Russia » Economics
Author`s name Ольга Савка

Criminal case filed in the Moscow region against the leader of the Indian pharmaceutical industry

The company failed to implement the investment program 

The Office of the Public Prosecutor of the Moscow region instituted criminal proceedings against Indian company Dr. Reddy's Laboratories Ltd. The proceedings were executed on the fact of the company's failure to implement the investment program that the company announced during the investment competition to sell 35 percent of voting stocks of the authorized capital of JSC Biomed in 1995.

The Property Fund of the Moscow region conducted the competition in February of 1995. The company Dr. Reddy's Laboratories Ltd. (India), which takes leading positions in the pharmaceutical business of both India and in the whole world, was named the winner of the competition. The company suggested an investment of $9.931 million as well as a four-stage investment program.

Pursuant to the investment program, Dr. Reddy's Laboratories Ltd. undertook an obligation to organize the sales and marketing system for JSC Biomed on the territory of the Russian Federation in the sum of $8 million.

According to the purchase and sale contract, which was signed as a result of the competition between the Property Fund of the Moscow region and the company Dr. Reddy's Laboratories Ltd., the buyer - Dr. Reddy's Laboratories Ltd. – confirmed its obligation to implement the investment program.

However, as the declarant, the company Biopark (one of Biomed's shareholders), states, the investment program has not been implemented. The statement says that the interdepartmental committee, which was set up by the Ministry for Finances of the Moscow region and the Property Fund of the Moscow region in July of 2000, did not find “any financial documents to prove the execution of the plan to organize the sales and marketing of Biomed's products in Russia and abroad” (the act of the committee is dated July 12th).

Yet, the statement runs, the company Dr. Reddy's Laboratories Ltd. and the former administration of JSC Biomed presented several documents to experts of the workgroup. The documents deliberately misled the experts to create the semblance of the investment program's implementation.

Spokespeople for the enterprise confirmed to us that the administration of the company Dr. Reddy's Laboratories Ltd. with the help of the former general director of JSC Biomed, Yu.Yakushevich, has caused considerable financial damage both to the enterprise and to the state on the whole, as it did not receive sales taxes from the company's products.