Ranbaxy Owners ‘Deliberately Buried’ Information From Daiichi-Sankyo: Singapore Tribunal Order
Ranbaxy withheld important information from its buyer Daiichi-Sankyo in 2008, according to an order by the Singapore International Arbitration Centre.
The Singapore International Arbitration Centre’s order in the Ranbaxy-Daiichi case has revealed in detail how the Indian pharmaceutical major ‘deliberately’ withheld information from Japan’s Daiichi-Sankyo, reported The Indian Express on Thursday. The information implicates the Ranbaxy top brass in a “in a slew of irregularities, from fraud to falsehood,” the paper wrote, based on a copy of the SAIC order they have reportedly accessed.
Malvinder Singh and his brother Shivinder Singh, former Ranbaxy owners, who have until August 22 to challenge the April 2016 order of the SIAC, face a penalty of Rs 3,500 crore.
Over 373 pages, it lays out what it calls the path of deception that Ranbaxy took and how it kept Japan’s Daiichi Sankyo — which bought Ranbaxy in 2008 for Rs 19,804 crore — in the dark even a year after its purchase.An excerpt from the report in The Indian Express
According to the news report, the SAIC’s order was based on a 2004 Self Assessment Report prepared by the then head of research and development of Ranbaxy, Rajinder Kumar, for the company’s internal use. Kumar stepped down the very next day, despite being asked to stay. The report submitted by him was later forwarded to the U.S. Food and Drug Administration by Kumar’s Principal Assistant Dinesh Thakur in 2005.
The U.S. FDA then opened an investigation against the company along with the U.S. Justice Department in February 2006. A year later authorities raided Ranbaxy premises in New Jersey where they seized a number of documents including a copy of the SAR.
The SAR also alleged that Ranbaxy had used fabricated data to receive approvals for more than 200 drugs.
The promoters, along with the top brass of the company went to great lengths to hide this information from Daiichi-Sankyo, The Indian Express report said.
The existence of SAR in the hands of US authorities meant that Ranbaxy shares were ‘pregnant with disaster’ at the time they were acquired by Daiichi.From Singpore Arbitration Tribunal’s order, accessed by The Indian Express
But for the misrepresentations (by Malvinder Singh and others), the transaction would not have been entered into all by Daiichi…had Daiichi been aware of the SAR it would not have paid any price for (Ranbaxy) shares.From Singpore Arbitration Tribunal’s order, accessed by The Indian Express
In 2008, the Japanese firm had made its foray into the Indian pharmaceutical market by buying a majority stake in Ranbaxy Laboratories for Rs 19,804 crore.
However, in 2013, Daiichi filed an arbitration case against Ranbaxy in Singapore. The firm had accused the Singh brothers of concealment and misrepresentation of facts.
The case came after Ranbaxy, in May 2013, pleaded guilty to misrepresenting data and fraudulent activities in pursuit of fast drug approvals and paid $500 million to the U.S. Department of Justice as settlement.
In 2015, Sun Pharma agreed to buy Ranbaxy, which was by then controlled by Daiichi, for Rs 22,679 crore.
The Indian Express report also included responses from some of the other key players also named in the SAIC order:
1. Jay Deshkumh, Ranbaxy’s then General Counsel said all his actions at the time of the Daiichi-Sankyo deal was in accordance with orders issued by Malvinder Singh. “I urged the management and Mr Singh to remedy the problems and to tell DS (Daiichi Sankyo) the truth, but he refused. Since leaving Ranbaxy, I have done everything in my power to remedy the situation,” he added.
2. Abha Pant, who stepped down in 2011 as Vice President, Regulatory Affairs told The Indian Express she was unaware of the tribunal’s order and refused to comment.
3. Rajinder Kumar, then head of research and development at Ranbaxy, who resigned a day after he presented the Self Assessment Report to the management in 2004, did not reply to queries by The Indian Express.
The spokesperson of RHC Holdings Pvt Ltd. said in an email response to BloombergQuint, “This story is malicious with a deliberate intent to tarnish the image of reputed individuals and thereby prejudice the court proceedings. The majority award is contrary to Indian law and the former Chief Justice of India AM Ahmadi, who was the Indian law expert, has rejected any fraudulent or wrong doing by the Respondent sellers of Ranbaxy shares and consequently rejected any ground for awarding damages. The award has been challenged both in Singapore and its enforcement in India.
Both Singapore Court and the Delhi High Court have directed that the award and its proceedings be kept in sealed cover as they are confidential. Yet, it appears that The Indian Express has obtained a copy of the award. Clearly, it is not only illegal but by quoting from the award, there appears to be an attempt to interfere in the judicial process, which is contempt of court.
Except for Daiichi Sankyo, no one else gains from this disclosure.
The timing of the articles is concerning as it comes immediately before a date of hearing and in fact wrongly mentions the date as 22nd Aug (which in fact is the next date of hearing under the enforcement proceedings in India) as being the date in Singapore for filing a challenge.”