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Russian businessmen fight over Indian company

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Dr. Reddy's Laboratories will no longer produce its medicines in Russia

In its previous publications PRAVDA.Ru has already informed its readers of all the problems of Russian pharmaceutical field, which is considered to be the most concealed and yet the most profitable area of our domestic economy. Several of our articles informed of a conflict which had arose between shareholders of Russia’s largest medicine manufacturer “Biomed”. One of the company’s major shareholders JSC “Biopark” (which holds 51% of shares) has addressed the Office of Public Prosecutor in regards to the actions administered by another shareholder with 46% of shares, Indian pharmaceutical company Dr. Reddy’s Laboratories LTD.

Company's present management has confirmed the fact that the company had suffered significant material loss due to the activities of Moscow's branch of Reddy's Labs with the help of Biomed’s director Yakushevich. Back then however, we were unable to receive any comments from the Indian party involved. In fact, they completely refused from providing any comments to PRAVDA.Ru concerning any of its future plans in Russia. However, soon after an article appeared in PRAVDA.Ru, we immediately received a comment concerning the situation from a company related to “Sistema.” As it turned out, it is them who intend to become future owners of the 46% packet of “Biomed” shares. Pyotr Perevoznikov, one of the managers of the “Sistema” subsidiary “System project” revealed to us his company's interests.

-The company “Dr. Reddy’s” refutes the fact that a criminal case has been filed against it. Their official statement which has been published on our site doesn’t appear to be quite clear though. It is unclear whether the company refutes the actual fact of having a criminal case against it or the fact that it is the company itself that should be held responsible.

-The case has been filed based on the article of “fraud” on the basis of “Biopark’s” official claim. According to JSC “Biopark”, in the course of the process of privatization of the entire packet of shares by the Indian company, fake documents have been submitted to the Federal Property Fund. The documents proved the fact that Dr. Reddy’s Laboratories had fulfilled the 4th clause of the privatization program. Consequently, according to “Biopark”, the Indian company has got a hold of the aforementioned shares illegally. One shouldn’t confuse the position of “Biopark” and the real situation. The fact that a case’s been filed doesn’t say much; special investigation will be conducted to check all the information. Being a lawyer myself, I can say that the case seems to be well fabricated. The case file already includes documents proving the absence of the fact of forgery of any sort of paperwork; and if there is a lack of forged docs, the fraud is considered nonexistent either. In addition, the fact that the Indian party has totally fulfilled its obligations, has been confirmed by “Biomed” itself and double-checked by the Property Fund.

As far as the status of Dr. Reddy’s Labs in this lawsuit is concerned, in connection with the Russian legislation, organizations cannot be merely natural persons; this in turn excludes the possibility of the company being sued on such grounds. Directors and staff of Dr. Reddy’s Laboratories have not been faced with any official accusations either. Company’s former general manager who is currently a member of the director’s board of “Biomed” Yuri Evgenievich Yakushevich is considered the main suspect so far. However, we still do not possess any exact claims against him.

-And what about "Dr.Reddy’s" position in regards to the statement?

-They assume that the privatization has gone in accordance to the law and that they have completely fulfilled their obligations outlined by the program. They provided a final audit copy including all the expenses made in accordance with the 4th clause of the program, in other words there was no fraud to begin with. Consequently, we think that this criminal case has no perspective.

An in order to settle the matter, shareholders could just as well use civil law courts or arbitrage. It is still unclear though why Mr. Mogutov (currently the head of Biomed’s Board of Directors, who controls 51% of the shares) preferred to settle the case in criminal court. Perhaps, this was done to pressure Dr, Reddy’s to make the company sell its shares to Mogutov’s organizations…

-Have you officially notified? Since such claims cannot be considered unilaterally.

-The claim hasn't been considered yet. They have only filed all the paperwork. Legally, if the claim is filed against a foreign company, a copy of the official documents is forwarded to the Russian branch of that company; and in case a company doesn't have a branch in Russia, then the paperwork goes to the Ministry of Justice through various embassy services and councils. Dr. Reddy's has a branch here in the Russian Federation, but probably Mr. Mogunov has deliberately concealed his awareness of such fact in his claim. And probably the arbitrage has sent the claim all the way via the “official” way. It has come to our knowledge post factum that the court had arrested Dr. Reddy's shares.    
-Now all of these legal matters concern you too, correct? Is it true that "System project", which you represent has signed an agreement with "Dr. Reddy's" not so long ago regarding the sale of 46% of their shares?

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