SEC v. Teva Pharmaceutical Industries Ltd., No. 1:16-cv-25298, Southern District of Florida (Dec. 22, 2016) — Complaint

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF FLORIDA

SECURITIES AND EXCHANGE
COMMISSION,

Plaintiff,

v.

TEVA PHARMACEUTICAL INDUSTRIES
LTD.,

Defendant.

COMPLAINT

 Plaintiff U.S. Securities and Exchange Commission (the “Commission”) alleges:
SUMMARY
1. This action arises from violations of the Foreign Corrupt Practices Act (“FCPA”)
by Defendant Teva Pharmaceutical Industries Ltd. (“Teva” or the “Company”), the largest
generic drug manufacturer in the world, relating to illegal payments made to foreign government
officials in three countries to assist Teva in obtaining or retaining business.
2. From at least October 2010 through at least December 2012, Teva paid bribes to a
government official in Russia.  From at least May 2002 through March 2011, Teva paid bribes to
a government official in Ukraine.  In 2011 and 2012, a Teva subsidiary in Mexico also paid
bribes to government officials in Mexico.  These illegal payments were made to influence
regulatory and formulary approvals, drug purchase decisions, prescription decisions, and to
increase Teva’s market share and develop competitive advantages over competitors.  Teva
realized more than $214,596,170 in profits from business obtained through the use of illegal
payments.

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3. These illegal payments were authorized by senior executives at Teva while
knowing of or recklessly ignoring red flags which indicated a high probability that such
payments were intended for, or would be paid to, foreign government officials.
4. Teva created false books and records to conceal illegal payments to a government
official in Russia and illegal payments to a government official in Ukraine.  Teva’s subsidiary in
Mexico also created false books and records to conceal illegal payments to government officials
in Mexico.
5. The illegal payments in Russia were improperly recorded as legitimate reductions
of revenue in Teva’s books and records.  The illegal payments in Ukraine were improperly
recorded as sales and marketing expenses and consultancy fees in Teva’s books and records.
The illegal payments in Mexico were improperly recorded as legitimate reductions of revenue,
and the inaccurate books and records and financial statements of the Mexican subsidiary were
consolidated into Teva’s financial statements, which were filed with the Commission.
6. Teva’s internal accounting controls were inadequate because they failed to
prevent such payments or detect red flags which should have alerted its employees that these
payments, in whole or in part, were bribes to foreign government officials.  Moreover, the
internal accounting controls were circumvented to allow employees to authorize payments with
little or no supporting documents.
7. As a result of its conduct in Russia, Ukraine, and Mexico, Teva violated Section
30A of the Securities Exchange Act of 1934 (“Exchange Act”) [15 U.S.C. § 78dd-1] when it
authorized or made illegal payments to foreign government officials in order to obtain or retain
business.  Teva violated Section 13(b)(2)(A) of the Exchange Act [15 U.S.C. § 78m(b)(2)(A)]
when it created false books and records to conceal illegal payments in Russia and Ukraine, and

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when its subsidiary in Mexico created false books and records to conceal the illegal payments in
Mexico, which were then included in the subsidiary’s financial statements and consolidated into
Teva’s financial statements.  Teva also violated Section 13(b)(2)(B) of the Exchange Act [15
U.S.C. § 78m(b)(2)(B)] by failing to have sufficient internal accounting controls in place to
detect and prevent the authorization or payment of illegal payments in Russia, Ukraine, and
Mexico.  Accordingly, the Commission seeks an order permanently enjoining Teva from further
violations of Sections 30A, 13(b)(2)(A),  and 13(b)(2)(B) of the Exchange Act.  Unless restrained
and enjoined, Teva is reasonably likely to continue to violate the federal securities laws.
JURISDICTION AND VENUE
8. This Court has jurisdiction over this action pursuant to Sections 21(d), 21(e), and
27 of the Exchange Act [15 U.S.C. §§ 78u(d), 78u(e), and 78aa].
9. Teva, directly or indirectly, made use of the means or instrumentalities of
interstate commerce, of the mails, or of the facilities of a national securities exchange in
connection with the transactions, acts, practices, and courses of business alleged in this
Complaint.
10. Venue is appropriate in this Court under Section 27 of the Exchange Act [15
U.S.C. § 78aa].  During the relevant period, Teva maintained operations and an office in Miami.
Specifically, Teva’s management of the Latin American region, the internal audit function for the
Latin American region, compliance personnel, and some accounting functions were located in
Teva’s Miami office.  Further, Teva has consented to venue in this Court.
DEFENDANT
11. Teva, a  n Israeli company headquartered in Petah Tikva, Israel, is a global
pharmaceutical corporation and the largest generic drug manufacturer in the world.  Teva

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conducts business all over the world, including in the U.S.  Outside the U.S., Teva sells its
products, directly and through distributors or other intermediaries, to government controlled
entities, such as ministries of health and government-owned hospitals and clinics.  Throughout
the relevant time period, Teva’s common shares were registered with the Commission pursuant
to Section 12(b) of the Exchange Act [15 U.S.C. § 781(b)] and traded in the form of American
Depositary Shares – representing shares of common stock – that were represented b y American
Depositary Receipts traded on the Nasdaq National Market from October 1987 until May 2012,
when Teva transferred the listing of its American Depositary Receipts to the New York Stock
Exchange.
12. As such, Teva was required to file reports, including Form 20-F, with the
Commission pursuant to Section 13(a) of the Exchange Act [15 U.S.C. § 78m(a)] and related
rules thereunder, and was an “issuer” within the meaning of the FCPA [15 U.S.C. § 78dd-1].
RELATED ENTITIES
13. Teva LLC, also known as Teva Russia, has been Teva’s wholly-owned
subsidiary in Russia since at least 2010.
14. Teva Ukraine LLC has been Teva’s wholly-owned subsidiary in Ukraine since
at least 2010.
15. Teva Mexico is comprised of various subsidiaries, including Sicor de Mexico,
S.A., Lemery S.A. de C.V., Lemery Desarrollo y Control S.A. de C.V., Immobiliaria Lemery
S.A. de C.V., Vitrium Division Farmaceutica, S.A. de C.V.,  Teva Pharmaceutical Mexico S.A.
de C.V., and Ivax Pharmaceuticals Mexico, S.A. de C.V.  Teva Mexico’s financial statements are
consolidated into the financial statements of Teva at the parent level.

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FACTUAL ALLEGATIONS
A. Teva’s Illegal Payments in Russia
16. From at least October 2010 through at least December 2012, Teva agreed to pay,
and did pay, an official of the government of Russia to obtain or retain business in Russia valued
at approximately $197,530,681.
17. Throughout that time period, Russia had a public healthcare system that provided
universal healthcare to Russian citizens.  The cost of the public healthcare, including medical
care and drug treatments, was shared between the central, regional, and local governments.
Beginning as early as 2001, Teva began using a Russian national (“Russian Official”) and
entities he owned or controlled, including a Russian company (“Russian Distributor”), to sell
pharmaceutical products to Russian government entities, including Copaxone, a drug used to
treat Multiple Sclerosis (“MS”).  In 2003, Russian Official became a high-ranking government
official in the Russian Federation, and held official positions on various government committees.
He remained a high-ranking government official until March 2013.
18. After Russian Official became a high-ranking government official in 2003, he
assigned the entirety of his shares of Russian Distributor and of other affiliated companies he
owned to his spouse because of  a Russian law prohibiting certain government officials from
owning company stock or running businesses.  However, Russian Official continued to run his
businesses, and his spouse was not involved in the operations of his businesses.
19. In 2006, Russian Official began asking Teva to increase its business with his
various companies.  In an internal email to a Teva executive in Israel, a Teva Russia executive
referenced Russian Official’s “influence in the industry” and the benefit to Teva of “getting a
status of a local manufacturer and thereby outperform[ing] foreign pharma companies,” “getting

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the green light in federal programmes,” and “more speedy and straightforward registration of
products . . . .”  The email also referenced Russian Official’s suggestion that he could “. . . assist
Teva with lobbying its business interests from the perspective of local legislation and even joint
efforts in developing a law with Knesset.”
20. In or around 2008, the Russian Ministry of Health designated seven illnesses and
conditions as the costliest to treat and created a program called the “Seven Nosologies” whereby
the central government would cover the costs associated with treating these illnesses and
conditions.  MS was one of the seven nosologies,  and Copaxone was approved as a treatment for
MS.  Beginning in or around 2008, the Russian government’s purchases of Copaxone were
primarily made by the Ministry of Health at annual auctions.
21. Throughout 2008, internal Teva emails detailed Russian Official’s influence as a
government official, and Teva’s management in Russia and Israel knew that Russian Official
was a government official and expected that he would use his official position to Teva’s
advantage.  For example, in a 2008 executive summary addressing Russian Distributor, a Teva
Russia executive stated: “Transparency of [Russian Distributor] should be considered as low.
Ownership structure is fully opaque.  Participation of [Russian Official] and probably some other
local government officials in the ownership structure is well-known.  Company’s top
management is weak as management, but strong with its government contacts and lobbying
power.  Company’s organisation structure unlikely is developed, and existence of business
processes is questionable.”
22. In October 2008, Teva executives met with Russian Official at his home in Israel.
The meeting was arranged by Russian Distributor’s Director of Sales and Marketing.

