As far as he is concerned, Teva is no longer an Israeli company, Economy Minister Eli Cohen said in an interview with Maariv. “After the appointment of Kare Schultz as CEO, Teva became a foreign company for all practical purposes, one of the 320 foreign multinationals with operations here,” said Cohen. “Ninety percent of the company’s sales are abroad, 90 percent of its shareholders are non-Israelis, and the CEO is not Israeli and not even Jewish.”
Cohen, in an extensive interview, revealed the back-story behind the company’s decision to fire 1,700 Israeli workers in the revitalization program announced last week. At his meeting with Prime Minister Binyamin Netanyahu this week, which Cohen attended, Schultz said that he was appointed CEO of a company on the verge of bankruptcy. “He apologized for the firings, but said that the company was in danger of failing on its financial commitments to banks and shareholders,” Cohen said of Schultz’s comments in the meeting. “He said that he had agreed to leave the Teva plants in the Negev and Kiryat Shemona intact, but that was the best he could do.”
Over the past decade, Teva has received NIS 22 billion ($6 billion) in government aid, grants and tax breaks, and Netanyahu was prepared to offer Teva further assistance if the company agreed to leave its Yerushalayim operations intact — but Schultz refused, said Cohen. “After that, the tone changed, and Netanyahu warned him that the company would likely seek the help of the state on matters in the future, and that its actions now would be taken into consideration.”
With that, Cohen said he did not believe that reversing the existing tax breaks and benefits would be helpful. “Israel has a free economy, and the state cannot force anyone to hire or keep workers. We cannot implement collective punishment against foreign companies because of the actions of one CEO.” With that, he said, “the policy of providing grants without any conditions to these multinationals is going to stop.”
The responsibility for Teva’s failure lies squarely with its board of directors, and all of them should resign, Cohen said. “The members of the board are the ones who ruined one of Israel’s greatest economic assets, as they are the ones who signed on several major acquisition blunders,” especially the $40 billion 2014 acquisition of Actavis Generics, the generic drug unit of U.S. firm Allergan – a deal that left Teva in heavy debt. “The best things the directors can do is take responsibility for their failure and resign, better sooner than later,” he added.