Isaac Kaye

Background

Isaac Kaye was born in South Africa and came to Britain in 1985. He is an Irish citizen with Non-domicile status and has been a registered voter since 1991. He lives in a luxury apartment in Grosvenor Square, Mayfair, London (since 1990). In 2002, he is described by the Guardian as being a 'seventysomething multi-millionaire' who 'moved to Britain in 1985, took Irish citizenship and salted away a small fortune in a Channel Islands trust fund from a US business deal'. According to The Express, Kaye moved to Britain shortly after his partner Bernard Miller who arrived in 1982. In 2008, Kaye is reported to be 78 years of age

Kaye has a long history of involvement in drug companies. In South Africa in the 1970's his companies were CE Electro-Medical and Continental Ethicals. His first company in Britain was Harris Pharmaceuticals, which was later sold to the IVAX Corporation. Kaye's involvement continued with IVAX, where he held several senior positions, until his retirement in 2003. He was also the second largest shareholder of IVAX (as reported in 1998), with a stake worth $136 million.

Kaye's career has been riddled with scandal. From as far back as the 1980's 'gifts for influence' has been a recurrent theme(In both South Africa and Britain). His company also stands accused of price fixing through a cartel of drugs companies which is estimated to have defrauded the NHS of an estimated £400million and violation of workers rights have also featured through the barring of union activity (as unions are "not in line with company philosophy"!). See Isaac Kaye business activities for more details.

Kaye, the 'Smooth Talker'

Peter Goldberg, who is reported to have been Kaye's 'right-hand man', describes Kaye as having "pizzazz, fantastic gut feel for a gap or a deal. He's a people's man, a smooth talker. He knew everyone in Pretoria. If he needed to get to know someone he got to know them, even if he had to go through a ten foot wall." .

South Africa's Apartheid regime

Kaye was a supporter of the South Africa's Apartheid regime, the Afrikaner-led National party. Such claims are reported to be contested by Kaye’s lawyer. However, as Osler states, 'it was admitted that Kaye did back one National Party candidate on grounds of childhood friendship' (John Erasmus). Kaye is reported to have met Erasmus whilst he was in Rhodesia (now known as Zimbabwe), however little else is known about Kaye's time there. According to The Express, 'Erasmus served in the Rhodesian security forces after the whites-only government of Ian Smith declared UDI in 1965'.

Osler reports that Kaye also offered National Party minister for health Dr Lapa Munnik the 'use of cars to transport supporters to the polls at a crucial 1979 by-election'. Munnik is described as 'an apartheid stalwart who threatened to close Catholic schools if they dared to admit non-white pupils'. Kaye also served on the board of South African Druggists (1977-1982) whose 'executives were also seconded to assist the election efforts of the Afrikaaner-led National Party'. According to Peter Goldberg ('Kaye's right-hand man') Kaye had personally approved every gift or payment given, yet Kaye is reported to have 'no recollection' of supporting Munnik or Bornman (another National Party candidate who received support by Kaye). Kaye's laywer, Warren Roiter, states that the only South African political party Kaye had "financially aided" was the opposition Progressive Party and that Kaye 'is a warm supporter of the peaceful transition to a multi-racial democracy in that country'. yet claims to the contrary continues to mount.

An award-winning investigation by the South African journalist Martin Welz, also alleges that Kaye seconded one of his company's executives to campaign for another candidate, Gerrit Bornman. Bornman is reported to have told the Express that Kaye had been a "substantial" backer of the National party.

In The Express in 2000, Welz is quoted as saying that Kaye 'lived in the best suburbs, dined in the best restaurants and socialised in the best circles'. The Express article continues by reporting that Kaye 'had a large and beautiful house in the upmarket Sandton suburb of Johannesburg. It was obscured behind a large garden at the end of a long, gated drive'. Kaye is reported to have been careful to avoid personal publicity whilst in South Africa. Even in 2000, IVAX's company documents make no reference to his previous business activities in connection to South Africa.

Kaye appears to have moved from Rhodesia to South Africa in the 1970's with his partner Bernard 'Dusty' Miller. They are reported to have 'built up their Alumina Development group into a major supplier to hospitals' before selling it for £8.5million to South African Druggists in 1977. The Chemist and Druggist report that Kaye undertook his initial training as a pharmacist in the Rhodesian township of Bulawayo

Financing Labour

Kaye spent £5,000 in 1997 and 1998 on tickets for Labour gala dinners and donated £100,000 to Labour in 1999. He also gave £10,000 to the London mayoral campaign of Frank Dobson, the former Labour health secretary. According to The Guardian, the Labour party has declined to comment on its relationship with Kaye. He gave the Labour Party more than £5,000 in 2000.. The Express highlights the 'hypocrisy at the heart of New Labour', by reporting that Nelson Mandela addressed the Labour Party conference in 2000, a hypocritical move after receiving substantial funding from Kaye since 1997. According to the Express 'To accept even a penny from such a figure reveals a shocking lack of principle among the party hierarchy'.

