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Former Execs, Directors, to Pay Teva $50 Million for Part in Bribery Damages

Former Execs, Directors, to Pay Teva $50 Million for Part in Bribery Damages

A recently reached settlement will see the Israeli drugmaker receive compensation for the fines it paid U.S. and Israeli authorities after being charged with conspiracy to violate the anti-bribery provisions of the Foreign Corrupt Practices Act in 2016

Tomer Ganon  :  2019-07-25T12:35:44..
Teva Pharmaceutical Industries Ltd. will soon see $50 million placed in its coffers courtesy of some of its former senior executives and board members, the identities of which are currently undisclosed, according to documents obtained by Calcalist. To be paid by an insurance company, the sum is a compensation for the heavy fines Teva was forced to pay U.S. and Israeli authorities after bribes paid in connection to the unnamed individuals in Russia, Ukraine, and Mexico between 2007 and 2012 to boost Teva’s local Copaxone sales landed the company in legal hot water.

In 2016, Teva was charged by the U.S. Department of Justice with conspiracy to violate the anti-bribery provisions of the Foreign Corrupt Practices Act, and with intentional failure to maintain adequate internal controls, leading it to pay around $519 million under a deferred-prosecution agreement. Following the U.S. settlement, Teva ended up paying Israel $22 million in 2018 to avoid similar charges in the country.

Teva. Photo: Sivan Farage Teva. Photo: Sivan Farage Teva. Photo: Sivan Farage

Teva made around $215 million in profit as a result of the bribes, recorded as legitimate distributor payments. Including the $50 million—still pending approval by Tel Aviv district court—the damage Teva ended up accruing as a result of actions of the former employees and directors stands at $276 million.

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The current settlement is a result of several lawsuits Teva faced from shareholders following the ordeal, which led the company to set up an independent claims committee to debate the bribes in March 2017. The committee finished its work in April, compiling a 165-page report. Its main conclusions were that, based on the agreement reached with U.S. authorities, a lawsuit filed against the former executives and board members would have low odds of succeeding due to the difficulty of proving individual responsibility, and it is better to try and reach a settlement with their insurer, represented by law firm Clyde & Co.
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