NEWS OF THE WEEK
FORMER DOW EXECUTIVES FIGHT BACK LAWSUIT: Dismissed pair is denyini company's accusations of betraya Kreinberg
Reinhard
T
WO DOW CHEMICAL executives fired last month for supposedly engaging in a conspiracy to sell the company are on the offensive. They have filed lawsuits claiming that the company made the allegations as a pretext to fire them because they were deemed a threat to CEO Andrew N. Liveris. The two executives are Romeo Kreinberg, an executive vice president, and J. Pedro Reinhard, a director and former chief financial officer. Dow fired them on April 12 for "unauthorized discussions with third parties about the potential sale of the company" (C&EN, April 30, page 21). In a suit filed in New York Supreme Court, Kreinberg seeks $600 million in damages. Reinhard has filed a suit in U.S. District Court for the Southern District of New York seeking $75 million. Dow is suing the executives in U.S. District Court for the Eastern District of Michigan to recover recent compensation made to the defendants and to obtain a declaration that it has no further financial obligations to the defendants. At the center of the cases is James Dimon, CEO of J. P. Morgan Chase. According to court filings, he flew to Midland, Mich., on April 9 to have dinner with Liveris at a local country club. An article had just appeared in the British tabloid Sunday Express claiming that J. P. Morgan was backing a leveraged buyout of Dow. The next day, Dimon furnished information to Dow implicating Kreinberg and Reinhard in talks with officials from J. P. Morgan's London office. Two days later, both Kreinberg and Reinhard were called into meetings with Liveris and were fired after
refusing to resign. Kreinberg's suit says he wasn't given a chance to review Dow's evidence or defend himself against the allegations. Reinhard likewise says he was given no details about the information against him. Both men deny they were in unauthorized talks to sell the company. Kreinberg's suit says Dimon even told Dow that the supposed talks were "unstructured and informal" and "no different from those typically held among bankers and industry businessmen." Both fired executives say Dow used the J. P. Morgan incident as an excuse to get them out of the way. Kreinberg says Liveris perceived him as a threat because of his success as an executive and because his "willingness to challenge the opinions held by his CEO was anathema to Liveris and his management style." Kreinberg says Liveris sent him a letter in March threatening to fire him over his "negative body language" and "bad attitude." Reinhard's suit alleges similar motives. It says the CEO viewed him as a "hindrance" because of his experience and "willingness to stand up to Mr. Liveris." The suit adds that Dow "used these false charges as a pretext to squelch a knowledgeable and independent voice on the Dow board." The suits claim that Liveris maligned the executives' reputations by making definitive pronouncements about their guilt despite having only the word of Dimon as evidence. Dow admits that it fired the men solely on the word of one person but says it subsequently confirmed it with sources in other organizations.—ALEX TULLO
INTELLECTUAL PROPERTY Brazil breaks patent on Merck's AIDS drug Merck & Co. says it Is "profoundly disappointed" by Brazil's decision to break the patent on a key AIDS drug made by the U.S. pharmaceutical giant and buy a less expensive generic version of the medicine from India. On May 4, Brazilian President Luiz Inacio Lula da Silva authorized his country's Ministry of Health to issue a "compulsory license" for efavirenz, a move that allows a country to manufacture or import generic copies of patented drugs while paying the patent holder only a small royalty.
Lula acted shortly after the Brazilian government rejected Merck's offer to reduce its price for efavirenz, sold as Stocrin, from $1.59 per pill to $1.10. Brazil wanted to purchase the drug at the same 65 cents per pill that Merck charges Thailand. Lula said World Trade Organization rules allow developing countries to issue compulsory licenses to combat public health emergencies. Brazil has been pushing for lower drug prices to limit the cost of a government-run program
WWW.CEN-0NLINE.ORG
\2,
MAY 14, 2007
that provides free medicines for people infected with the AIDS virus. Merck is urging Brazil to reconsider its decision and wants further negotiations. But the company also defends its pricing practices, asserting that Brazil has a greater ability to pay for AIDS medicines than other countries that are poorer. "We believe it is essential to price our medicines according to a country's level of development and HIV burden," Merck says.-GLENN HESS
