IF A bulk of Appleby’s revelations are related to corporates and their offshore dealings, one set of papers highlights a potential conflict-of-interest transaction involving top medical practitioners.
Records investigated by The Indian Express show that in 2004, Dr Ashok Seth, chairman of Fortis-Escorts — honoured with the Padma Bhushan and Padma Shri – was given shares by a Singapore-based company that manufactures stents, before the company went public.
Subsequently, Seth prescribed these stents to his patients and cashed in on these shares.
The company in question is Biosensors International Group Ltd, a Singapore-listed company, which manufactures and markets medical devices for interventional cardiology and critical care procedures.
According to its annual report, Biosensors International Group Ltd was incorporated in Bermuda on May 28, 1998 and was listed on the Singapore Exchange Securities Trading Limited (SGX-ST) on May 20, 2005. The company is not subject to income tax in Bermuda pursuant to tax exemption granted until the year 2035.
When contacted, Seth told The Indian Express that he kept the shares of Biosensors for three years and made a profit of Rs 54 lakh on them when he sold them.
The share offer to Seth and doctors from USA, Germany, Singapore, Japan and Indonesia — at least 13 grants were offered, some in 2007 — are detailed in minutes of meetings of Biosensors Board of Directors
Records of the minutes of the Board meeting dated October 19, 2004, mention that Seth was being offered 5,000 shares of the company “immediately vesting upon issuance” for $90,000.
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Subsequently, minutes of a Special General Meeting held on January 28, 2005 show that it was decided that each share would be divided into 50 and, thus, the offer of stocks to Seth increased to 250,000 shares.
Asked about the potential conflict of interest, Seth said he had an offer of purchase of 5,000 shares in October 2004 which he says he did not take up. He, however, admitted that he took up the offer nine years later, in April 2013 and paid the same $90,000 for them.
Evidently, he was able to exercise the stock option in 2013 which had been approved by at the Board meeting of the company in 2004.
Seth told The Indian Express he sold the shares of Biosensors International Group Ltd in April 2016 and thus held them for a period of three years. What is important is that when Biosensors International Group, Ltd was listed on the SGX-ST on May 20, 2005 its share price was US $0.371. And according to stock market data, the price of the company’s share in April 2013 was US $1.23. So the market value of the 250,000 shares was US $247,954 (Rs 1.51 crore at the 2013 exchange rate).
Seth admits this but gives the value of the Biosensors International shares as Rs 1.39 crore. More importantly, he sold the shares in 2016 for “approximately” Rs 1.03 crore (since the price was down) and made a profit of Rs 54 lakh on the purchase. He says he has declared the transactions in his tax returns.
Seth claims that he got the shares because “advancements in technology and better and safer stents for treatment of patients have only happened by combining advanced practical knowledge and expertise of doctors with the bio medical engineers of device companies.”
He said that Biosensors developed an innovative stent named ‘Biomatrix’ which he used to “benefit my complex patients in anywhere between 3-15% of my angioplasty patients upto 2012.”
“During the time I possessed the shares of Biosensors, from April 2013 to August 2013, I used only seven Biomatrix stents. From August 2013 to April 2016, nil Biomatrix stent or Biosensors product was used by me. Neither did I give any lectures related to this product. If required, I declared this shareholding at scientific peer meetings, I also had no role in purchase or pricing of this product at any stage. I did this because even though my shareholding in Biosensors was miniscule and is generally not considered as financial interest in a public limited company, I felt it may be construed as a conflict of interest and hence did not use any Biosensors products when I possessed these shares.
“Throughout my career I have strongly believed, practiced and advocated that the treatment I give to the patients has to be the best evidenced based practices,” Seth said.