In 2008, The Independent reports that Kaye donated nearly £15,000 to Peter Hain through the Progressive Policies Forum (PPF) think tank (which was set up three months after the launch of Mr Hain's campaign) to finance Hain's failed deputy leadership campaign. The Progressive Policies Forum was set up by John Underwood (former director of communications for the Labour Party, founder of Clear Communications and Business Development Director of Freshwater UK) in 2006 and 'channelled over £50,000 in donations and loans to Peter Hain's deputy leadership campaign'. The report continues by stating that the PPF 'has no staff, no board, no website and no published research'. Hain appeared as a guest of honour at Freshwater's table at a Labour fund-raising dinner and publicly praised Freshwater as a "modern, dynamic company" that he wanted to see go "from strength to strength". He is reported to have "absolutely no regrets" over his links to the company.

Hain is reported to have been an anti-apartheid campaigner, yet Kaye's support of the pro-apartheid National Party did not stop him from taking the money. This leads us on to a crucial question when it comes to the financing of political parties, a question of how morals and ideals can be swept aside in the process of securing finances. How 'money trumps principle every time'. As Monbiot states...

'You enter politics with the highest ideals and end up grovelling to multi-millionaires. Campaign finance is not the only reason for the corruption of leftwing political parties. But any system without a cap on individual donations encourages the mass abandonment of political programmes. You need to spend much less time and effort and money to secure thousands of pounds from a rich man than to shake it out of the piggybanks of hundreds of new members. Who can blame you if you adjust your programme to please the millionaires?'

In 2006 and 2007, 27% of Labour's money came from individual donations of more than £100,000. As Monbiot describes, 'Aside from the largesse of Lord Sainsbury and Lakshmi Mittal, almost all of this is City money, much of it from men who run private equity companies. To what extent this influences Labour's failure to tax the super-rich, we will never know - which is, of course, the problem'.

Kaye is also reported to have 'paid for new tennis courts at Chequers'

Gifts for influence

The Guardian reported that...

'Kaye was caught up in a "gifts for influence" scandal in South Africa during the early 1980s amid claims that doctors were being rewarded with everything from cars and TVs to swimming pool equipment and chandeliers for prescribing drugs made by his then firm. He denied any impropriety, saying the giving of presents was not an inducement but an appreciation'.

However the official inquiry into the scandal found that Kaye had "no scruples about applying dishonest or unethical methods". As his former employees claim, such 'gifts' were 'an essential part of an aggressive campaign "to win friends in high places"'. It was not only doctors who received 'gifts' but also academics who sat on the South African government's advisory panels, the head of the Medical Research Council and the minister of health.

This behaviour continued when Kaye came to Britain, as the Express report, 'Kaye's success in Britain, the row over Norton's sales tactics and his support of the government in power mirrors exactly what happened in South Africa'.

Norton Healthcare (Part of IVAX) has been condemned by the Association of the British Pharmaceutical Industry for offering "unnacceptable inducements". Also the awarding of a £990,000 grant to Norton to set up a new plant in London (to boost employment and promote investment) one week after it was revealed that Norton was to cease manufacturing in the UK and relocate to Ireland (cutting 500 jobs in the process) certainly raises some questions!

See Isaac Kaye business activities for more details.

NHS £400m rip-off?

When Frank Dobson was Health Minister he called on the NHS to save money by buying cheaper generic drugs, rather than expensive name brands. However, as NHS spending shifted to the generic drugs, their prices increased too - for instance, by 1999 the price of a pack of Norton Healthcare Thyroxine tablets had increased from £6.84 12 months earlier, to £44.89! As a result the NHS doesn't save money, but the IVAX Corporation makes huge profits. As stated by Osler, 'Such tactics saw Ivax’s profits rise over 70% in 2000, despite a 12% decline in turnover'. IVAX's "Easi-Breathe" inhaler has been named a Millennium Product by the Government and is displayed in the Dome. Norton Healthcare is reported to be 'the biggest supplier of generic drugs to the NHS'.

