For four years before he began his presidential campaign, former California Gov. Edmund G. (Jerry) Brown Jr. served on the board of a biomedical firm whose parent company paid a $400,000 penalty to settle federal charges that it falsely promoted an anti-AIDS drug.
Brown, who has made his support of AIDS patients a prominent feature of his bid for the Democratic nomination, held a $20,000-a-year directorship in a company run by longtime supporter Milan Panic. Panic was the biggest contributor to a political action committee set up to support Brown's political activities after he left the governorship in 1983.
In a series of interviews Saturday, Brown first disclaimed any detailed knowledge of Panic's legal problems and then said, "I categorically reject" any charge of fraud against him.
Brown also disclosed that during the controversy, he called Rep. Henry A. Waxman (D-Los Angeles), chairman of the House Energy and Commerce subcommittee on health and the environment, asking for Waxman's help in Panic's dispute with the Food and Drug Administration.
Last May, ICN Pharmaceuticals Inc., the parent company of Panic's network, agreed to pay a $400,000 penalty to the government and $200,000 in expenses to settle civil charges that it violated federal laws in promoting the drug ribavirin as a treatment for the AIDS virus, according to news reports at the time. The company made no admission of wrongdoing.
The subsidiary on whose board Brown served, ICN Biomedicals Inc., was not named in the litigation and was not involved in the development or marketing of ribavirin, company officials said. Colleen P. Mahoney, chief counsel of the Securities and Exchange Commission's enforcement division, said Brown's "name did not come up in the course of the investigation." ICN Biomedicals, which produces and sells chemicals and biomedical instruments, is 78% owned by ICN Pharmaceuticals, and Panic is the chairman of both corporations.
Brown said he accepted Panic's invitation to go on the board because "I wanted to get a private-sector perspective on how business functions." He joined the subsidiary months after the FDA had rejected ICN's claims for ribavirin and a congressional subcommittee had heard a hospital official testify that ICN representatives made a "sleazy and illegal" proposal that he use the drug on AIDS patients without FDA approval.