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23. Shortly after the meeting, in October 2008, Russian Distributor’s Director of
Sales and Marketing emailed one of the Teva executives present at the meeting.  The email
stated that Russian Distributor was “interested to participate in the delivery and distribution of
Copaxone,” and explained that the Russian government had already “defined” the government’s
order for Copaxone for 2009.  The email also mentioned possible “future scenarios” that could
affect the “decision making” related to Copaxone sales, reminded Teva that Russian Official had
had “personal involvement ... in the introduction of Copaxone and other important healthcare
initiatives in Russia,” and explained that “it will be beneficial for Teva to grant the distribution
of Copaxone to [Russian Distributor] in full or partially.”
24. In 2008, Russian Distributor’s President was under investigation for corruption in
Russia after allegedly making illegal payments to officials working in a Russian government
agency.  At least by October 2008, senior Teva and Teva Russia executives were aware of this
investigation.
25. In January 2009, Teva learned that its insurer would no longer insure Russian
Distributor’s receivables if Russian Distributor defaulted on any of its debts to Teva.  Despite
numerous red flags about Russian Official and Russian Distributor, Teva continued to conduct
business with Russian Distributor and used Russian Distributor for new tenders ( the formal
process by which pharmaceutical companies were invited to submit bids to supply drugs to the
Russian government).
26. In 2009, the Russian government launched a new initiative for the pharmaceutical
industry called “Pharma 2020,” which directed the state to purchase all pharmaceutical products
primarily from local producers by the year 2020.  As a first step of this initiative, the government

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announced that all strategic lifesaving pharmaceutical products would now be required to be
produced in Russia by 2020.
27. As a result of this development, Teva began looking for a Russian company that
would be capable of repackaging and distributing Copaxone in Russia.
28. Russia’s bi-annual MS government tender was scheduled to be held in the fourth
quarter of 2010, and Teva sought to have a local packager in place prior to the tender.
29. Starting in early August 2010, Teva began to focus exclusively on Russian
Distributor, despite knowing that Russian Official was still a government official, and despite
documented concerns regarding the transparency of Russian Distributor’s structure.  At this time,
Teva was continuing to use Russian Distributor for other smaller Russian government tenders.
For example, in August 2010 Teva used Russian Distributor as a distributor for a Russian
oncology tender.  And while some Teva Russia employees noted in emails that they did not plan
to give Russian Distributor any additional discounts related to certain oncology drugs, a Teva
Russia executive replied that such additional discounts were “the cost of building a relationship
with [Russian Official],”  adding that “this year, there was a substantial increase in the Copaxone
requests from the Russian Academy of Medical Sciences,” and that Teva Russia “may benefit
from [Russian Official’s] support in other areas as well.”  Shortly thereafter, Russian Distributor
sent correspondence to Teva requesting a large discount.
30. In September 2010, Teva employees began raising concerns regarding using
Russian Distributor as a distributor due to the fact that Russian Distributor had failed to timely
pay Teva’s bills in their prior business dealings.  In fact, after Teva employees raised concerns, a
Teva Russia executive forwarded an email to senior management in Israel stating: “We suggest
to cooperate [sic] with [Russian Distributor] to launch Copaxone local production.  Russian

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Distributor is headed by [Russian Official] a representative from [a region in Russia] to Council
of Federation of Russian Federation.  He is a Deputy Chairman of [a Federation Council
Committee] and he has a position of Chairman of [another government committee]. . . .  [Russian
Official]’s political network makes him a strong partner from market access stand point.  The
plan is to utilize his contacts to secure our shares and minimize generics risks.”
31.   Despite such concerns, Teva employees moved forward to sign a deal with
Russian Distributor quickly.  First, the relationship with Russian Distributor was likely to be
highly profitable, and Teva management expected that it would continue to be very lucrative in
the future, potentially generating approximately $67 million more in revenue in 2011 than had
been originally estimated.  Second, Russian Official threatened to damage Teva’s market share
in Russia if Teva did not select Russian Distributor.  Teva Russia employees met with Russian
Official, and subsequently sent a summary of this meeting to a Teva Russia executive stating, in
part, that Russian Official had told him that the Minister of Health “had returned from a vacation
and asked in the morning if there was a confirmation that the entire project . . . would take
place.”  Russian Official then threatened that “both the price and the supply volumes [of
Copaxone] would be purposefully lowered if a partnership with him was not established.”

32. On September 12, 2010, a Teva Russia executive emailed a finance executive in
the Copaxone business unit and other Teva executives in Israel to provide the rationale for the
new scheme of Copaxone business in Russia.  In the email, he asked for their approval of the
proposed exclusive repackaging and distribution agreement with Russian Distributor.  The email
also forwarded an earlier email from another Teva Russia executive that explained that “if we do
not have the supply agreement approved and signed by [the] mid[dle] of this week we will
encounter very real threat of losing a 100 million USD Copaxone business in 2011.”

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33. In September 2010, Teva’s proposed Copaxone agreement with Russian
Distributor passed Teva’s FCPA’s approval process, yet Teva’s due diligence forms omitted
critical information.  For example, although the forms did disclose that Russian Distributor’s
owner was the spouse of a Russian politician, they failed to disclose that the politician in
question ran Russian Distributor’s operations and would be hired in part with the expectation that
he could influence the decisions of the Ministry of Health (such as obtaining more funding for
Copaxone purchases by the state), obtain approval in federal program tenders, obtain faster drug
registrations, and increase market access and secure Teva’s market share.  It also failed to
disclose that Russian Distributor’s President was under investigation for corruption despite the
fact that Teva employees were aware of the investigation.
34. On or about October 28, 2010, despite knowing that Russian Official was a
government official who would be used by Teva, among things, for his influence and to increase
market access, Teva executives signed a contract with Russian Distributor for repackaging and
distribution of Copaxone in Russia.  Russian Distributor then began providing repackaging and
distribution services.
35. On or about November 12, 2010, the Russian Ministry of Health awarded Russian
Distributor the contract to supply the Russian government with Copaxone for 2011.
36. Teva directly  and  indirectly
made use of the mails and of the means and
instrumentalities of interstate commerce in connection  with and in furtherance of its illegal
payments to Russian Official through Russian Distributor.  Teva sent and responded to a number
of emails to the Russian Distributor’s President that were sent through U.S. servers.  For
example, in or around November 2010, Teva Russia employees corresponded with Russian

