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The crucial “closed-door meeting of the board of directors” referred to by whistleblower Dinesh Thakur in his testimony against Ranbaxy didn’t take place at all, if one goes by Ranbaxy’s official filings. It turns out there was no board meeting held in September 2004 in Thailand, or anywhere else, as claimed by Thakur, according to Ranbaxy’s annual report for 2004.
“During the year 2004, five board meetings were held — January 23, April 22, June 25, July 30 and October 15.” The dates of board meetings were fixed in advance and agenda papers were circulated to directors seven days before the meeting, according to the annual report.
A legal battle is brewing between Ranbaxy’s former shareholders and the company’s current owners, Daiichi Sankyo. Though an informal meeting of directors could have been held without following prescribed procedures such as advance notice and circulation of agenda, the legal validity of such a meeting isn’t very clear.
Thakur did not immediately respond to an email seeking comment on the board meeting.
In his testimony, Thakur claimed the ongoing fraudulent practices in the company were reported to the senior management by his boss, Rajinder Kumar, then head of the company’s research and development division. “On or about September 21-24, 2004, during a closed-door board-of-directors meeting in Thailand, Kumar had addressed the board about the data falsification,” Thakur’s testimony, filed with the US District Court of Maryland, stated.
It added ahead of the meeting Thakur had prepared a “spreadsheet and other documents illustrating the drugs impacted and the issue(s) with the defendant’s (Ranbaxy) false data” for Kumar, who notified the board members about the investigation by Thakur, as well as the systemic fraud in formulation, bioequivalence, and stability filings with regulators in the US and other countries to obtain approval for the anti-retroviral and non-antiretroviral drugs in Ranbaxy’s portfolio.
The meeting is crucial, as it implicates the senior management and the board, including the independent directors, suggesting their knowledge and involvement in the alleged data falsification and other malpractices the company has pleaded guilty to in US courts.
Earlier this week, Daiichi said it would explore legal options against “former shareholders” for concealing material information at the time of the deal (2008). Former chief executive Malvinder Mohan Singh rejected all charges, saying “to plead guilty” was Daiichi’s business decision and a testimony wasn’t a statement of facts.
Harpal Singh, earlier part of the company’s board, says to the best of his knowledge, there was no board meeting in Thailand. Another director who served on the Ranbaxy board for long insisted not even an informal briefing was held in Thailand. He added he wasn’t aware of any presentation by Kumar. An independent director on the board in 2004 said, “The US FDA probe was known to everyone. There were concerns about quality, which is normal to the business. But there was no information about fraud or faking of data.”
The only meeting held in September 2004 was that of the audit committee. And, the annual report said the audit committee met on September 28. This committee had five members —Tejinder Khanna, Vivek Bharat Ram, Vivek Mehra, Harpal Singh and Surendra Daulet Singh. It also included DS Brar, Brian Tempest and Malvinder Mohan Singh as permanent invitees.
Whether Thakur had referred to this meeting wasn’t clear. However, the brief of the audit committee does not extend beyond financial reporting and auditing matters.
A second meeting Thakur refers to in his testimony is recorded in the annual report. According to Thakur, in December 2004, Kumar had made another presentation, this time to the board’s scientific subcommittee. This committee comprised three members — independent director PS Joshi, then chairman Tejinder Khanna and then chief executive Brian Tempest. The committee, whose terms of reference include approval of focus areas of research and laying down a policy framework for collaborative research and development programmes, met on October 14 and December 21 2004. Malvinder Mohan Singh, Nityanand and Thakur’s boss and research and development head Kumar were permanent invitees to this committee.
According to Thakur’s testimony, Ranbaxy’s senior management had requested Kumar to destroy the evidence of the fraud.
