Teva Agrees to Pay Over $500 Million for FCPA Violations

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The U.S. Securities and Exchange Commission (SEC) recently announced that Teva Pharmaceutical Industries Ltd. (NYSE: TEVA) has agreed to pay over $519 million to settle parallel civil and criminal charges that it violated the Foreign Corrupt Practices Act (FCPA) by paying bribes to foreign government officials in Russia, Ukraine, and Mexico.

According to the SEC’s complaint, Teva allegedly made more than $214 million in illicit profits by making the influential payments to increase its market share and obtain regulatory and formulary approvals as well as favorable drug purchase and prescription decisions in the aforementioned countries.

Under the settlement, Teva must pay over $236 million in disgorgement and interest to the SEC, plus a $283 million penalty in a deferred prosecution agreement with the U.S. Department of Justice. This pharmaceutical giant must retain an independent corporate monitor for at least three years.

Unfortunately, this has not been Teva’s year, as its stock has slid about 45% over the course of 2016.

Stephanie Avakian, deputy director in the SEC Enforcement Division, commented:

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.

Eric I. Bustillo, director of the SEC’s Miami Regional Office, added:

As we allege in our complaint, many of these bribes were concealed as legitimate payments to distributors.  While distributors can help companies navigate complex regulatory environments and provide valuable industry relationships, they also can create significant corruption risks for companies.

Shares of Teva were trading down about 1.4% at $36.30 on Tuesday, with a consensus analyst price target of $53.83 and a 52-week trading range of $34.57 to $66.55.