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Distributor’s President about the delivery of Copaxone in Russia using emails sent through U.S.
servers.
37. In December 2010, a Teva Russia executive emailed Teva’s regional executive,
stating: “The dilemma [Russian Official] faces is how to protect his positions under conditions
when state funded business in Russia is becoming transparent.  Besides building relationships
with him I see the following tasks for the meeting:  (1) keep him as our loyal buyer (2) obtain his
commitment in protecting Copaxone (access to the Minister and MoH [Ministry of Health]
decision makers, leveraging Senate capabilities), push him to demand more funding for
Copaxone already in early 2011 ([a Teva Russia Copaxone Unit executive] reports potential in
another 400 patients/5000 packs/$4,5m sales).”
38. In 2011, Teva Russia hired a new executive, formerly employed at a large U.S.
pharmaceutical company.  After learning that Teva was conducting business with Russian
Distributor, t  he new Teva Russia executive informed another Teva Russia executive that his
former employer prohibited its employees from conducting business with Russian Distributor
based on corruption concerns.  The second Teva Russia executive, who believed that Russian
Official had significant influence in both the Parliament and the Russian Ministry of Health, told
the new executive not to worry about it and that due diligence into Russian Distributor had been
conducted by Teva.
39. In part as a result of Teva’s relationship with Russian Distributor, the quantity of
Copaxone sales in Russia increased over time and Copaxone’s market share grew.
40. Between October 2010 and at least December 2012, Russian Distributor’s margin,
not including repackaging and distribution costs, from its relationship with Teva was

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approximately $65 million.  Teva’s discounts to Russian Distributor were larger on average than
discounts given to other distributors Teva used in Russia.
41. In December 2012, Teva Russia’s management became aware that a prominent
U.S. pharmaceutical company had been charged by the Commission for FCPA violations in part
as a result of making illegal payments to Russian Official and his companies.
42. Russian Official remained a high-ranking government official until March 2013,
when he resigned his position.  Teva ceased its relationship with Russian Distributor in August
2013.  In 2016, Teva lost the last Copaxone tender, and ultimately lost its entire Copaxone
market share in Russia.
43. Teva mischaracterized its payments to Russian Distributor as legitimate
reductions of revenue in its books and records.  As a result, Teva did not, in reasonable detail,
accurately and fairly reflect its payments to Russian Distributor in its books and records.
 B. Teva’s Illegal Payments in Ukraine
44. From at least May 2002 through March 2011, Teva agreed to pay, and did pay, a
then-prominent Ukrainian government official (“Ukrainian Official”) more than $200,000, and
paid for his vacations to Israel on at least five occasions, in exchange for his improper political
influence in the process of registering and promoting various Teva drugs in Ukraine.
45. Throughout that time period, Ukraine had a socialized healthcare system, with the
national Ministry of Health coordinating the provision of healthcare to its citizens with regional
and local counterparts.  Most healthcare services were provided through government-owned
healthcare facilities.  Pharmaceutical products were regulated by agencies under the Ukrainian
Ministry of Health.  In Ukraine, drugs were permitted for marketing and sale in Ukraine only
after registration by the state, which included clinical testing and examination as part of the

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approval process.  In Ukraine, since at least 2007, medications for certain socially significant or
especially serious illnesses, including MS, were dispensed free by the government.
46. Ukrainian Official held a number of roles and positions in the government of
Ukraine, including Deputy Director of one of the Institutes of the National Academy of Medical
Science since at least 2000, Vice President of the National Academy of Medical Sciences since
at least 2005, advisor to the sitting President’s administration from 2005 to 2009, Deputy
Chairman of the Interagency Workgroup for the Issues of Price-Formation for Drugs and Other
Medicinal Products, and Member of the Scientific and Expert Council of the State
Pharmacological Center of Ukraine.   In those roles and official positions, Ukrainian Official had
the ability to influence the Ukrainian government’s decision to approve the registration of
pharmaceutical products.
47. Beginning in 2002 and at least until 2009, Teva entered into numerous
agreements, signed by Teva executives, with Ukrainian Official whereby he would be
compensated for assisting Teva with registering its drugs in Ukraine and corruptly influencing
the registration of its pharmaceutical products, including Copaxone, among other activities.
48. Teva directly  and  indirectly
made use of the mails and of the means and
instrumentalities of interstate commerce in
connection  with and in furtherance of its illegal
payments to Ukrainian Official.  For example, although some of the compensation Ukrainian
Official received from Teva was in cash, at least seven payments were wired through U.S.
correspondent banks.
49. The invoices for Ukrainian Official’s services noted that he was paid for the
registrations of Teva drugs, including Copaxone.

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50. During the same time period, Teva also paid for Ukrainian Official to visit Israel
numerous times (traveling in business class), and on at least one occasion his wife traveled with
him.  For example, one request to authorize payment to Ukrainian Official stated, Ukrainian
Official “is helping us very much in advancing Copaxone and Insulins in the Ukrainian market.
One of the ways of settling our account with him is funding his trip to Israel once a year.”  The
request included travel expenses for both Ukrainian Official and his wife.
51. Teva stopped paying Ukrainian Official at the end of 2009.  Teva Ukraine LLC,
Teva’s wholly-owned subsidiary in Ukraine since at least 2010, took over the payments in early
2010 to honor the agreement with Ukrainian Official, and paid Ukrainian Official through March
31, 2011.
52. Teva mischaracterized its payments to Ukrainian Official as legitimate sales and
marketing expenses and consultancy fees in its books and records.  As a result, Teva did not, in
reasonable detail, accurately and fairly reflect its payments to Ukrainian Official in its books and
records.
 C. Teva’s Illegal Payments i n Mexico
53. In 2011 and 2012, Teva’s subsidiary and distributor in Mexico made illegal
payments to doctors employed at government hospitals, government officials under the FCPA, to
obtain business valued at approximately $16,865,489.
54. Throughout that time period, Mexico had a public healthcare system that provided
universal healthcare to Mexican citizens.  The cost of the public healthcare, including medical
care and drug treatments, was subsidized by the federal government.  Most healthcare services
were provided through government-owned healthcare facilities.

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55. In 2007, a number of employees in Teva’s Latin American Division (“Teva
Miami”) became concerned that Teva Mexico may have violated the FCPA.
56. For example, they heard that a Teva Mexico manager routinely entertained
Mexican government officials at a Cancun hotel to increase sales of Teva drugs in Mexico.  At
the time, Teva Mexico did not report to Teva Miami, but instead reported directly to Teva.
57.  On or about February 23, 2007, an anonymous letter was delivered to a Teva
internal auditor stating, among other things, that Teva Mexico was authorizing illicit payments to
government officials as an incentive to increase sales.
58. As a result of that letter, Teva initiated an internal investigation in 2007.  The
internal investigation was completed in 2008, and found credible evidence of illegal payments by
Teva Mexico to government officials in Mexico to influence regulatory and formulary approvals,
drug purchase decisions, and prescription decisions, and to develop strategic advantages over
competitors.  Eleven Teva Mexico employees were terminated in connection with the
investigation.
59. After the investigation, Teva’s internal accounting controls were still not
sufficient to meet the risks posed by Teva’s business in Mexico.  As a result, sporadic
misconduct in Mexico continued and several Mexican doctors employed at government hospitals
continued to receive money from Teva Mexico to prescribe Teva drugs.
60. In 2011, Teva Mexico’s Innovative Business Unit was in charge of Copaxone
sales in Mexico.  In early 2011, Teva decreased Teva Mexico’s promotional budget for
Copaxone.  A Teva Mexico manager requested that the budget be increased, but the request was
denied.

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61. Shortly thereafter, the Teva Mexico manager told a subordinate, another manager,
that the money that the doctors had been previously receiving as part of the promotions budget
would now be paid in cash by Teva Mexico’s Copaxone distributor in Mexico.
62. By this time, Teva had an anti-bribery policy in place, and it required that Teva
Mexico conduct due diligence of third parties, such as distributors, and required that third parties
sign an anti-corruption acknowledgement form.  In the case of Teva Mexico’s Copaxone
distributor in Mexico, neither requirement was met.
63. In April 2011, a Teva employee responsible for overseeing the implementation of
the anti-corruption compliance program emailed a senior executive responsible for overseeing
compliance in Latin America.  The email stated that a senior Teva executive had “specifically
instructed not to implement a robust system that will enable us to monitor and assure that the
same doctor wasn’t invited to a meal more than three times (for example)” and that “the purpose
of the global FCPA tool under development is mainly to automate the manual forms; get a more
organized and easy process of authorisations with less paper work.”
64. In January 2012, another Teva Mexico executive and a subordinate met with two
executives of Teva Mexico’s Copaxone distributor in Mexico.  The parties agreed that Teva
Mexico would provide its C opaxone distributor in Mexico additional margins in its sales of
Copaxone, through improper discounts.
65. After the January 2012 meeting, the Teva Mexico manager then gave the same
subordinate a list of doctors, their phone numbers, and the amounts of money that they should be
paid.  The Teva Mexico manager then directed the same subordinate to call the doctors who had
been receiving money from Teva and inform them that they would continue to be paid.
Consistent with those assurances, Teva Mexico continued to pay Mexican doctors in 2012.

