A letter addressed by Adv.Boaz Ben Zur to Teva Pharmaceutical Industries Ltd.'s (NYSE: TEVA; TASE: TEVA) management and board of directors in the name of the Histadrut (General Federation of Labor in Israel) states, "Teva's workers have grounds for a lawsuit against the company's board of directors." In the letter, the Histadrut, which represents Teva's workers, is demanding that the layoffs at Teva should be reduced or canceled, and that a fund should be established for the benefit of those laid off.
"The subject of this letter is the breach of the legal duty of Teva's directors and officeholders to its workers, including negligent behavior that caused the company billions of dollars in damage, exorbitant salaries, and distribution of dividends, despite mounting debts," the letter asserts. "Unfortunately, the company's loyal employees, who are being deprived of their livelihood, are being asked to pay for this colossal failure."
The letter mentions a number of matters, including $20 billion in tax concessions received by Teva, the growth in the company's debt from $3.3 billion to $35 billion within a few years, and the generous salaries received by senior Teva executives.
The letter lists what it calls "unsuccessful transactions contracted by Teva under the 'supervision' of the board of directors." It mentions that Teva tried to take over Mylan N.V. (Nasdaq: MYL; TASE: MYL), a competitor, and notes the company posted a $756 million loss as a result (Teva bought shares in Mylan on the stock market as part of this attempt, and later sold them at a large loss, S.H.-V.). Also mentioned is the acquisition of Mexican company Rimsa for $2.3 billion and, of course, the acquisition of Actavis Generics for almost $40 billion.
The letter also mentions the $500 million that Teva paid to the US authorities last year in the framework of a bribery investigation.
"The directors, who have a duty of care towards Teva's workers, took unreasonable risks, and acted without conducting adequate checks. They thereby failed in their tasks and caused damage to the company and its workers," the letter states. "It appears that the board of director's actions and failures even go beyond mere negligence in the direction of carelessness. Teva's workers therefore have grounds for a lawsuit against the company's board of directors."
The Histadrut is demanding that Teva should refrain from large-scale layoffs, or at least greatly reduce the number of those laid off. It is also demanding the establishment of a large fund for compensating those laid off.
Published by Globes [online], Israel Business News - www.globes-online.com - on December 20, 2017
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