Companies & Sectors
Ranbaxy pleads guilty to felony charges; to pay $500 million in US lawsuit settlement

Ranbaxy USA pleaded guilty to “felony charges” relating to manufacture and distribution of certain adulterated drugs. The generic drugs at issue were manufactured at Ranbaxy’s facilities in Paonta Sahib and Dewas in India

 
Pleading guilty to “felony charges” relating to manufacture and distribution of certain adulterated drugs made at two Indian units, the US subsidiary of Ranbaxy on Monday agreed to pay $500 million—the largest settlement with a generic medicine maker till date.
 
The US Justice Department said in a statement: “In the largest drug safety settlement to date with a generic drug manufacturer, Ranbaxy USA, a subsidiary of Indian generic pharmaceutical manufacturer Ranbaxy Laboratories, pleaded guilty on Monday to felony charges relating to manufacture and distribution of certain adulterated drugs made at two of Ranbaxy’s manufacturing facilities in India.”
 
“Ranbaxy also agreed to pay a criminal fine and forfeiture totalling $150 million and to settle civil claims under the False Claims Act and related State laws for $350 million.”
 
Ranbaxy USA pleaded guilty to three felony counts under Federal Food Durg and Cosmetics Act, and four felony counts of knowingly making materially false statements to the Food and Drug Administration (FDA). The generic drugs at issue were manufactured at Ranbaxy’s facilities in Paonta Sahib and Dewas in India.
 
As part of the case’s resolution, the whistle-blower, a former Ranbaxy executive Dinesh Thakur will receive about $ 48.6 million from the Federal share of the settlement amount.
 
Ranbaxy shares recovered from their early losses and were trading 0.85% higher at Rs443.85 apiece on the NSE in mid-morning trade today.

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High Mark to sell 250 million records to another credit bureau?

High Mark Credit Information Services' promoter Prof Dr Pandya is negotiating with another credit bureau for an asset sale including about 250 million records collected from members. This is a gross violation of CIRC Act, alleges a former employee in a complaint to the regulator

 
Troubled and cash-strapped High Mark Credit Information Services Pvt Ltd, (High Mark Credit Bureau), one of the four credit information companies (CICs) in India licensed by the Reserve Bank of India (RBI), is negotiating with other credit bureaus to do an asset sale including 250 million records collected from member institutions, says a complaint. A former employee of High Mark has filed this complaint to the finance minister, RBI governor D Subbarao, secretaries from the finance ministry and financial services alleging gross violations in the proposed asset sale of the credit bureau.
 
Following the exit of several of its top managers and the failure of its rights issue last year, the credit bureau is under severe financial stress. Earlier, its promoter Prof Dr Anil Pandya, who lives in the US, tried to rope in a foreign rating agency to put in additional capital. However, it did not materialise.
 
This time Prof Dr Pandya is negotiating with an Indian credit bureau for the asset sale to circumvent any regulatory permissions. “If this (asset sale) goes through, then all the proceeds from asset sale would remain at Prof Dr Pandya's discretion, while the shareholders would get nothing until the company is liquidated. In short, after the asset sale, High Mark would have a license and cash but no business,” the complaint says.
 
The ex-employee pointed out that due to mis-management or absence of any management, High Mark, is at a stage where its existence is at stake. “This in turn jeopardizes the valuable records of various financial institutions including public sector banks, cooperative banks, micro finance institutions, etc. This also is a gross violation of the Credit Information Companies Regulations Act, 2005 (CICRA), as the data is collected after signing individual agreements with member institutions. The asset sale is being designed in such a way so that it would not require any approval from the RBI,” the former employee said.
 
Moneylife sent a mail to Prof Dr Pandya and would incorporate his reply as and when we receive it.
 
High Mark is the only bureau started by individuals. Prof Dr Pandya, whom the board designated as the executive chairman, started the business with nominal capital. While Prof Dr Pandya continued to be a tenured full Professor at the College of Business, Northeastern Illinois University in Chicago, and an Adjunct Professor at Northwestern University Kellogg Graduate School of Management, he was also appointed as executive chairman at High Mark.
 
While High Mark never appointed Prof Dr Pandya on a whole-time basis, he was able to continue teaching in the US as well work with the credit bureau on a part-time basis. As per the Credit Information Companies Regulations Act, 2005 (CICRA), when a credit bureau appoints a chairman on a part-time basis, it then must have a managing director or full-time director to look after the management and affairs of the bureau. 
 
According to our sources, High Mark violated CICRA as well as Companies Act, while appointing Prof Dr Pandya as its executive chairman. The issue was first raised by Siddharth Das, former chief operating officer (COO) of High Mark, before the company’s board. But the board apparently ignored it. Subsequently, Das sent a legal notice raising this issue. Ajay Kohli, former chief executive of High Mark, tried to bring this to the attention of the board. This too was ignored.
 
Earlier, High Mark was negotiating with Italy-based CRIF credit bureau for a bailout. We learned that CRIF executives had already met senior executives to assure them of support and continuity after takeover. However, there is no news on this front.
 
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Competition Commission probing IATA for unfair practices

Self-acquired regulatory power for registering, accrediting and regulating the engagement of air cargo agents in India is alleged to have enabled IATA to indulge in anti-competitive activities, the CCI said

 
Competition Commission of India (CCI) is probing allegations of anti-competitive practices in air cargo transportation services against the International Air Transport Association (IATA) and its domestic unit IATA (India).
 
The Commission has ordered its director-general (DG) to investigate the complaint filed by the Air Cargo Agents Association of India.
 
The allegation pertains to cargo agents being required to seek accreditation from IATA to carry out international air cargo transportation services for the latter’s member carriers. A trade association of airlines, IATA accounts for about 84% of total air traffic worldwide.
 
“ ...the Commission is of the opinion that the decisions/resolution prescribing the rate of commission to be paid to the intermediaries or similar other decisions pertaining to prices/charges were prima facie in contravention of Section 3(3) of the (Competition) Act,” it said.
 
As per Section 3(3), an agreement entered into between enterprises, which determines purchase or sale price, directly or indirectly, is presumed to have an appreciable adverse effect on competition.
 
Going by the air cargo agents’ complaint, the practice of accreditation “was without any authority of law“.
 
“This self-acquired regulatory power for registering, accrediting and regulating the engagement of air cargo agents in India is alleged to have enabled Opposition Party 1 (IATA) to indulge in anti-competitive activities,” it had alleged.
 
The CCI said even though IATA is not based in the country, Section 32 of the Act provides extra-territorial jurisdiction to investigate matters having appreciable adverse effect on competition in India.
 

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