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66.  All doctors paid were health care providers at state-owned and state-controlled
hospitals, working under the direction and control of the Mexican government.  Some of these
doctors employed at government hospitals were influential neurologists.  Most of the doctors
who were paid by Teva Mexico’s Copaxone distributor in 2011 and 2012 had also received
illegal payments in or around 2007.
67. Teva Mexico directly  and  indirectly made use of the mails and of the means and
instrumentalities of interstate commerce in connection  with and in furtherance of its illegal
payments to Mexican officials.  For example, a Teva Mexico manager corresponded with Teva
Mexico’s Copaxone distributor in Mexico about the delivery of cash to the Mexican officials
using emails sent and stored on U.S. servers.
68. Teva Mexico through its Copaxone distributor paid the Mexican officials between
$9,600 and $30,000 each per year to influence their Copaxone prescription decisions.  In 2012,
Teva paid Mexican officials approximately $159,000.
69. Teva Mexico mischaracterized its payments to Mexican officials as legitimate
reductions of revenue in its books and records.  As a result, Teva did not, in reasonable detail,
accurately and fairly reflect in its books and records its payments to Mexican officials.  Teva
Mexico’s inaccurate books and records and financial statements were consolidated into Teva’s
financial statements, which were filed with the Commission.
Failure to Maintain Adequate Internal Controls
70.  Teva failed to devise and maintain an adequate system of internal accounting
controls.  For example, Teva instituted a Code of Business Conduct (“Code of Conduct”) in
February 2006.  The Code of Conduct contained a section on the FCPA which prohibited
employees “from directly or indirectly authorizing, offering, promising or giving anything of

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value to a foreign government official as a means of influencing or inducing the official to obtain
or retain business for Teva.”  Additionally, the Code of Conduct contained a section on financial
reporting that prohibited “false, artificial, misleading, or deceptive entries [ ] in any of the books,
records or accounts of the Company.”
71. Teva failed to take reasonable steps to publicize or enforce its Code of Conduct.
Despite the existence of the Code of Conduct, employees were not familiar with the Code of
Conduct’s prohibitions and were not trained about the FCPA or the implications of dealing with
doctors employed at government hospitals or government tenders.
72. Teva first learned of potential violations of the FCPA in Latin America in 2007,
and its internal investigation, confirming FCPA violations, was completed in 2008.  Yet, Teva
only rolled out an Anti-Corruption Policy in Latin America in 2009 at the behest of Teva
Miami’s management.  And despite conducting business in a number of high risk countries, Teva
did not roll out a global Anti-Corruption policy until the summer of 2010, three years after
learning of the first FCPA issues, and Teva employees did not begin to receive training until that
time.  The Anti-Corruption Policy had a number of requirements that were not implemented in
time to prevent Teva’s illegal payment schemes.  For example, the Anti-Corruption policy
required that due diligence be conducted on third parties such as distributors.  However, in some
cases Teva did not attempt to conduct due diligence on third parties until 2013.
CLAIMS FOR RELIEF
FIRST CLAIM

Unlawful Payments to Foreign Government Officials in Violation of
Section 30A of the Exchange Act

73. Paragraphs 1 through 72 are re-alleged and incorporated by reference.

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74. As described above, Teva, through its officers, directors, employees, or agents
corruptly offered, promised to pay, or authorized unlawful payments to one or more persons,
while knowing that all or a portion of those payments would be offered, given, or promised,
directly or indirectly, to foreign officials for the purposes of influencing their acts or decisions in
their official capacity, inducing them to do or omit to do actions in violation of their lawful
duties, securing an improper advantage, or inducing such foreign officials to use their influence
with a foreign government or instrumentality thereof to assist Teva in obtaining or retaining
business.
75. By reason of the foregoing, Teva violated, and unless enjoined, is reasonably
likely to continue to violate the anti-bribery provisions of the FCPA, as codified at Section 30A
of the Exchange Act [15 U.S.C. § 78dd-1].
SECOND CLAIM

Failure to Keep Accurate Books and Records in Violation of
Section 13(b)(2)(A) of the Exchange Act

76. Paragraphs 1 through 72 are re-alleged and incorporated by reference.
77. As described above, Teva, through its officers, agents, subsidiaries, and affiliates,
failed to make and keep books, records, and accounts which, in reasonable detail, accurately and
fairly reflected its transactions and dispositions of its assets.
78. By  reason  of  the  foregoing,  Teva violated,  and  unless  enjoined,  is  reasonably
likely to continue to violate the books-and-records provisions of the FCPA, as codified at Section
13(b)(2)(A) [15 U.S.C. § 78m(b)(2)(A)].

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THIRD CLAIM

Failure to Devise and Maintain Internal Accounting Controls in Violation of
Section 13(b)(2)(B) of the Exchange Act

79. Paragraphs 1 through 72 are re-alleged and incorporated by reference.
80. As described above, Teva, through its officers, directors, employees, or agents
acting on its behalf, failed to devise and maintain a system of internal accounting controls
sufficient to provide reasonable assurances that:  (i) payments were made in accordance with
management’s general or specific authorization; and (ii) payments were recorded as necessary to
permit preparation of financial statements in conformity with generally accepted accounting
principles or any other criteria applicable to such statements, and to maintain accountability for
its assets.
81. By  reason  of  the  foregoing,  Teva violated,  and  unless  enjoined,  is  reasonably
likely to continue to violate the internal-accounting-controls provisions of the FCPA, as codified
at Section 13(b)(2)(B) of the Exchange Act [15 U.S.C. § 78m(b)(2)(B)].
PRAYER FOR RELIEF
 WHEREFORE, the Commission respectfully requests that this Court enter a judgment:
 A. Permanently  enjoining  Teva from  violating  Sections  30A,  13(b)(2)(A),  and
13(b)(2)(B) of the Exchange Act [15 U.S.C. §§ 78dd-1; 78m(b)(2)(A) and (B)].
 B. Ordering Teva to disgorge ill-gotten gains, with prejudgment interest, wrongfully
obtained as a result of its illegal conduct.
 C. Granting such further relief as the Court may deem just and appropriate.
 D. Further, the Commission respectfully requests that the Court retain jurisdiction
over this action in order to implement and carry out the terms of all orders and decrees that it
may enter, or to entertain any suitable application or motion by the Commission for additional

21

relief within the jurisdiction of this Court.
Dated:    December 22, 2016     Respectfully submitted,

s/ Jenny Trotman____
Jenny Trotman
      Senior Counsel
Court ID No. A5501913
Direct Dial: (305) 982-6379
      E-mail: [email protected]

Russell Koonin
Senior Trial Counsel
Fla. Bar No. 474479
Direct Dial: (305) 982-6385
E-mail: [email protected]

      Attorneys for Plaintiff
SECURITIES AND EXCHANGE
COMMISSION
801 Brickell Avenue, Suite 1800
Miami, Florida 33131
Telephone: (305) 982-6300
Facsimile: (305) 536-4154

Of Counsel:

Thierry Olivier Desmet
Assistant Director, FCPA Unit
Fla. Bar No. 0143863
U.S. Securities and Exchange Commission
801 Brickell Avenue, Suite 1800
Miami, Florida  33131

UNITED STATES DISTRICT COURT 
SOUTHERN DISTRICT OF FLORIDA 

 
  
SECURITIES AND EXCHANGE 
COMMISSION, 

 

  
Plaintiff,  

  
v.  

  
TEVA PHARMACEUTICAL INDUSTRIES 
LTD., 

 

  
Defendant.  

