Mexico’s Social Security Agency Sues Israel’s Teva for Allegedly Bribing Doctors

Yoram Gabison
Yoram Gabison
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Teva Pharmaceutical Industries CEO Kare Schultz speaks during a news conference in Tel Aviv, February 19, 2019.
Teva Pharmaceutical Industries CEO Kare Schultz speaks during a news conference in Tel Aviv, February 19, 2019. Credit: REUTERS/Amir Cohen
Yoram Gabison
Yoram Gabison

Mexico’s Social Security Institute filed a suit this week in Florida against Israel-based Teva Pharmaceutical Industries alleging that company employees engaged in corrupt practices by paying bribes to doctors at hospitals in Mexico that are owned by the social security agency.

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The suit alleges that the employees’ actions earned the company $18.6 million and that, although Teva dismissed 11 employees following an internal investigation of corrupt practices, it did not put a stop to illegal activity by its employees and did not enforce its anti-corruption policies.

According to the complaint, a Teva employee who oversaw its operations in Mexico wrote a memo acknowledging that the company could not rule out that payments were made in violation of the U.S. Foreign Corrupt Practices Act. Teva also improperly categorized payments to senior Mexican officials as legitimate business expenses and included the payments in financial statements submitted to the U.S. Securities and Exchange Commission, the complaint states.

The suit, which was filed in the U.S. District Court for Florida’s Southern District, seeks reimbursement of all payments made to Teva in violation of the law, reduced by Teva’s direct production costs for the medicine that it sold to the Mexico Social Security Institute.

The lawsuit alleges that Teva has admitted in prior U.S. Justice Department Foreign Corrupt Practices legal proceedings to paying bribes in Russia and Ukraine, as well as Mexico. It argues that the company is legally responsible for the actions of its former directors and employees as part of deferred prosecution agreements that it entered into, in which it committed to rectify deficiencies related to corrupt practices. The complaint also states that Teva paid $54 million to settle U.S. government legal action relating to illegal payments to physicians.

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