Will Novartis become Greece's largest ever whistleblowing case?
ATHENS – 5 March, 2018 – Blueprint for Free Speech Staff. Greece is gripped by a story the Swiss-based pharmaceutical company Novartis paid 10 rivals to the ruling Radical Left SYRIZA as much as 50 million euros over a decade to fix prices and control the flu shot market. The government said it is one of the biggest scandals in the country’s history. Targets said it is a manufactured phony scandal.
The central allegation is that Novartis ‘bribed decision-makers and doctors between 2006 and 2015 to build a commanding position in the Greek health market as well as secure inflated prices for its products even though cheaper alternatives were available,’ it was reported in international media.
The Greek Parliament approved creation of a committee to look into the charges put forward by investigators who allege the company overcharged the state by US$3.7 billion. The broader problem of corruption in healthcare has cost Greece €23billion in the 15 years to 2015, according to the investigators. The BMJ reported in June last year that ‘public opinion in Greece rates corruption in physicians higher than any other professional sector.’
Evidence has not yet been made public. The report, sent by prosecutors to Parliament, may be sent back so investigators can produce evidence beyond the claims made by the witnesses whose names are being kept anonymous in accordance with Greek whistleblowing laws.
A 21-member parliamentary committee will look into the charges, although most are beyond the statute of limitations unless bribery is found and money-laundering charges could be brought.
Not only were the witnesses names remaining secret, they were said to be in a protection program.
Parliament’s committee will decide whether to strip the accused of immunity. They include two former Premiers, Bank of Greece Governor Yannis Stournaras, a frequent critic of government economic estimates who has undercut Prime Minister Alexis Tsipras’ statements of a recovery; and European Commission migration chief Dimitris Avramopoulos, who is suing to uncover the identity of three secret witnesses prosecutors said took money from Novartis from 2006 until SYRIZA took power in January, 2015.
Prosecutors were assisted by the FBI as the US is also looking into Novartis’ practices in America but only one was said to named – Shipping Minister Panagiotis Kouroublis from SYRIZA, a former health minister – whose name was not included in the Greek prosecutors file sent to Parliament and which critics said was unlawfully shared with government officials, including its spokesman.
The targets are mostly from the New Democracy Conservatives who were beaten in the election but have taken double-digit leads in recent polls, as well as a former finance minister, Evangelos Venizelos, from the now-defunct PASOK Socialists, a Constitutional Law professor who has brought suit against one of the protected witnesses.
Former Premier and then-New Democracy leader Antonis Samaras, who was beaten by Tsipras in the first of two elections in 2015, has also sued and said the scandal was a shameless concoction by Tsipras and SYRIZA to get his political opponents, with only two of the accused not tied to New Democracy and PASOK, the last coalition government.
During a debate in Parliament, Samaras said, “I did not come here to defend myself, I came to accuse,” and said the government had created “fake witnesses to tarnish its rivals,” while Avramopoulos, who did not take part, said it was a conspiracy by “scum,” who “would soon find themselves in the dock” and be prosecuted themselves.
Panayiotis Pikramenos, who served as an interim Premier for one month in 2012, teared up while speaking to lawmakers and said, “At the beginning, I was surprised. Now I am overwhelmed by feelings of anger, frustration and disappointment,” blistering the government and prosecutors. He is a judge and former head of the country’s highest administrative court, the Council of State, where he said his record is unblemished.
The case, with its many swirling allegations, is high stakes at a human, political and financial level. On New Year’s Day in 2017, a manager of Novartis had threatened to commit suicide by jumping from the roof of the Hilton hotel in Athens. Police talked him down, but he told them he feared for his life, and that he would be made to bear the burden of the mistakes of his employer. It was reported that he had just been relocated from Greece to the corporate headquarters in Switzerland.