  
 

COMPLAINT 
 
 Plaintiff U.S. Securities and Exchange Commission (the “Commission”) alleges: 

SUMMARY 

1. This action arises from violations of the Foreign Corrupt Practices Act (“FCPA”) 

by Defendant Teva Pharmaceutical Industries Ltd. (“Teva” or the “Company”), the largest 

generic drug manufacturer in the world, relating to illegal payments made to foreign government 

officials in three countries to assist Teva in obtaining or retaining business. 

2. From at least October 2010 through at least December 2012, Teva paid bribes to a 

government official in Russia.  From at least May 2002 through March 2011, Teva paid bribes to 

a government official in Ukraine.  In 2011 and 2012, a Teva subsidiary in Mexico also paid 

bribes to government officials in Mexico.  These illegal payments were made to influence 

regulatory and formulary approvals, drug purchase decisions, prescription decisions, and to 

increase Teva’s market share and develop competitive advantages over competitors.  Teva 

realized more than $214,596,170 in profits from business obtained through the use of illegal 

payments.    

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3. These illegal payments were authorized by senior executives at Teva while 

knowing of or recklessly ignoring red flags which indicated a high probability that such 

payments were intended for, or would be paid to, foreign government officials.   

4. Teva created false books and records to conceal illegal payments to a government 

official in Russia and illegal payments to a government official in Ukraine.  Teva’s subsidiary in 

Mexico also created false books and records to conceal illegal payments to government officials 

in Mexico.   

5. The illegal payments in Russia were improperly recorded as legitimate reductions 

of revenue in Teva’s books and records.  The illegal payments in Ukraine were improperly 

recorded as sales and marketing expenses and consultancy fees in Teva’s books and records.  

The illegal payments in Mexico were improperly recorded as legitimate reductions of revenue, 

and the inaccurate books and records and financial statements of the Mexican subsidiary were 

consolidated into Teva’s financial statements, which were filed with the Commission. 

6. Teva’s internal accounting controls were inadequate because they failed to 

prevent such payments or detect red flags which should have alerted its employees that these 

payments, in whole or in part, were bribes to foreign government officials.  Moreover, the 

internal accounting controls were circumvented to allow employees to authorize payments with 

little or no supporting documents. 

7. As a result of its conduct in Russia, Ukraine, and Mexico, Teva violated Section 

30A of the Securities Exchange Act of 1934 (“Exchange Act”) [15 U.S.C. § 78dd-1] when it 

authorized or made illegal payments to foreign government officials in order to obtain or retain 

business.  Teva violated Section 13(b)(2)(A) of the Exchange Act [15 U.S.C. § 78m(b)(2)(A)] 

when it created false books and records to conceal illegal payments in Russia and Ukraine, and 

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when its subsidiary in Mexico created false books and records to conceal the illegal payments in 

Mexico, which were then included in the subsidiary’s financial statements and consolidated into 

Teva’s financial statements.  Teva also violated Section 13(b)(2)(B) of the Exchange Act [15 

U.S.C. § 78m(b)(2)(B)] by failing to have sufficient internal accounting controls in place to 

detect and prevent the authorization or payment of illegal payments in Russia, Ukraine, and 

Mexico.  Accordingly, the Commission seeks an order permanently enjoining Teva from further 

violations of Sections 30A, 13(b)(2)(A), and 13(b)(2)(B) of the Exchange Act.  Unless restrained 

and enjoined, Teva is reasonably likely to continue to violate the federal securities laws. 

JURISDICTION AND VENUE 

8. This Court has jurisdiction over this action pursuant to Sections 21(d), 21(e), and 

27 of the Exchange Act [15 U.S.C. §§ 78u(d), 78u(e), and 78aa].   

9. Teva, directly or indirectly, made use of the means or instrumentalities of 

interstate commerce, of the mails, or of the facilities of a national securities exchange in 

connection with the transactions, acts, practices, and courses of business alleged in this 

Complaint.   

10. Venue is appropriate in this Court under Section 27 of the Exchange Act [15 

U.S.C. § 78aa].  During the relevant period, Teva maintained operations and an office in Miami.  

Specifically, Teva’s management of the Latin American region, the internal audit function for the 

Latin American region, compliance personnel, and some accounting functions were located in 

Teva’s Miami office.  Further, Teva has consented to venue in this Court. 

DEFENDANT 

11. Teva, an Israeli company headquartered in Petah Tikva, Israel, is a global 

pharmaceutical corporation and the largest generic drug manufacturer in the world.  Teva 

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conducts business all over the world, including in the U.S.  Outside the U.S., Teva sells its 

products, directly and through distributors or other intermediaries, to government controlled 

entities, such as ministries of health and government-owned hospitals and clinics.  Throughout 

the relevant time period, Teva’s common shares were registered with the Commission pursuant 

to Section 12(b) of the Exchange Act [15 U.S.C. § 781(b)] and traded in the form of American 

Depositary Shares – representing shares of common stock – that were represented by American 

Depositary Receipts traded on the Nasdaq National Market from October 1987 until May 2012, 

when Teva transferred the listing of its American Depositary Receipts to the New York Stock 

Exchange.     

12. As such, Teva was required to file reports, including Form 20-F, with the 

Commission pursuant to Section 13(a) of the Exchange Act [15 U.S.C. § 78m(a)] and related 

rules thereunder, and was an “issuer” within the meaning of the FCPA [15 U.S.C. § 78dd-1]. 

RELATED ENTITIES 

13. Teva LLC, also known as Teva Russia, has been Teva’s wholly-owned 

subsidiary in Russia since at least 2010.  

14. Teva Ukraine LLC has been Teva’s wholly-owned subsidiary in Ukraine since 

at least 2010.   

15. Teva Mexico is comprised of various subsidiaries, including Sicor de Mexico, 

S.A., Lemery S.A. de C.V., Lemery Desarrollo y Control S.A. de C.V., Immobiliaria Lemery 

S.A. de C.V., Vitrium Division Farmaceutica, S.A. de C.V.,  Teva Pharmaceutical Mexico S.A. 

de C.V., and Ivax Pharmaceuticals Mexico, S.A. de C.V.  Teva Mexico’s financial statements are 

consolidated into the financial statements of Teva at the parent level.   

 

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FACTUAL ALLEGATIONS 

A. Teva’s Illegal Payments in Russia 

16. From at least October 2010 through at least December 2012, Teva agreed to pay, 

and did pay, an official of the government of Russia to obtain or retain business in Russia valued 

at approximately $197,530,681. 

17. Throughout that time period, Russia had a public healthcare system that provided 

universal healthcare to Russian citizens.  The cost of the public healthcare, including medical 

care and drug treatments, was shared between the central, regional, and local governments.  

Beginning as early as 2001, Teva began using a Russian national (“Russian Official”) and 

entities he owned or controlled, including a Russian company (“Russian Distributor”), to sell 

pharmaceutical products to Russian government entities, including Copaxone, a drug used to 

treat Multiple Sclerosis (“MS”).  In 2003, Russian Official became a high-ranking government 

official in the Russian Federation, and held official positions on various government committees.  

He remained a high-ranking government official until March 2013. 

18. After Russian Official became a high-ranking government official in 2003, he 

assigned the entirety of his shares of Russian Distributor and of other affiliated companies he 

owned to his spouse because of  a Russian law prohibiting certain government officials from 

owning company stock or running businesses.  However, Russian Official continued to run his 

businesses, and his spouse was not involved in the operations of his businesses.     

19. In 2006, Russian Official began asking Teva to increase its business with his 

various companies.  In an internal email to a Teva executive in Israel, a Teva Russia executive  

referenced Russian Official’s “influence in the industry” and the benefit to Teva of “getting a 

status of a local manufacturer and thereby outperform[ing] foreign pharma companies,” “getting 

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the green light in federal programmes,” and “more speedy and straightforward registration of 

products . . . .”  The email also referenced Russian Official’s suggestion that he could “. . . assist 

Teva with lobbying its business interests from the perspective of local legislation and even joint 

efforts in developing a law with Knesset.” 

20. In or around 2008, the Russian Ministry of Health designated seven illnesses and 

conditions as the costliest to treat and created a program called the “Seven Nosologies” whereby 

the central government would cover the costs associated with treating these illnesses and 

conditions.  MS was one of the seven nosologies, and Copaxone was approved as a treatment for 

MS.  Beginning in or around 2008, the Russian government’s purchases of Copaxone were 

primarily made by the Ministry of Health at annual auctions. 

