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Novartis bribery probe in Greece ‘could affect general election’

The pharma giant allegedly gave “bundles of cash” to civil servants, doctors and politicians

Novartis

Allegations of kickbacks by pharma companies don’t usually threaten the political establishment of a country, but that could be the case in Greece, according to Politico.

The journal says a judicial investigation into claims that payments were made by Novartis to top government officials - whilst Greece was in the depths of its recent financial crisis - is becoming a battleground that could have a material impact on the country’s forthcoming general election.

The scandal centres around claims that Novartis gave “bundles of cash” to a number of civil servants, doctors and politicians, including two former Prime Ministers for the current opposition party and the former head of the country’s central bank. The investigation has been rumbling on for years, but stepped up a gear in early 2017 after the attempted suicide of a company official.

There’s a lot at stake for both sides, says the report. On the one hand, if one of the prominent opposition politicians is charged it would be a big boost to the ruling left-wing Syriza party, but on the other if no charges are brought the government will be seen as ineffectual - particularly as it swept to power in 2015 on promises that it would tackle corruption.

The situation has come to a head after anonymous testimonies collected during the investigation were sent to the Greek Parliament in February, with debate now focusing on whether senior political figures named in those testimonies should be made public.

All the accused parties - including Novartis - are denying any wrongdoing and thus far no charges have been filed - although Politico says it has been told that “formal charges against public officials” are expected in the coming months.

In the spotlight at the pharma company is ex-Novartis Greece vice president Konstantinos Frouzis, who is described in the anonymous testimonies as handing over a “Samsonite suit case …filled with bundles of cash” to former Prime Minister Antonis Samaras, and using public relations firms to launder cash and siphon money to doctors as well as government officials.

The latter were “paid for the registration of new products,” according to the transcripts, which suggest “the company’s view was that an investment of 150,000 euros to a government official had the potential to save Novartis millions of euros.”

Frouzis left Novartis in 2015 and now works for a food company in Greece, but according to Politico is under investigation by the US Federal Bureau of Investigation (FBI). He denies the allegations and would not comment further.

A Novartis spokesman told the journal: “As investigations are ongoing, we can’t comment on the allegations raised, nor will we comment on the speculation we are seeing in the media, which appears driven in large part by the selective leaking of portions of a confidential and preliminary investigative file.”

In March, Novartis executives promised its investors it would take fast and decisive action if the ongoing probe reveals any wrongdoing and had strengthened its internal processes to prevent bribery and other illicit activity across the globe. Among the allegations are that Greece’s health minister from 2006-2009 took €40m in payments over several years in return for ordering Novartis products.

The investigation comes in the wake of earlier corruption allegations in the US, as well as Turkey and South Korea, and after the company settled allegations of kickbacks involving specialty pharmacy prescribing of two of its drugs in the US in 2015. In 2016, Novartis also paid $25m to settle US charges that it bribed officials in China in breach of the US Foreign Corrupt Practices Act (FCPA).

The Politico article appears shortly after Novartis’ long-serving general counsel Felix Ehrat stepped down from the role after helping arrange a $1.2m payment to a consulting firm led Donald Trump’s attorney Michael Cohen. Ehrat said that the payment, while legal, was “an error”.

You can read more at Politico here.

5th June 2018

From: Regulatory

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