Ranbaxy's Singh brothers told to pay Rs 2,562 crore fine to Daiichi

Arbitration court rules against former Ranbaxy owners for hiding facts during the 2008 buyout

An arbitration court in Singapore has ordered Malvinder Singh and Shivinder Mohan Singh, former owners of Ranbaxy Laboratories, to pay damages worth Rs 2,562.78 crore (based on Thursday's exchange rate) to Japan's Daiichi Sankyo Co. Malvinder Singh, currently chairman of Fortis Healthcare, and his brother Shivinder Singh will have to pay the fine for concealing and misrepresenting facts from the Japanese drug giant when it purchased about 35 per cent stake in Ranbaxy from them in 2008.

The court has ruled that the Singh brothers did not share information with Daiichi on investigations into Ranbaxy by the US Department of Justice (DOJ) and Food and Drug Administration (FDA). The arbitration court gave this judgment last week. It has issued an award by a majority of 2:1 in favour of the claimant.

In 2013, Daiichi had filed an arbitration case in Singapore, accusing the Singh brothers of concealment and misrepresentation of facts, after Ranbaxy paid $500 million to the DoJ as settlement for misrepresenting facts.

The 2008 agreement between Daiichi Sankyo and the former promoters of Ranbaxy had a provision that any future arbitration related to the deal would be pursued in Singapore, in accordance with commercial arbitration rules.

The arbitration dispute was between Daiichi Sankyo and sellers of shares of erstwhile Ranbaxy Laboratories, which includes RHC Holding and Oscar Investments. Ranbaxy was subsequently purchased by the Dilip Shanghvi-led Sun Pharma, while the Singh brothers control a majority stake in RHC Holding and Oscar Investments.

RHC Holding said in a statement that the former owners were considering challenging the verdict.

In 2008, Daiichi Sankyo had bought the entire 34.82 per cent stake in Ranbaxy from its promoters in a $4.6-billion deal. Five years later, in 2013, Ranbaxy had to pay a fine of $500 million to the US authorities after it pleaded guilty to fraudulent activities and misrepresenting data to seek fast drug approvals.

BIG BLOW FOR SINGH BROTHERS

• 2006: US FDA issues warning letter to Ranbaxy’s Paonta Sahib facility
• 2007: A whistle-blower’s lawsuit alleges Ranbaxy defrauded Federal programmes
• Jun 2008: Daiichi Sankyo acquires majority stake in Ranbaxy
• Sep 2008: FDA imposes import alert on Ranbaxy’s Paonta Sahib and Dewas factories; bans 30 drugs
• May 2013: Criminal charges filed; Ranbaxy agrees to pay a fine of $500 million
• Sep 2013: US bans imports from Ranbaxy’s new formulations factory in Mohali
• Nov 2013: Daiichi Sankyo accuses Singh brothers of hiding information regarding investigations, files a case in Singapore court
• Jan 2014: US FDA bans imports from Ranbaxy’s main API factory in Toansa
• Apr 2014: Sun Pharmaceutical  acquires Ranbaxy in a $4-bn deal
• Sep 2015: Shivinder Mohan Singh steps down,  joins Radha Soami Satsang Beas, an Amritsar-based spiritual organisation

In 2014, Sun Pharma agreed to buy Ranbaxy - which was then controlled by Daiichi - in a proposed $4-billion deal, including a debt of $800 million.

Currently, Malvinder Singh owns a majority stake in Fortis Healthcare - which runs 30 hospitals in the country; Fortis Healthworld - a pharmacy chain; Religare - a financial services company; SRL Diagnostics - a diagnostics chain, etc. On September, 2015, Shivinder Mohan Singh stepped down from his executive role in the companies and joined Radha Soami Satsang Beas, an Amritsar-based spiritual organisation.