act, prosecutors said. The law, jointly enforced by the U.S. Justice Department and the Securities and Exchange Commission, bars the use of bribes for foreign officials to get or receive business.
The U.S. has extensively enforced the FCPA on pharmaceutical firms over the years following a 2010 industry sweep. The sector, which increasingly does its business in foreign markets, faces heightened FCPA exposure in countries with national health systems, where doctors are considered public officials. In 2016, pharmaceutical giants GlaxoSmithKline PLC, AstraZeneca PLC and Novartis AG all settled cases involving FCPA violations.
Teva entered into a deferred-prosecution agreement that charges the company with violating the antibribery provisions of the FCPA, and it agreed to pay a $283.2 million criminal fine, continue to cooperate with a U.S. investigation and retain a compliance monitor. The Russian subsidiary pleaded guilty. The parent company also agreed to pay $236 million in disgorgement and interest to the SEC.
Tom Schoenberg and David McLaughlin of Bloomberg News report that the settlement is one of the 10 largest under FCPA:
Teva’s penalties are among the 10 largest levied by U.S. authorities for violations of the Foreign Corrupt Practices Act, which prohibits companies from bribing officials to win business overseas.
Justice Department officials are working to wrap up a series of investigations before the Obama administration leaves in January. Some 75 companies have disclosed that they are under investigation for violations of the anti-corruption law, according to the FCPA Blog.
On Wednesday, Odebrecht SA, Latin America’s biggest construction company, and an affiliate agreed to pay more than $3.5 billion to resolve bribery allegations involving Brazil’s state-run oil company, the largest corruption penalty ever levied by global authorities. The hedge fund operator Och-Ziff Capital Management LP agreed in September to a $415 million settlement over bribe-paying across Africa, and JPMorgan Chase & Co. in November paid $264 million to settle allegations that it had hired children of Chinese decision-makers to win business.
Teva, based in Petach Tikva, Israel, told investors last month that it had set aside $520 million to resolve the investigations over conduct that occurred between 2007 and 2013.
In February, Teva reported that an internal investigation concluded that the company probably violated U.S. laws, according to SEC filings. The probe of affiliates in Russia, Eastern Europe and Latin America found that some executives gave local authorities inaccurate or altered information relating to marketing or promotional practices, Teva reported this year.
John George of the Philadelphia Business Journal reported that none of the Teva employees involved are still at the company:
None of the conduct in question involved Teva’s U.S. sales.
The resolution agreement also includes a deferred prosecution agreement and the implementation of a temporary independent compliance monitor.
Teva said the result of the company’s own probe into the bribery allegation resulted in “terminating problematic business relationships with third parties, separating relevant employees from the company, overhauling the management of several subsidiaries, and ceasing operations in several countries.” Teva said it also restructured the company through a new global organizational structure and chain of command that reduces risks, and trained tens of thousands of employees on compliance and anti-corruption measures, protocols and best practices.
“The Teva of today is a fundamentally different company,” Vigodman said. “We welcome working with the monitor as an added step in our process to ensure the program we have put in place is working as designed.”
Based in Israel, Teva has its North American headquarters in North Wales, Pennsylvania.
