At Novartis’ annual meeting last month, an investor was quoted lamenting that the “Greek thing will be the swamp that keeps on giving.” The "Greek thing" in question is a widening scandal involving allegations that the Swiss drugmaker paid Greek government officials bribes in return for orders for its products.
The whole saga is getting so nasty that Novartis Chairman Joerg Reinhardt has had to repeat many times that if the company’s internal investigation reveals illegal activities in Greece, managers there will face consequences.
But Greek officials don’t seem moved by Novartis’ promises. On Tuesday, a prosecutor working on the case, Eleni Touloupaki, requested information on bank accounts and other financial assets belonging to more than 30 former politicians being investigated in the case, according to the International New York Times.
Then, two protected witnesses in the Novartis case were sued by Yannis Stournaras, governor of the Central Bank, who alleged they committed perjury and slander, the paper reported.
A spokesperson for Novartis said in an email that its own investigation into the charges is ongoing. The company previously provided a statement to FiercePharma indicating it will “accept responsibility for any actions that fell below our high standards of ethical business conduct.”
Among the Greek politicians whose assets are being probed is former deputy prime minister Evangelos Venizelos, who spoke out back in February, calling the case a “cheap political diversion.” Touloupaki also wants to open up the bank accounts of Dimitris Avramopoulos, a former Greek health minister, who had previously denied being involved in anything related to pharmaceutical pricing and policy.
As for those protected witnesses sued by Stournaras, it’s not clear what their relationship to the case is. In February, however, reports emerged that three former Novartis executives had provided information leading to the charges and that their lawyer was fighting to protect their identities. And a former vice president of Novartis’ Greek operation, who reportedly surrendered his passport, went public on Facebook with his complaints that the case was a “crude prank.”
The list of allegations against Novartis has captured headlines in Greece, which was on the brink of financial collapse when the events were purportedly happening. The alleged bribes include a suitcase full of euros handed to a former prime minister in exchange for fixed prices on Novartis drugs. Greek prosecutors argue that the total worth of the alleged bribes was in the millions of euros, resulting in a loss to the country in the billions.
Novartis has been in the hot seat in other countries, including Korea, where it paid a $50 million fine over bribery allegations. In 2016, it settled a bribery investigation in China by paying U.S. authorities $25 million. In response, Novartis revised its ethics policies, training executives in the countries where it operates on how to follow business practices that jive with local practices. In March, the company named Shannon Klinger as chief of ethics and compliance and elevated the function so that Klinger reports directly to CEO Vas Narasimhan.
In any case, the “Greek thing” is surely an unwanted distraction for Novartis. The company is juggling multiple challenges, including a fight for market share in COPD, a strategy decision pertaining to the future of its generics business, and the newly announced sale of its consumer health joint-venture stake to GlaxoSmithKline.
And Novartis is dealing with legal trouble in the U.S., too. Sales representatives for the company and some doctors plan to testify in a kickbacks case alleging the company offered fancy dinners, entertainment and even employment in return for prescriptions of its drugs.
The company told FiercePharma at the time that it is disputing the allegations and “disagrees with the government’s characterization of our conduct.”