Teva settles graft case with Israeli authorities

Teva Photo: Tamar Matsafi

After a $500 million penalty in the US, Teva will be fined NIS 75 million in Israel for illegal payments in Russia, Ukraine and Mexico.

The taxation and economic section of the State Attorney's Office, with the approval of State Attorney Shai Nitzan, signed a conditional arrangement for an end to proceedings yesterday with Teva Pharmaceutical Industries Ltd. (NYSE: TEVA; TASE: TEVA), under the Securities Law. The settlement provides that Teva will admit involvement in a bribery affair in Russia and Ukraine, and will pay a NIS 75 million penalty.

An investigation carried out in the US found that Teva had made corrupt payments to public officials in Russia and Ukraine, and had also made inappropriate payments in Mexico, as a result of which it garnered profits amounting to at least $220 million. Some of the payments, made by overseas subsidiaries wholly owned by Teva, were not described for what they really were in the companies' financial statements, but were presented as legitimate expenses, and were consolidated as such in the financial statements of Teva.

In 2016, Teva reached a settlement with the US law enforcement authorities, under which it paid a fine and a forfeit of revenue amounting to $500 million.

In the wake of the findings in the US, it was decided to open an investigation in Israel as well, to examine the local ramifications of the affair. Under the settlement reached with the State Attorney's Office, which is an alternative provided for by the law to an indictment, Teva admits involvement in the affair, as it did in the US. The payment of NIS 75 million will end the criminal proceedings against Teva and any company connected with it.

The decision to settle the case with Teva was made in the light of the large penalty already paid in the US, the fact that the company had cooperated with the investigation and had instituted a comprehensive compliance and risk management program designed to prevent illegal payments in the future, and had ceased business connections with the external parties involved, dismissed the employees concerned, replaced the management in several subsidiaries, and ceased operating in several countries.

Teva's position as a major employer in Israel and its current financial position, as well as the fact that the maximum penalty that could be imposed on the company if criminal proceedings were pursued would in any case be a fine, were also taken into account.

Published by Globes [online], Israel business news - www.globes-online.com - on January 15, 2018

© Copyright of Globes Publisher Itonut (1983) Ltd. 2018

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Teva Photo: Tamar Matsafi
Teva Photo: Tamar Matsafi
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