Teva Pharmaceuticals Industries Ltd. agreed Thursday with the DOJ and SEC to resolve FCPA violations through a deferred prosecution agreement and total payments of $519 million.
The $519 million settlement will rank fourth on our list of the ten biggest FCPA cases. And Teva will be the first Israeli company to appear in the top ten.
In the DOJ enforcement action, Teva agreed to pay a criminal fine of $283 million. The company entered into a three-year deferred prosecution agreement that requires an independent compliance monitor.
In the SEC action, Teva will disgorge $236 million. That will be the second biggest FCPA disgorgement ever.
Teva is the world’s biggest manufacturer of generic drugs. It committed the FCPA offenses in in Ukraine, Mexico, and Russia.
In Russia, Teva did business with a repackaging company owned by an official at the Ministry of Health. The official earned about $65 million through the agreement.
In Ukraine, Teva hired a government official as a consultant and paid him $200,000 through monthly fees and travel.
In Mexico, Teva bribed government doctors.
The DOJ said Teva executives approved policies that wouldn’t detect or stop the bribery. The executives also put in place managers to oversee compliance who were “unable or unwilling” to enforce the company’s anti-corruption program.
As part of the settlement. Teva’s Russia subsidiary pleaded guilty to conspiracy to violate the anti-bribery provisions of the FCPA. The DOJ filed a one-count criminal information (pdf) Thursday in federal court in Miami.
The plea agreement (pdf) is subject to court approval. Teva Russia’s initial court appearance has been scheduled for January 12.
The SEC filed a civil complaint (pdf) Thursday, also in federal court in Miami. The complaint alleged that Teva made more than $214 million in illicit profits. It used bribery to increase sales and obtain regulatory approvals.
Teva said in a securities filing in November it had reserved $520 million for an FCPA settlement.
The SEC subpoenaed Teva, one of Israel’s biggest companies, in 2012 because of potential FCPA problems in Latin America. The probe then spread to Russia and other countries.
Teva trades on the NYSE under the symbol TEVA.
None of the employees involved in the improper payments are still employed by Teva, the company said Thursday. The entire leadership team in Russia was replaced in 2013.
Teva said it learned about the FCPA problems “from both Teva employees and the U.S. government in early 2012.”
Thursday’s company announcement said Teva has “a new global organizational structure and chain of command that reduces risks.” Teva has also given employees compliance training and adopted best practices, it said.
The DOJ said it reduced Teva’s criminal penalty by 20 percent because of its substantial cooperation and remediation.
But Teva didn’t receive full cooperation credit because of “vastly overbroad assertions of attorney-client privilege and not producing documents on a timely basis,” the DOJ said.
Erez Vigodman, Teva’s President and CEO, said Thursday: “The Teva of today is a fundamentally different company. 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.”
Richard L. Cassin is the publisher and editor of the FCPA Blog.