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In April 2016, former promoters of Ranbaxy – Malvinder Mohan Singh and Shivinder Mohan Singh – had been ordered by an arbitration court in Singapore to compensate Japan’s Daiichi Sankyo for concealing facts at the time of sale of their 34.82 percent stake in Ranbaxy to the latter for $2.4 billion in 2008. The compensation will be to the tune of Rs 3500 crore.
This order, which shows the Ranbaxy’s former top brass in poor light, details how they “deliberately” concealed crucial data with the intention of hiding their own irregularities – alleged fraud and falsehood.
The former promoters have until 22 August to challenge the verdict, but a study of the copy of the order, don by The Indian Express, reveals just how deep the web of fraud runs.
A Self Assessment Report (SAR) prepared by Rajinder Kumar in 2004 – then head of Ranbaxy’s R&D – for the company’s internal use reveals many skeletons tucked neatly away in the company’s closet.
Rajinder Kumar, dissatisfied with the state of affairs in the company, resigned a day after the report was submitted.
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In 2005, Kumar’s principal assistant Dinesh Thakur forwarded the damning SAR to the US drug regulator Food and Drug Administration (USFDA).
The USFDA reacting to the contents of the SAR opened an investigation into the matter against Ranbaxy in 2006. It later raided its offices, seizing crucial documents that shed more light on the fraud that was happening under its nose.
The investigations also led to Ranbaxy – then under Daiichi’s management control – being asked to pay $500 million in settlement to the US Department of Justice.
The arbitration court in its order further observed that Malvinder Singh had been hiding facts from the Daiichi since the beginning of talks for negotiations.
Malvinder Singh misguided Daiichi, with “carefully crafted language,” claiming that the DOJ investigations were merely a “fishing expedition.” and that it was a conspiracy initiated by its competitor Pfizer.
The court observed that these were not “honest answers”, and were aimed at coercing Daiichi into entering the consequent agreements.
The tale of lies and deceit, however, does not end there. As revealed by the order, earlier this year, the Singh brothers took it upon themselves to give the story a new spin. Responding to the tribunal, the brothers claimed that documents disclosed to Daiichi before the signing of share purchase revealed enough information to give them“cause” for concern about Ranbaxy being “corrupt.”
The promoters, trying to wash their hands off the problem, claimed that Daiichi ignored fraud concerns and decided to proceed with the purchase.
A claim that was shot down by the court by slapping the slapping of a Rs 3500 crore fine.
Source: The Indian Express
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