Types Of SEC Cases: Foreign Bribery
Teva Pharmaceuticals Fined $519 Million For FCPA Foreign Bribery FraudThe SEC announced that it reached a settlement agreement related to civil charges that it brought against Teva Pharmaceuticals (“Teva” or the “Company”) for committing foreign bribery, in violation of the Foreign Corrupt Practices Act (“FCPA”). Teva also entered into a deferred prosecution agreement with the U.S. Department of Justice in connection with criminal charges related to the foreign bribery.
Bribery Of Foreign Government OfficialsIn its court Complaint, the SEC charged Teva with foreign bribery for payments that Teva made to government officials of Russia, Ukraine, and Mexico. The foreign bribery payments were allegedly made to those officials to influence regulatory and formulary approvals, drug purchasing decisions, prescription decisions, and to increase Teva’s market share and develop competitive advantages over its competitors. Because of those foreign bribes, Teva purportedly obtained business resulting in over $200 million of profits. The SEC further asserted that senior executives of the Company knowingly and/or willfully disregarded signs that the payments were being made as bribes to the foreign government officials. In an SEC press release about the foreign bribery case, the Director of the SECʼs Miami Regional Office explained:
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.
Fictitious Accounting Records Used To Hide The Foreign BriberyIn addition to making illegal payments to the foreign government officials, Teva allegedly created fictitious books and records to hide the illegal activity. (For more information about Accounting, Disclosure, and Books and Records frauds, click here.) The Deputy Director of the SECʼs Enforcement Division added in the press release:
As alleged in our complaint, Teva failed to devise and maintain proper internal accounting controls to prevent the companyʼs payments of bribes to win business in certain regions around the globe.
Settlement and PenaltyIn its press release, the SEC stated that Teva agreed to the following settlement:
- $236 million (disgorgement and interest to the SEC)
- $283 million penalty (deferred prosecution agreement – U.S. Department of Justice)
- Retention of an independent corporate monitor for at least three years following the settlement