Teva Pharmaceutical Industries Ltd. ("Teva") was an Israeli pharmaceutical corporation and the largest generic drug manufacturer in the world. Teva’s American Depositary Receipts traded on the Nasdaq National Market from October 1987 until May 2012, when Teva transferred the listing to the New York Stock Exchange.
From at least October 2010 through at least December 2012, Teva paid bribes to a high-ranking government official in Russia intending to influence the official to use his authority to increase sales of Teva’s multiple sclerosis drug, Copaxone, to the Russian government. In 2009, the Russian government announced a new strategy for the Russian Federation's domestic pharmaceutical industry which established a preference for domestic products. In response, Teva partnered with a distribution company ("Russian Distributor") owned by Russian Official to repackage and distribute Copaxone in Russia. In part as a result of Teva’s relationship with Russian Distributor, Teva's Copaxone sales in Russia increased over time and Copaxone’s market share grew. In exchange, Teva offered discounts to Russian Distributor that were larger on average than discounts given to other distributors Teva used in Russia. Payments to Russian Official were improperly recorded as legitimate reductions of revenue in Teva ’s books and records.
From at least May 2002 through March 2011, Teva paid a prominent Ukrainian government official more than $200,000, and paid for his vacations to Israel on at least five occasions, in exchange for his improper political influence in the process of registering and promoting various Teva drugs in Ukraine. Teva's payments to the Ukrainian official were improperly recorded as sales and marketing expenses and consultancy fees in Teva’s books and records.
In 2011 and 2012, Teva's Mexican subsidiaries made illegal payments through a distributor to doctors employed at government hospitals to influence their Copaxone prescription decisions. Although Teva had earlier discovered credible evidence of improper payments by Teva's Mexican subsidiaries to government officials in Mexico, the company failed to implement internal accounting controls sufficient to meet the risks posed by Teva’s business in Mexico. The improper payments to Mexican officials were improperly recorded as legitimate reductions of revenue, and the inaccurate books and records and financial statements of the Mexican subsidiaries were consolidated into Teva’s financial statements, which were filed with the Commission.
In total, Teva realized more than $214,596,170 in profits from business obtained as a result of illegal payments to foreign officials in Russia, Ukraine, and Mexico.
On December 22, 2016, the SEC filed a civil complaint against Teva charging the company with anti-bribery, books and records, and internal controls violations. Teva consented to the entry of a final judgment and agreed to pay $214,596,170 in disgorgement and $21,505,654 in pre-judgment interest, for a total of $236,101,824. Teva also agreed to retain an independent corporate monitor for a term of three years. The Commission did not impose a civil penalty on Teva in recognition of Teva's cooperation and the criminal penalty imposed in a separate matter initiated by the DOJ.
In related proceedings, Teva entered into a Deferred Prosecution Agreement with the DOJ and agreed to pay a $283 million penalty. Teva's Russian subsidiary pled guilty to a one count criminal information charging conspiracy to violate the anti-bribery provisions of the FCPA. The combined total amount of U.S. criminal and regulatory penalties to be paid by Teva is nearly $520 million.