21. Throughout 2008, internal Teva emails detailed Russian Official’s influence as a 

government official, and Teva’s management in Russia and Israel knew that Russian Official 

was a government official and expected that he would use his official position to Teva’s 

advantage.  For example, in a 2008 executive summary addressing Russian Distributor, a Teva 

Russia executive stated: “Transparency of [Russian Distributor] should be considered as low.  

Ownership structure is fully opaque.  Participation of [Russian Official] and probably some other 

local government officials in the ownership structure is well-known.  Company’s top 

management is weak as management, but strong with its government contacts and lobbying 

power.  Company’s organisation structure unlikely is developed, and existence of business 

processes is questionable.”  

22. In October 2008, Teva executives met with Russian Official at his home in Israel.  

The meeting was arranged by Russian Distributor’s Director of Sales and Marketing. 

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23. Shortly after the meeting, in October 2008, Russian Distributor’s Director of 

Sales and Marketing emailed one of the Teva executives present at the meeting.  The email 

stated that Russian Distributor was “interested to participate in the delivery and distribution of 

Copaxone,” and explained that the Russian government had already “defined” the government’s 

order for Copaxone for 2009.  The email also mentioned possible “future scenarios” that could 

affect the “decision making” related to Copaxone sales, reminded Teva that Russian Official had 

had “personal involvement … in the introduction of Copaxone and other important healthcare 

initiatives in Russia,” and explained that “it will be beneficial for Teva to grant the distribution 

of Copaxone to [Russian Distributor] in full or partially.”  

24. In 2008, Russian Distributor’s President was under investigation for corruption in 

Russia after allegedly making illegal payments to officials working in a Russian government 

agency.  At least by October 2008, senior Teva and Teva Russia executives were aware of this 

investigation.   

25. In January 2009, Teva learned that its insurer would no longer insure Russian 

Distributor’s receivables if Russian Distributor defaulted on any of its debts to Teva.  Despite 

numerous red flags about Russian Official and Russian Distributor, Teva continued to conduct 

business with Russian Distributor and used Russian Distributor for new tenders (the formal 

process by which pharmaceutical companies were invited to submit bids to supply drugs to the 

Russian government). 

26. In 2009, the Russian government launched a new initiative for the pharmaceutical 

industry called “Pharma 2020,” which directed the state to purchase all pharmaceutical products 

primarily from local producers by the year 2020.  As a first step of this initiative, the government 

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announced that all strategic lifesaving pharmaceutical products would now be required to be 

produced in Russia by 2020.   

27. As a result of this development, Teva began looking for a Russian company that 

would be capable of repackaging and distributing Copaxone in Russia.   

28. Russia’s bi-annual MS government tender was scheduled to be held in the fourth 

quarter of 2010, and Teva sought to have a local packager in place prior to the tender. 

29. Starting in early August 2010, Teva began to focus exclusively on Russian 

Distributor, despite knowing that Russian Official was still a government official, and despite 

documented concerns regarding the transparency of Russian Distributor’s structure.  At this time, 

Teva was continuing to use Russian Distributor for other smaller Russian government tenders.  

For example, in August 2010 Teva used Russian Distributor as a distributor for a Russian 

oncology tender.  And while some Teva Russia employees noted in emails that they did not plan 

to give Russian Distributor any additional discounts related to certain oncology drugs, a Teva 

Russia executive replied that such additional discounts were “the cost of building a relationship 

with [Russian Official],” adding that “this year, there was a substantial increase in the Copaxone 

requests from the Russian Academy of Medical Sciences,” and that Teva Russia “may benefit 

from [Russian Official’s] support in other areas as well.”  Shortly thereafter, Russian Distributor 

sent correspondence to Teva requesting a large discount.  

30. In September 2010, Teva employees began raising concerns regarding using 

Russian Distributor as a distributor due to the fact that Russian Distributor had failed to timely 

pay Teva’s bills in their prior business dealings.  In fact, after Teva employees raised concerns, a 

Teva Russia executive forwarded an email to senior management in Israel stating: “We suggest 

to cooperate [sic] with [Russian Distributor] to launch Copaxone local production.  Russian 

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Distributor is headed by [Russian Official] a representative from [a region in Russia] to Council 

of Federation of Russian Federation.  He is a Deputy Chairman of [a Federation Council 

Committee] and he has a position of Chairman of [another government committee]. . . .  [Russian 

Official]’s political network makes him a strong partner from market access stand point.  The 

plan is to utilize his contacts to secure our shares and minimize generics risks.”  

31.   Despite such concerns, Teva employees moved forward to sign a deal with 

Russian Distributor quickly.  First, the relationship with Russian Distributor was likely to be 

highly profitable, and Teva management expected that it would continue to be very lucrative in 

the future, potentially generating approximately $67 million more in revenue in 2011 than had 

been originally estimated.  Second, Russian Official threatened to damage Teva’s market share 

in Russia if Teva did not select Russian Distributor.  Teva Russia employees met with Russian 

Official, and subsequently sent a summary of this meeting to a Teva Russia executive stating, in 

part, that Russian Official had told him that the Minister of Health “had returned from a vacation 

and asked in the morning if there was a confirmation that the entire project . . . would take 

place.”  Russian Official then threatened that “both the price and the supply volumes [of 

Copaxone] would be purposefully lowered if a partnership with him was not established.” 

32. On September 12, 2010, a Teva Russia executive emailed a finance executive in 

the Copaxone business unit and other Teva executives in Israel to provide the rationale for the 

new scheme of Copaxone business in Russia.  In the email, he asked for their approval of the 

proposed exclusive repackaging and distribution agreement with Russian Distributor.  The email 

also forwarded an earlier email from another Teva Russia executive that explained that “if we do 

not have the supply agreement approved and signed by [the] mid[dle] of this week we will 

encounter very real threat of losing a 100 million USD Copaxone business in 2011.” 

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33. In September 2010, Teva’s proposed Copaxone agreement with Russian 

Distributor passed Teva’s FCPA’s approval process, yet Teva’s due diligence forms omitted 

critical information.  For example, although the forms did disclose that Russian Distributor’s 

owner was the spouse of a Russian politician, they failed to disclose that the politician in 

question ran Russian Distributor’s operations and would be hired in part with the expectation that 

he could influence the decisions of the Ministry of Health (such as obtaining more funding for 

Copaxone purchases by the state), obtain approval in federal program tenders, obtain faster drug 

registrations, and increase market access and secure Teva’s market share.  It also failed to 

disclose that Russian Distributor’s President was under investigation for corruption despite the 

fact that Teva employees were aware of the investigation. 

34. On or about October 28, 2010, despite knowing that Russian Official was a 

government official who would be used by Teva, among things, for his influence and to increase 

market access, Teva executives signed a contract with Russian Distributor for repackaging and 

distribution of Copaxone in Russia.  Russian Distributor then began providing repackaging and 

distribution services.  

35. On or about November 12, 2010, the Russian Ministry of Health awarded Russian 

Distributor the contract to supply the Russian government with Copaxone for 2011.   

36. Teva directly and indirectly made use of the mails and of the means and 

instrumentalities of interstate commerce in connection with and in furtherance of its illegal 

payments to Russian Official through Russian Distributor.  Teva sent and responded to a number 

of emails to the Russian Distributor’s President that were sent through U.S. servers.  For 

example, in or around November 2010, Teva Russia employees corresponded with Russian 

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Distributor’s President about the delivery of Copaxone in Russia using emails sent through U.S. 

servers.   

37. In December 2010, a Teva Russia executive emailed Teva’s regional executive, 

stating: “The dilemma [Russian Official] faces is how to protect his positions under conditions 

when state funded business in Russia is becoming transparent.  Besides building relationships 

with him I see the following tasks for the meeting:  (1) keep him as our loyal buyer (2) obtain his 

commitment in protecting Copaxone (access to the Minister and MoH [Ministry of Health] 

decision makers, leveraging Senate capabilities), push him to demand more funding for 

Copaxone already in early 2011 ([a Teva Russia Copaxone Unit executive] reports potential in 

another 400 patients/5000 packs/$4,5m sales).” 

