Teva to pay NIS 75 million to Israel authorities to settle foreign bribe claims
Deal takes into account the pharmaceutical company’s financial plight, and the fact that it has already been penalized by the US for the infractions
Shoshanna Solomon was The Times of Israel's Startups and Business reporter
Teva Pharmaceutical Industries Ltd. has agreed to pay NIS 75 million ($22.1 million) in fines to Israeli authorities as part of a settlement in which the drug-maker admitted to paying bribes in Russia, Ukraine and Mexico to increase sales.
The agreement with the State Attorney’s office, comes after the company agreed to pay more than $519 million to settle the same charges with US authorities in 2016.
The case included bribes by Teva Pharmaceutical Industries to a “high-ranking Russian government” official who used his authority to boost sales of the Teva multiple sclerosis drug Copaxone, resulting in more than $200 million in profits for Teva and about $65 million for the Russian official between 2010 and 2012, according to the US Justice Department’s investigation into the matter at the time.
In Ukraine, Teva also admitted to paying bribes to a senior government official, who agreed to promote Teva drugs. The payments to the Ukraine government official date from 2001 and 2011.
In Mexico, Teva’s subsidiary paid bribes to doctors employed by the Mexican government since at least 2005, according to the US Justice Department.
As a result of Teva’s settlement with the US authorities, the Israeli authorities also opened an investigation into the matter. The settlement reached with the company on Sunday, with the admission of guilt, will close all criminal charges against the company, the Justice Ministry said in a statement on Monday.
The decision to settle was based on a number of considerations, the statement said, including the fact that the troubled drug-maker has already paid a fine in the US; the company cooperated with the investigation and has implemented an extensive compliance program to avoid such violations in the future; Teva has also terminated the employment of the workers involved and set up an organizational structure designed to reduce the recurrence of such cases.
The ministry also said that Teva’s current financial plight and the cost-cutting measures it is implementing was also a consideration in the settlement deal. “The company still employs many workers in Israel,” the statement said. Continued enforcement procedures could have had “severe consequences” on the firm, given its “current financial situation and the efficiency measures it is undertaking.” As a global company, the statement said, a criminal conviction could have caused “significant damage” to the firm.
“In view of these considerations and the terms of the arrangement and the special circumstances of this case, the State believed that signing the arrangement with Teva met the public interest under the circumstances,” the statement said.
Teva’s new CEO Kare Schultz, who took the firm’s helm on November 1, in December unveiled a reorganization plan meant to lead the recovery of the ailing Israeli drug-maker, which has been suffering from price cuts in its generics business and sooner-than-expected competition to its flagship branded drug, Copaxone, for multiple sclerosis. The firm is one the world’s largest generic makers of drugs and one of the nation’s largest employers.
“After arriving at a settlement on the Foreign Corrupt Practices Act (FCPA) with the U.S. authorities in 2016 regarding improper payments that ended in 2012, the Israeli authorities announced an investigation into the same issues,” Teva said in a statement.
“Today we announce that the Company reached a resolution with the Israeli authorities that ends their investigation against the company. It should be noted that after the company learned of the U.S. investigation, it has implemented a robust compliance and enforcement program with very high standards designed to protect it and its subsidiaries from future violations. All employees that had been willfully involved in the wrongdoing are no longer employed by the company,” Teva said. “The investigation and todays’ resolution are not due to new facts but rather relate to facts that were subject to FCPA resolution with the U.S. authorities in 2016,” Teva’s statement said.