In 2002 The Guardian reported that, Kaye's company was 'raided by police investigating an alleged £400m rip-off of the NHS' and was 'one of six firms suspected of being involved in a price fixing cartel to push up prices charged to the NHS'. IVAX denied any 'wrongdoing'. After initial enquiries carried out by the Counter Fraud Directorate of the Department of Health, The Serious Fraud Office (SFO) began an investigation 'into a suspected conspiracy to defraud the NHS in relation to prices charged by suppliers for prescribed penicillin based antibiotics and warfarin between 1st January 1996 and 31st December 2000'. One of the antibiotics (called amoxycillin) is described as 'one of Britain's most commonly prescribed drugs' which the companies allegedly conspired to raise the price of, 'by up to 260 per cent'. The NHS reportedly spends £39million a year on amoxycillin and in the Evening Standards 'Experts are reported to have said that the NHS 'could have been overcharged by as much as 30 million'. In April 2006, The Guardian reported that Norton had 'been named in three ongoing lawsuits relating to the supply of blood-thinning drug warfarin, penicillin-based antibiotics and a generic version of anti-ulcer pill Zantac'.

The six pharmaceutical companies being investigated by the Serious Fraud Office were:

• Generics UK Ltd.
• Kent Pharmaceuticals Ltd.
• Regent-GM Laboratories Ltd.
• Goldshield Group Plc.
• Norton Healthcare Ltd - a subsidiary of Ivax Corporation
• Ranbaxy (UK) Ltd - a subsidiary of Ranbaxy Laboratories Ltd

The Daily Mail reports that 'NHS investigators claim that in 1997 and 1998 senior representatives from the seven firms met near Heathrow and agreed to act together'. According to the NHS's Claim Form, 'A series of meetings followed at which the defendants negotiated a sophisticated scheme by means of which the prices and supply of penicillins in the UK market could be controlled and manipulated'. It is alleged that this involved 'raising prices and restricting supply' in order to 'almost quadruple the cost of the common antibiotic amoxicillin'. The allegations also relate to the price fixing of over 30 other drugs. The Independent also adds the claims that, at the Heathrow meeting, the senior representatives of the firms 'considered the possibility of arrangements designed to reduce competition in the UK..' and agreed to 'refuse to sell the drugs to the NHS below an agreed price'. The Sunday Times reported in 2002 that 'Executives are said to have held a secret meeting in offices in Kensington High Street, London, in July 1998 to review their plot and extend it to overseas markets. It is claimed the groups lied about supplies of warfarin to force the price up'. The report continues by stating that the 'Government alleges' that...

'In 11 months in 1997 Regent increased revenue on sales of warfarin by 140% though the volume of its supplies remained mostly the same. This gave the company Pounds 750,000 in extra revenue. Goldshield increased the price of one pack of drugs from Pounds 6.94 to Pounds 20.82 at around the same time'.

The SFO later (27th April 2006) reported that nine persons appeared in court on 'charges of conspiracy to defraud the National Health Service' along with 5 Companies (including Norton Healthcare) 'on conspiracy to defraud charges'. The 'persons' were Jonathan Raymond Close and Nicholas Mark Foster (both formerly of Norton Healthcare Limited) alongside Denis William O’Neill and John Stephen Clark (of Kent Pharmaceuticals Limited), Luma Auchi (formerly of Regent-GM Laboratories), Michael John Frederick Sparrow (formerly of Generics (UK) Limited), Anil Kumar Sharma (formerly of Ranbaxy (UK) Limited), Ajit Ramanlal Patel and Kirti Vinubhai Patel (of Goldshield Group Plc). On the 9th April 2006 (shortly before the companies appearance in court), Medical News Today reported that The Department of Health and Norton Healthcare Ltd and Norton Pharmaceuticals Ltd had 'jointly announce settlement of the claims'. Norton did not admit any liability in relation to the charges but did pay compensation to the NHS for the amount of £13.5 million. In the report, Jim Gee (Director of Counter Fraud Services for the Department of Health) stated that "Norton is the third of the defendant companies to have recognised the strength of the claim made by the NHS..." The £13.5million was paid out to the NHS in England and Wales.

It appears that the case was due to go to trial in September 2008 in what The Guardian describes as 'the biggest prosecution for alleged fraud ever launched in the United Kingdom'. However, in April 2008, it was announced that 'A drugs group has agreed a £2.8m settlement with the Scottish Government and health boards over the alleged price fixing'. Norton is reported to have agreed to the £2.8 million payment as a 'full and final settlement' and without admiting any liability. The report also mentions that the Goldshield Group paid £750,000 after agreeing a similar deal in March 2008.

