Allegations fly as boardroom battle at Elan gains intensity
Published 11/09/2010 | 05:00
THERE was opposition by some senior Elan directors to initiating a review of certain corporate-governance issues at the firm earlier this year, before the company agreed to hire US lawyers to do so.
The revelations come as Elan reported one of its dissident non-executive directors, Jack Schuler, to the US Securities and Exchange Commission (SEC), alleging market abuse in relation to share dealings.
Eventually, it was agreed that the Atlanta law firm McKenna, Long and Aldridge would undertake the independent review, details of which are due to be presented to the board next week.
However, the law firm had been paid by Elan just months earlier to assess its general corporate-governance compliance and had issued the company with a clean bill of health.
The revelations come as Elan reported one of its dissident non-executive directors, Jack Schuler, to the SEC watchdog with market-abuse allegations related to share dealings.
In an increasingly acrimonious dispute, Elan also secured a High Court injunction this week preventing Mr Schuler and non-executive director Vaughn Bryson from launching their own investigation into governance matters at the company in parallel with the McKenna Long review.
Legal action against the pair, both of whom are respected pharmaceutical industry veterans, was also taken against them by Elan in the US. Elan has accused them of violating their fiduciary and contractual obligations to the company.
Mr Schuler owns more than five million shares in Elan, representing 1pc of its stock. Mr Schuler and Mr Bryson's lawyer has said the allegations are "completely meritless". Mr Schuler was not contactable yesterday.
Part of the review being undertaken by McKenna Long relates to a transaction involving Irish firm Azur Pharma.
Elan sold the US rights to its Prialt pain-relief treatment to Azur earlier this year. Azur is headed by former Elan executive Seamus Mulligan.
Activist investor Ib Sonderby has questioned what he says was the low price paid by Azur for Prialt, noting that some members of the Elan board had a beneficial interest in Azur. He has also proposed four new board members for Elan, saying the company needs candidates with strong experience in the pharmaceutical industry.
This week, Elan chief executive Kelly Martin rounded on Mr Sonderby, telling shareholders that there was a rigorous sale process for Prialt and that Azur was not controlled by Elan directors.
He said three serious bidders emerged for Prialt and that Azur won the US rights based on price and terms that were favourable to Elan.
He added that three Elan directors collectively owned less than 1pc of Azur and that they excluded themselves from any substantive board discussions or decisions on Prialt.