38. In 2011, Teva Russia hired a new executive, formerly employed at a large U.S. 

pharmaceutical company.  After learning that Teva was conducting business with Russian 

Distributor, the new Teva Russia executive informed another Teva Russia executive that his 

former employer prohibited its employees from conducting business with Russian Distributor 

based on corruption concerns.  The second Teva Russia executive, who believed that Russian 

Official had significant influence in both the Parliament and the Russian Ministry of Health, told 

the new executive not to worry about it and that due diligence into Russian Distributor had been 

conducted by Teva.   

39. In part as a result of Teva’s relationship with Russian Distributor, the quantity of 

Copaxone sales in Russia increased over time and Copaxone’s market share grew.   

40. Between October 2010 and at least December 2012, Russian Distributor’s margin, 

not including repackaging and distribution costs, from its relationship with Teva was 

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approximately $65 million.  Teva’s discounts to Russian Distributor were larger on average than 

discounts given to other distributors Teva used in Russia.       

41. In December 2012, Teva Russia’s management became aware that a prominent 

U.S. pharmaceutical company had been charged by the Commission for FCPA violations in part 

as a result of making illegal payments to Russian Official and his companies.    

42. Russian Official remained a high-ranking government official until March 2013, 

when he resigned his position.  Teva ceased its relationship with Russian Distributor in August 

2013.  In 2016, Teva lost the last Copaxone tender, and ultimately lost its entire Copaxone 

market share in Russia. 

43. Teva mischaracterized its payments to Russian Distributor as legitimate 

reductions of revenue in its books and records.  As a result, Teva did not, in reasonable detail, 

accurately and fairly reflect its payments to Russian Distributor in its books and records. 

 B. Teva’s Illegal Payments in Ukraine  

44. From at least May 2002 through March 2011, Teva agreed to pay, and did pay, a 

then-prominent Ukrainian government official (“Ukrainian Official”) more than $200,000, and 

paid for his vacations to Israel on at least five occasions, in exchange for his improper political 

influence in the process of registering and promoting various Teva drugs in Ukraine. 

45. Throughout that time period, Ukraine had a socialized healthcare system, with the 

national Ministry of Health coordinating the provision of healthcare to its citizens with regional 

and local counterparts.  Most healthcare services were provided through government-owned 

healthcare facilities.  Pharmaceutical products were regulated by agencies under the Ukrainian 

Ministry of Health.  In Ukraine, drugs were permitted for marketing and sale in Ukraine only 

after registration by the state, which included clinical testing and examination as part of the 

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approval process.  In Ukraine, since at least 2007, medications for certain socially significant or 

especially serious illnesses, including MS, were dispensed free by the government.  

46. Ukrainian Official held a number of roles and positions in the government of 

Ukraine, including Deputy Director of one of the Institutes of the National Academy of Medical 

Science since at least 2000, Vice President of the National Academy of Medical Sciences since 

at least 2005, advisor to the sitting President’s administration from 2005 to 2009, Deputy 

Chairman of the Interagency Workgroup for the Issues of Price-Formation for Drugs and Other 

Medicinal Products, and Member of the Scientific and Expert Council of the State 

Pharmacological Center of Ukraine.  In those roles and official positions, Ukrainian Official had 

the ability to influence the Ukrainian government’s decision to approve the registration of 

pharmaceutical products.   

47. Beginning in 2002 and at least until 2009, Teva entered into numerous 

agreements, signed by Teva executives, with Ukrainian Official whereby he would be 

compensated for assisting Teva with registering its drugs in Ukraine and corruptly influencing 

the registration of its pharmaceutical products, including Copaxone, among other activities.   

48. Teva directly and indirectly made use of the mails and of the means and 

instrumentalities of interstate commerce in connection with and in furtherance of its illegal 

payments to Ukrainian Official.  For example, although some of the compensation Ukrainian 

Official received from Teva was in cash, at least seven payments were wired through U.S. 

correspondent banks.   

49. The invoices for Ukrainian Official’s services noted that he was paid for the 

registrations of Teva drugs, including Copaxone.    

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50. During the same time period, Teva also paid for Ukrainian Official to visit Israel 

numerous times (traveling in business class), and on at least one occasion his wife traveled with 

him.  For example, one request to authorize payment to Ukrainian Official stated, Ukrainian 

Official “is helping us very much in advancing Copaxone and Insulins in the Ukrainian market.  

One of the ways of settling our account with him is funding his trip to Israel once a year.”  The 

request included travel expenses for both Ukrainian Official and his wife. 

51. Teva stopped paying Ukrainian Official at the end of 2009.  Teva Ukraine LLC, 

Teva’s wholly-owned subsidiary in Ukraine since at least 2010, took over the payments in early 

2010 to honor the agreement with Ukrainian Official, and paid Ukrainian Official through March 

31, 2011.   

52. Teva mischaracterized its payments to Ukrainian Official as legitimate sales and 

marketing expenses and consultancy fees in its books and records.  As a result, Teva did not, in 

reasonable detail, accurately and fairly reflect its payments to Ukrainian Official in its books and 

records.   

 C. Teva’s Illegal Payments in Mexico   

53. In 2011 and 2012, Teva’s subsidiary and distributor in Mexico made illegal 

payments to doctors employed at government hospitals, government officials under the FCPA, to 

obtain business valued at approximately $16,865,489. 

54. Throughout that time period, Mexico had a public healthcare system that provided 

universal healthcare to Mexican citizens.  The cost of the public healthcare, including medical 

care and drug treatments, was subsidized by the federal government.  Most healthcare services 

were provided through government-owned healthcare facilities.   

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55. In 2007, a number of employees in Teva’s Latin American Division (“Teva 

Miami”) became concerned that Teva Mexico may have violated the FCPA.   

56. For example, they heard that a Teva Mexico manager routinely entertained 

Mexican government officials at a Cancun hotel to increase sales of Teva drugs in Mexico.  At 

the time, Teva Mexico did not report to Teva Miami, but instead reported directly to Teva.   

57.  On or about February 23, 2007, an anonymous letter was delivered to a Teva 

internal auditor stating, among other things, that Teva Mexico was authorizing illicit payments to 

government officials as an incentive to increase sales.   

58. As a result of that letter, Teva initiated an internal investigation in 2007.  The 

internal investigation was completed in 2008, and found credible evidence of illegal payments by 

Teva Mexico to government officials in Mexico to influence regulatory and formulary approvals, 

drug purchase decisions, and prescription decisions, and to develop strategic advantages over 

competitors.  Eleven Teva Mexico employees were terminated in connection with the 

investigation. 

59. After the investigation, Teva’s internal accounting controls were still not 

sufficient to meet the risks posed by Teva’s business in Mexico.  As a result, sporadic 

misconduct in Mexico continued and several Mexican doctors employed at government hospitals 

continued to receive money from Teva Mexico to prescribe Teva drugs.   

60. In 2011, Teva Mexico’s Innovative Business Unit was in charge of Copaxone 

sales in Mexico.  In early 2011, Teva decreased Teva Mexico’s promotional budget for 

Copaxone.  A Teva Mexico manager requested that the budget be increased, but the request was 

denied.   

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61. Shortly thereafter, the Teva Mexico manager told a subordinate, another manager, 

that the money that the doctors had been previously receiving as part of the promotions budget 

would now be paid in cash by Teva Mexico’s Copaxone distributor in Mexico.   

62. By this time, Teva had an anti-bribery policy in place, and it required that Teva 

Mexico conduct due diligence of third parties, such as distributors, and required that third parties 

sign an anti-corruption acknowledgement form.  In the case of Teva Mexico’s Copaxone 

distributor in Mexico, neither requirement was met.   

63. In April 2011, a Teva employee responsible for overseeing the implementation of 

the anti-corruption compliance program emailed a senior executive responsible for overseeing 

compliance in Latin America.  The email stated that a senior Teva executive had “specifically 

instructed not to implement a robust system that will enable us to monitor and assure that the 

same doctor wasn’t invited to a meal more than three times (for example)” and that “the purpose 

of the global FCPA tool under development is mainly to automate the manual forms; get a more 

organized and easy process of authorisations with less paper work.”          

