Novartis investors want the company to tighten up. At the company’s Friday annual meeting—barely a week after Greek lawmakers officially opened a bribery investigation into 10 politicians there—shareholders said top brass needs to be more vigilant.
The Swiss drugmaker has already said that it would take “fast and decisive” action if the investigation shows its managers there acted improperly, and it previously strengthened its compliance program to avert bribery and other misbehaviors at its far-flung operations around the globe.
But the allegations in Greece are just the latest in a series of scandals that forced those changes, including bribery in South Korea and data-tampering in Japan. And shareholders warned the Novartis board Friday that it may not have done enough to keep employees in line.
“Corruption cannot be allowed to become a tradition,” Veronika Hendry, president of the sustainable investing proxy group Actares, said during the meeting, as quoted by Reuters.
The alleged bribery scheme in Greece goes back a decade and encompasses 10 former ministers. Among the allegations are that Greece’s health minister from 2006 to 2009 took €40 million ($49 million) in exchange for ordering “a huge amount” of Novartis products, while the health minister working between 2009 and 2010 allegedly accepted €120,000 ($147,000) from the company and laundered it through a computer hardware firm.
The politicians named in the probe have called the allegations spurious and attacked the whistleblowers themselves. In addition to the parliamentary probe there, U.S. and Swiss authorities are said to be looking into the accusations, which initially surfaced last year when three anonymous Novartis employees turned whistleblower. Novartis itself has launched an internal investigation.
On Friday, Chairman Joerg Reinhardt again promised that staffers and managers in Greece will bear the consequences if they behaved illegally or unethically. “If anybody was responsible for any misdeed, we will act accordingly,” Reinhardt said.
Given the morass of allegations in Greece—and the subsequent political infighting that has made the investigation a media sensation there—Novartis is likely to remain in the headlines for some time. And that’s a big distraction at a time when the company needs to be focused on new launches and regulatory approvals, not legal problems.
According to Reuters, Mike Moran of the Swiss not-for-profit shareholders group Suishare, told the gathering Friday that he’s not convinced Novartis will break free of the scandal soon.
“I think the Greek thing will be the swamp that keeps on giving,” Moran said.