The Parliament is controlled by the government, which includes the Independent Greeks which, along with SYRIZA, reneged on anti-austerity promises in bowing to the country’s European creditors. The Tsipras Government has faced a free fall in the polls after breaking promises to stop pay cuts, tax hikes, slashed pensions and worker firings.
Most recently, his party has said it wanted to let the Former Yugoslav Republic of Macedonia (FYROM) keep Macedonia in a new composite and end a 26-year name feud between the countries.
This has not been popular with many Greeks, with surveys showing 68 percent opposed to the name giveaway. The most recent twist in the Novartis scandal had been reported the day after a massive protest rally in Athens which came two weeks after a similar demonstration in Thessaloniki, the country’s second-largest city.
While it is unclear what evidence the investigators may have in the alleged Greek case, there is clearly a pattern of bribery and other illegal or unethical behavior by Novartis across at least four other countries, going back more than four years – with one or more whistleblowers pivotal in revealing the criminal behavior.
A whistleblower triggered a major US investigation into Novartis, made under the False Claims Act and the Anti-Kickback Statute. The US Government opened its investigation in April 2013.
In 2015, the Swiss company paid US$25 million to settle charges with the US Securities and Exchange Commission (SEC) of bribing health care providers in China. The specific charges against Novartis were for violation of the Foreign Corrupt Practices Act. The bribery involved ‘gifts, travel, improper sightseeing or vacations, entertainment, and favors,’ according to the SEC filing.
In November 2015, the Manhattan US Attorney announced a $US390 million settlement against the Swiss company in a ‘civil fraud lawsuit based on claims that Novartis gave kickbacks to specialty pharmacies’ for recommending two of its drugs.
Allegations of bribery against Novartis continued to emerge across the globe, this time as an anonymous whistleblower provided Reuters with details of the alleged activity in Turkey in March 2016.
Reuters reported that the whistleblower accused the Swiss pharmaceutical company of bribery ‘to secure business advantages worth an estimated US$85 million’ – and that the whistleblower had detailed the wrongdoing in a 5,000-word anonymous email to the Novartis Chief Executive and the Chair of the Audit and Compliance Committee.
The Turkish Social Security Institution (SSI) launched an investigation. The Turkish Health Ministry confirmed in August 2016 that an investigation in to Novartis was ‘ongoing’, despite claims by the company to the contrary.
The company’s woes continued on the other side of the world, as yet another Novartis bribery scandal emerged, this time in Korea. Over the past two years, Novartis Korea has faced a slew of investigations and punishments from South Korea’s Fair Trade Commission, the Ministry of Health and Welfare, the Ministry of Drug and Food Safety, and most recently, the Korean tax authorities.
South Korean prosecutors indicted six senior officials for paying US$2.3 million in kickbacks to doctors. In 2017, the Korean Ministry of Health and Welfare slapped the company with fines of US$48.80 million for doctor kickbacks.
In December 2017, the South Korean tax authorities began a probe of Novartis Korea, with the media reporting a suspected link with the bribery case, which is pending. In a further development Novartis Korea also found itself mired in a sexual harassment scandal in 2017.
As early as April 2014, the company was forced to do a clean sweep of the top executives of its Japanese unit, after a scandal in which staff hid improper involvement in drug studies examining cancer treatment’s possible side effects. This revelation followed from a raid of the company’s Tokyo offices by Japanese prosecutors not two months earlier.
The ongoing Novartis case in Greece highlights why whistleblower protection laws are so important. While Greece has an article of legislation that specifically provides for creation of a protected status for a whistleblower, the legislation has many gaps in coverage. One specific problem is that whistleblower protection status can be revoked at any time – which makes it difficult for whistleblowers to feel safe when they come forward. International standards support a stand-alone, dedicated law that gives thorough protection for whistleblowers.
Protections mean whistleblowers are more likely to step forward with information and – most importantly – documents evidencing wrong-doing. This makes procurement of actual evidence in cases easier. Documents in particular provide better clarity to investigators about what is false accusation and what is genuine wrongdoing.
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