ICN, Chairman Settle 2 Sexual Harassment Suits

ICN Pharmaceuticals Inc. said Tuesday that it settled two lawsuits that charged its controversial and internationally known chairman, Milan Panic, had sexually harassed two female employees.

The confidential agreements, which the Costa Mesa drug manufacturer hopes will end years of allegations surrounding Panic’s behavior, came late Monday on the eve of a trial in one of the cases.

The settlements bring to four the number of lawsuits that ICN and Panic--who briefly served as prime minister of Yugoslavia in the early 1990s--have settled with female employees in recent years.

Settlements with two other women were reached before they resulted in lawsuits.

Analysts predicted Tuesday that the settlements, to be paid by the company, will not materially hurt ICN’s bottom line.

Eugene Melnitchenko at Sutro & Co. said the shaky outlook for ICN’s business in Yugoslavia and Russia--roughly 40% of its revenue--remains investors’ biggest concern.

Earlier this year, ICN took a $130-million charge to account for losses it incurred from the Yugoslav government, which defaulted on $39 million in notes payable for drugs and supplies sold to state medical institutions.

In New York Stock Exchange trading Tuesday, ICN shares fell $1.81 to close at $22.31.

Both Panic and the women insisted Tuesday that they would have prevailed at trial and continued to trade barbs in interviews and in strongly worded written statements.

At a news conference at ICN’s headquarters, the 68-year-old Panic made a brief appearance and said he did “nothing unwanted” with any of his employees.

“We have 12,000 women in this company, and we have six cases against me,” he said. “I am a perfect target. In none of the cases has it been proven that I did anything wrong.”

Philip Kay, the attorney for former human resources director Mary Martinelli--whose lawsuit was set to go to trial Monday--and another plaintiff, Michelle McKenney, said nothing has been proved in court because ICN and Panic settled the cases before a jury could hear them.

In their lawsuits, both women contend that they rebuffed sexual advances made by Panic and were retaliated against as a result. As part of her settlement, McKenney resigned.

Martinelli said the settlement offer was “too good too pass up.”

“Although I wanted a jury to see the parade of women who I believe had suffered harassment like I did, I realized that ending this nightmare for myself and my family was more important,” Martinelli said in a statement.

Kay said ICN and Panic settled to spare themselves the embarrassment of a high-profile trial and were willing to pay a “substantial” amount.

“When a defendant pays this kind of settlement, [guilt] is implied in the amount,” Kay said.

A jury of eight women and four men had sat in a corridor of Orange County Superior Court for more than a day waiting for opening arguments in the case to begin. Serious settlement talks began after the jury was selected, Kay said.

ICN attorneys said the agreement came about because the Martinelli trial was expected to last at least five weeks, which they say would have made it impossible for Panic to continue to run the company.

ICN’s board had formed a special committee of directors to oversee its handling of the sexual harassment allegations against Panic.

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Times staff writer Barbara Marsh contributed to this report.