ICN Sues Serbia, Yugoslavia Over Unit’s Takeover

ICN Pharmaceuticals Inc., whose chairman and founder is a bitter political foe of Yugoslav President Slobodan Milosevic, said Wednesday it has filed a $500-million lawsuit against Yugoslavia and Serbia over the takeover of an ICN subsidiary.

The U.S. government already has condemned Belgrade’s takeover of ICN Yugoslavia, the largest pharmaceutical company in that torn nation. Costa Mesa-based ICN Pharmaceuticals says it has a 75% stake in ICN Yugoslavia.

U.S. State Department spokesman James Rubin said the takeover was an attempt by Milosevic to silence opponents, including Milan Panic, the Serbian-American president of ICN Pharmaceuticals who once served as Yugoslavia’s prime minister.

The State Department also charged that Milosevic’s government engineered the takeover to avoid paying more than $175 million owed to ICN Yugoslavia for medicines provided to the state health care system.

“What happened over the weekend was theft, pure and simple,” ICN lawyer Arnold Burns told a news conference in Washington, D.C. “This action on the part of the [Yugoslavian] government is a transparent attempt on its part to avoid responsibility for the debt.”

ICN filed suit in U.S. District Court in Washington under terms of the Foreign Sovereign Immunity Act, which regulates private claims of U.S. businesses against foreign governments.

If the pharmaceuticals maker prevails, the act--supported by an international treaty that Yugoslavia has signed--would permit ICN to seize assets of the Yugoslavian government that are being held in the U.S.

David Watt, ICN’s chief legal officer, said various Yugoslavian assets--including cash banking accounts, securities and gold bullion--have been frozen in the U.S. since the Bush administration imposed sanctions on the Balkan nation in 1992.

ICN’s suit alleges that the Belgrade government engineered the illegal transfer last year of the majority of ICN’s ownership interest in the Yugoslavian company to the State Health Fund of Serbia. It alleges that armed police and paramilitary troops took over the ICN Yugoslavia headquarters near Belgrade on Saturday and forcibly removed managers from their offices.

A number of managers were detained and questioned by police in Yugoslavia, Watt said. The plant’s chief financial officer, Zoran Vasic, was held for two days before being released Wednesday.

“He was told not to leave Belgrade,” Watt said, adding that many other management employees of ICN Yugoslavia “have been told they will be detained and questioned” in coming days.

ICN is seeking damages for the loss of majority ownership in ICN Yugoslavia and loss of revenue. The company also seeks a declaration that the transfer to the state health fund is null and void.

“There’s a rogue regime running Yugoslavia,” Burns said. “It’s time for the courts to say ‘enough.’ ”

The government of Yugoslavia said last week that it controls 65% of ICN Yugoslavia, thus reducing ICN’s stake to 35%. The government said the size of its stake allows it to appoint the management of the company.

ICN’s worldwide sales in 1997 totaled $752.2 million, more than double its sales in 1994, with about $200 million coming from the Yugoslav subsidiary. But ICN sharply curtailed the plant’s operations last year as the government stopped paying for drugs and currency devaluations sapped demand in its main markets.

Burns said ICN’s Belgrade operations were overrun by 200 heavily armed police and paramilitary officers Saturday. The company has more than 2,000 workers there loyal to ICN and is “very concerned” about their safety, he said.

Panic, who runs ICN, is a Serbian-born naturalized American citizen who served as Yugoslavia’s prime minister in 1992.

Relations between Belgrade and ICN soured last year when the State Health Fund of Serbia defaulted on $39 million in notes payable to ICN.