The Securities and Exchange Commission has revealed that Teva Pharmaceutical Industries Ltd (NYSE:TEVA) will have to pay more than $500 million after being found to have been in violation of the Foreign Corrupt Practices Act. This was in connection with the charges that Teva offered officials of the governments of Mexico, Russia, and Ukraine bribes.
“As alleged in our complaint, Teva failed to devise and maintain proper internal accounting controls to prevent the company’s payments of bribes to win business in certain regions around the globe,” SEC Enforcement Division’s deputy director, Stephanie Avakian, said.
Ill-gotten gains and unfair market practices
In the complaint by the SEC, Teva is estimated to have earned over $200 million in illicit profits through bribing government officials in a bid to increase the size of its market share. The pharmaceutical company is also accused of bribing in order to get regulatory approvals. Additionally, Teva also bribed to sway prescription decisions as well as drug purchase decisions in its favor in the three countries.
The settlement deal will require Teva to pay more than $236 million in interest and disgorgement to the SEC. A United States Department of Justice’s deferred prosecution agreement with Teva will also require the pharmaceutical company to pay a penalty of $283 million. And for a period of at least three years, Teva will be required to retain an independent corporate monitor.
Teva first disclosed that it had been subpoenaed by the SEC four years ago. Months later, the U.S. Department of Justice joined the investigation. The company also launched an internal investigation.
Dismantling the corruption network
Over the course of this year, Teva’s stock has lost close to half of its value. The company has revealed that all the employees who were involved in the bribery allegations have all left. In Russia in particular, the whole leadership team was replaced with a new one.
In Tuesday’s trading, Teva Pharmaceutical Industries Ltd fell by 1.3% to close the day at $36.34 a share.