64. In January 2012, another Teva Mexico executive and a subordinate met with two 

executives of Teva Mexico’s Copaxone distributor in Mexico.  The parties agreed that Teva 

Mexico would provide its Copaxone distributor in Mexico additional margins in its sales of 

Copaxone, through improper discounts.   

65. After the January 2012 meeting, the Teva Mexico manager then gave the same 

subordinate a list of doctors, their phone numbers, and the amounts of money that they should be 

paid.  The Teva Mexico manager then directed the same subordinate to call the doctors who had 

been receiving money from Teva and inform them that they would continue to be paid.  

Consistent with those assurances, Teva Mexico continued to pay Mexican doctors in 2012.   

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66.  All doctors paid were health care providers at state-owned and state-controlled 

hospitals, working under the direction and control of the Mexican government.  Some of these 

doctors employed at government hospitals were influential neurologists.  Most of the doctors 

who were paid by Teva Mexico’s Copaxone distributor in 2011 and 2012 had also received 

illegal payments in or around 2007. 

67. Teva Mexico directly and indirectly made use of the mails and of the means and 

instrumentalities of interstate commerce in connection with and in furtherance of its illegal 

payments to Mexican officials.  For example, a Teva Mexico manager corresponded with Teva 

Mexico’s Copaxone distributor in Mexico about the delivery of cash to the Mexican officials 

using emails sent and stored on U.S. servers.   

68. Teva Mexico through its Copaxone distributor paid the Mexican officials between 

$9,600 and $30,000 each per year to influence their Copaxone prescription decisions.  In 2012, 

Teva paid Mexican officials approximately $159,000.   

69. Teva Mexico mischaracterized its payments to Mexican officials as legitimate 

reductions of revenue in its books and records.  As a result, Teva did not, in reasonable detail, 

accurately and fairly reflect in its books and records its payments to Mexican officials.  Teva 

Mexico’s inaccurate books and records and financial statements were consolidated into Teva’s 

financial statements, which were filed with the Commission. 

Failure to Maintain Adequate Internal Controls 

70.  Teva failed to devise and maintain an adequate system of internal accounting 

controls.  For example, Teva instituted a Code of Business Conduct (“Code of Conduct”) in 

February 2006.  The Code of Conduct contained a section on the FCPA which prohibited 

employees “from directly or indirectly authorizing, offering, promising or giving anything of 

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value to a foreign government official as a means of influencing or inducing the official to obtain 

or retain business for Teva.”  Additionally, the Code of Conduct contained a section on financial 

reporting that prohibited “false, artificial, misleading, or deceptive entries [ ] in any of the books, 

records or accounts of the Company.” 

71. Teva failed to take reasonable steps to publicize or enforce its Code of Conduct.  

Despite the existence of the Code of Conduct, employees were not familiar with the Code of 

Conduct’s prohibitions and were not trained about the FCPA or the implications of dealing with 

doctors employed at government hospitals or government tenders.   

72. Teva first learned of potential violations of the FCPA in Latin America in 2007, 

and its internal investigation, confirming FCPA violations, was completed in 2008.  Yet, Teva 

only rolled out an Anti-Corruption Policy in Latin America in 2009 at the behest of Teva 

Miami’s management.  And despite conducting business in a number of high risk countries, Teva 

did not roll out a global Anti-Corruption policy until the summer of 2010, three years after 

learning of the first FCPA issues, and Teva employees did not begin to receive training until that 

time.  The Anti-Corruption Policy had a number of requirements that were not implemented in 

time to prevent Teva’s illegal payment schemes.  For example, the Anti-Corruption policy 

required that due diligence be conducted on third parties such as distributors.  However, in some 

cases Teva did not attempt to conduct due diligence on third parties until 2013. 

CLAIMS FOR RELIEF 

FIRST CLAIM 
 

Unlawful Payments to Foreign Government Officials in Violation of  
Section 30A of the Exchange Act 

 
73. Paragraphs 1 through 72 are re-alleged and incorporated by reference. 

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74. As described above, Teva, through its officers, directors, employees, or agents 

corruptly offered, promised to pay, or authorized unlawful payments to one or more persons, 

while knowing that all or a portion of those payments would be offered, given, or promised, 

directly or indirectly, to foreign officials for the purposes of influencing their acts or decisions in 

their official capacity, inducing them to do or omit to do actions in violation of their lawful 

duties, securing an improper advantage, or inducing such foreign officials to use their influence 

with a foreign government or instrumentality thereof to assist Teva in obtaining or retaining 

business.   

75. By reason of the foregoing, Teva violated, and unless enjoined, is reasonably 

likely to continue to violate the anti-bribery provisions of the FCPA, as codified at Section 30A 

of the Exchange Act [15 U.S.C. § 78dd-1].  

SECOND CLAIM 
 

Failure to Keep Accurate Books and Records in Violation of  
Section 13(b)(2)(A) of the Exchange Act 

 
76. Paragraphs 1 through 72 are re-alleged and incorporated by reference. 

77. As described above, Teva, through its officers, agents, subsidiaries, and affiliates, 

failed to make and keep books, records, and accounts which, in reasonable detail, accurately and 

fairly reflected its transactions and dispositions of its assets.   

78. By reason of the foregoing, Teva violated, and unless enjoined, is reasonably 

likely to continue to violate the books-and-records provisions of the FCPA, as codified at Section 

13(b)(2)(A) [15 U.S.C. § 78m(b)(2)(A)]. 

 

 

 

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THIRD CLAIM 
 

Failure to Devise and Maintain Internal Accounting Controls in Violation of  
Section 13(b)(2)(B) of the Exchange Act 

 
79. Paragraphs 1 through 72 are re-alleged and incorporated by reference. 

80. As described above, Teva, through its officers, directors, employees, or agents 

acting on its behalf, failed to devise and maintain a system of internal accounting controls 

sufficient to provide reasonable assurances that:  (i) payments were made in accordance with 

management’s general or specific authorization; and (ii) payments were recorded as necessary to 

permit preparation of financial statements in conformity with generally accepted accounting 

principles or any other criteria applicable to such statements, and to maintain accountability for 

its assets. 

81. By reason of the foregoing, Teva violated, and unless enjoined, is reasonably 

likely to continue to violate the internal-accounting-controls provisions of the FCPA, as codified 

at Section 13(b)(2)(B) of the Exchange Act [15 U.S.C. § 78m(b)(2)(B)]. 

PRAYER FOR RELIEF 

 WHEREFORE, the Commission respectfully requests that this Court enter a judgment: 

 A. Permanently enjoining Teva from violating Sections 30A, 13(b)(2)(A), and  

13(b)(2)(B) of the Exchange Act [15 U.S.C. §§ 78dd-1; 78m(b)(2)(A) and (B)].  

 B. Ordering Teva to disgorge ill-gotten gains, with prejudgment interest, wrongfully 

obtained as a result of its illegal conduct.  

 C. Granting such further relief as the Court may deem just and appropriate.  

 D. Further, the Commission respectfully requests that the Court retain jurisdiction 

over this action in order to implement and carry out the terms of all orders and decrees that it 

may enter, or to entertain any suitable application or motion by the Commission for additional 

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relief within the jurisdiction of this Court. 

Dated:   December 22, 2016   Respectfully submitted, 

 
       
s/ Jenny Trotman____                          
Jenny Trotman 

      Senior Counsel 
Court ID No. A5501913 
Direct Dial: (305) 982-6379  

      E-mail: [email protected] 
 

Russell Koonin  
Senior Trial Counsel  
Fla. Bar No. 474479  
Direct Dial: (305) 982-6385  
E-mail: [email protected]    

  
      Attorneys for Plaintiff  

SECURITIES AND EXCHANGE 
COMMISSION  
801 Brickell Avenue, Suite 1800  
Miami, Florida 33131  
Telephone: (305) 982-6300  
Facsimile: (305) 536-4154  

 
Of Counsel: 
 
Thierry Olivier Desmet 
Assistant Director, FCPA Unit 
Fla. Bar No. 0143863 
U.S. Securities and Exchange Commission 
801 Brickell Avenue, Suite 1800 
Miami, Florida  33131 

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