Russia files criminal case against Dr Reddy's

The office of the Public Prosecutor of the Moscow region in Russia has launched criminal proceedings against Dr. Reddy's Laboratories following the company's alleged failure to implement an investment programme.

According to a report in Pravda, a Russian language newspaper, on Wednesday, Dr Reddy's had failed to "implement the investment program that the company announced during the investment competition to sell 35 per cent of voting stock of the authorised capital of JSC Biomed in 1995".

"The Property Fund of the Moscow region conducted the competition in February 1995. Dr Reddy's Laboratories 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 undertook an obligation to organise the sales and marketing for JSC Biomed on the territory of the Russian Federation in the sum of $8 million," the report said.

"However, as the claimant, 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 organise the sales and marketing of Biomed's products in Russia and abroad," the report said, citing a statement from the prosecutor's office.

When contacted, Dr Reddy's spokesman, Pratap Antony, said the company had no immediate comment.

Yet, according to the statement, Dr. Reddy's and the former administration of JSC Biomed presented several documents to experts of the workgroup, the report said.

The documents deliberately misled the experts to create the semblance of the investment program's implementation, the report added citing the statement.

The claimants argue that Dr Reddy's, 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, it added.