The police’s national fraud unit has launched an investigation into suspicions that Teva Pharmaceutical Industries bribed officials abroad – a month and a half after the company settled a similar case in the United States.
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In December, Teva agreed to pay $519 million amid allegations it violated the U.S. Foreign Corrupt Practices Act. That case related to conduct in Ukraine, Mexico and a guilty plea by a subsidiary in Russia.
At the center of the Israeli probe are suspicions that the company made hundreds of millions of dollars from bribes and falsified documents in order to conceal them, sources told Haaretz. Later in the day the company confirmed that an Israeli investigation similar to the American one was underway.
On Tuesday, Teva shares fell 3.2%, a day after CEO Erez Vigodman suddenly stepped down. In recent months the company has suffered a series of setbacks including patent challenges to its multiple sclerosis drug Copaxone.
According to the Israeli allegations, bribes in Russia and Mexico were concealed as discounts to clients. Bribes in Ukraine were allegedly concealed as marketing and sales expenses, or as consultation fees.
The person who headed Teva’s international division during the period in question was Chaim Hurvitz, a shareholder and the son of Eli Hurvitz, a former chairman and CEO of the company who died in 2011.
In 2009 Israel signed an OECD treaty against bribing officials in foreign countries. The relevant clause in Israel’s books was amended a year earlier; transgressors can receive up to seven years in prison.
Sources say the police are trying to establish whether senior Teva officials knew of any payments, directed them or turned the other way. The investigation is at its early stages but could end in a costly plea bargain similar to the U.S. one.
A plea bargain might be likely because such a case requires the perusal of hundreds of thousands of documents. Still, most of the details in the case are known from the U.S. investigation.
In an announcement after the U.S. deal, Teva said the transgressions took place from 2007 to 2012 and no one involved was currently employed by the company. This included Russia, where the entire management team was replaced in 2013.
Teva also said the investigation did not relate to its activities in the United States. Vigodman said at the time that “Teva today is a completely different company, and conduct that led to the investigation was terminated several years ago and is now totally unacceptable.”
The investigation of businesses and businesspeople suspected of bribing foreign officials is a relatively new approach in Israel. A criminal investigation was recently launched against Beny Steinmetz, a tycoon suspected of giving tens of millions of dollars in bribes to senior officials in Guinea.