Teva to Pay $519 Million in U.S. Probe Over Foreign Bribes

  • Drugmaker admits paying bribes in Russia, Mexico, Ukraine
  • Penalty is among the 10 largest over FCPA violations

Teva Pharmaceutical Industries Ltd. agreed to pay $519 million to U.S. authorities after admitting to paying bribes in Russia, Ukraine and Mexico to boost sales.

Teva, the world’s biggest maker of generic medicines, admitted to making corrupt payments to public officials and doctors, including an unidentified high-ranking Russian government official, according to a statement Thursday by the Justice Department. The agreement also resolves a parallel investigation by the Securities and Exchange Commission. A Russian subsidiary of Teva agreed to plead guilty.

“Teva and its subsidiaries paid millions of dollars in bribes to government officials in various countries,” Assistant Attorney General Leslie Caldwell said. “Companies that compete fairly, ethically and honestly deserve a level playing field, and we will continue to prosecute those who undermine that goal.”

Earlier: Widespread Drug Price Increases Point to Collusion, Study Finds

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.

FCPA Probes

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.

Governance Overhaul

Teva, which entered into a deferred prosecution agreement with the U.S., said it responded to the allegations by overhauling its corporate-governance program, severing relationships with third parties, ceasing operations in certain countries and removing employees from the company. None of the conduct involved U.S. sales, Teva said in a statement, and employees involved in the payments are no longer employed by the company.

Teva’s American depositary receipts rose 2.2 percent to $37.16 at 11:21 a.m. in New York.

The settlement doesn’t resolve all of Teva’s legal woes. In the U.S., Teva is among more than a dozen generic-drug makers under criminal investigation by the Justice Department for allegedly conspiring to raise prices. Last week the company was sued by 20 states over its alleged pricing conduct.

Russia Auctions

In Russia, Teva employees paid bribes to a high-ranking Russian government official to increase sales of its multiple sclerosis drug, Copaxone, in drug-purchase auctions held by the Ministry of Health, the Justice Department said in its complaint. Between 2010 and at least 2012, under an agreement with a repackaging and distribution company owned by the unidentified government official, Teva earned more than $200 million in profits on Copaxone sales to the Russian government, according to the U.S.

In Ukraine, Teva paid bribes to a senior government official in the Ministry of Health to influence the government’s approval of Teva drug registrations, which were needed for the company to market and sell its products in the country, the Justice Department said. Teva’s Mexican subsidiary paid bribes since at least 2005 to doctors employed by the Mexican government to prescribe Copaxone, according to the U.S.

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