Kaye the 'veteran supporter of Israel'

The Jewish Chronicle describes Kaye as 'a veteran supporter of Israel'.

In 2006, a Guardian report by Jerusalem correspondent Chris McGreal drew parallels between Israel and apartheid-era South Africa stating that “as in white South Africa,” there was in Israel “a world of discrimination and oppression that most Israelis choose not to see.” 'There were few places where governments constructed “a web of nationality and residency laws designed for use by one sector of the population against another. Apartheid South Africa was one. Israel was another.”' Israeli Ambassador Zvi Heifetz then convened a 'gathering of leaders' to discuss a response to the article. This included Chief Rabbi Sir Jonathan Sacks, Lord Janner, Bicom chair Poju Zabludowicz, Isaac Kaye, Gerald Ronson and Henry Grunwald. Ronson and Grunwald then met with the papers editor, Alan Rusbridger where they 'conveyed communal anger' over the article. Following this, Benjamin Pogrund (former deputy editor of the Daily Mail) published a rebuttal.

Takeovers

In 2007, The Star in South Africa made reference to an offer made by Issac Kaye to Natie Kirsh (the controlling shareholder of Greatermans and uncle of Primedia chief executive William Kirsh) in an article which included a piece about takeover bids which are 'directed only at the holders of voting shares and not at the holders of non-voting shares'. The offer was made by Kaye and Dusty Miller to shareholder Kirsh only. It appears to have then been overturned by the High Court.

The Express in 2000 made reference to Kaye and Miller's Greatermans activities. Little details are given, however they do report that (in relation to the Greatermans sale)...

'The buyers cut the purchase price and later sued, claiming profits had been overstated and liabilities understated. There was also a police investigation but no prosecution'..

In 1978, The Economist refered to Kaye's purchase of Greatermans. It was reported that Norman Herber (who had run Greatermans since 1954) had sold control of his master company, Griffon Holdings. This was sold to a consortium which included Isaac Kaye, Dusty Miller, Herber's cousin Laurence and Federale Chemiese (Federale Chemiese is controlled by the quoted company Federale Volksbeleggings (FVB), the main industrial holding company of Sanlam)

Tax Loophole

In an article in 2002 on the subject of how 'Rich people are costing Britain millions in lost tax by not registering their houses in their own names', the Guardian reports that Kayes home in Grosvenor Square was owned by a company which in turn was owned by a 'family trust'. The article claims that through the exploitation of legal loopholes 'wealthy individuals... appear to be enjoying the country's choicest property virtually tax-free'. The article also mentions Margaret Thatcher, Mohamed Al Fayed, David Potter, Tony Tabatznik, Lakshmi Mittal, Uri David, Rupert Allason, Wafic Said, Prince Bandar and Christopher Ondaatje as others who are not the registered owners of their homes who may benefit from such a loophole.

The company which owns Kaye's home is reported to be Woodworth Investment Ltd. Kaye has 'Non-domiciled' status in the UK and it is estimated that he stands to potentially save stamp duty in the region of £60,000 and inheritance tax of at least £500,000

Other news

In 2001, Kaye met The Duke of Kent at Norton Healthcare's headquarters at London's Royal Docks

Affiliations

• Labour Friends of Israel - Kaye is reported to be a donor to the LFI. He is also reported to have 'backed' the Community Security Trust, UJIA and 'other Jewish and pro-Israel organisations'.
• Kaye is on the board of Bicom (Britain-Israel Communications and Research Centre).
• Hebrew University of Jerusalem - Patron of Applied Research. At the university, Kaye also acted as Chair for the University's 'South African Friends' organization and was a member of the Board of Governors. Kaye also established the Isaac and Myrna Kaye Chair in Immunopharmacology at the Hebrew University of Jerusalem's School of Pharmacy in 1995. In 1994 the Kaye Innovation Award was created.
• Israel Healthcare Ventures (IHCV) - Kaye is a founding member of the IHCV which was created in 2001. The IHCV describes itself as 'a venture capital fund dedicated to providing venture capital investment to Israeli life sciences companies'.
• Isaac Kaye Family Trust - was set up in 1988 (it is reported that this was mainly for his children). In 2000 the Trust owned more than £50million shares in IVAX. According to the Sunday Tribune (Ireland), Ivax's second largest shareholder is reported to be Azure Ltd. Azure Ltd held a $136m stake in IVAX in April 2000. This was held on behalf of the Charter Trust Company, which is an offshore company that represents the Kaye Family Trust .
• Galena pharmaceutical company - Kaye is reported as a member of the Board in 1999