Isaac Kaye

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Background

Isaac Kaye (born South Africa) is Deputy Chief Executive of the IVAX Corporation and Chairman of Norton Healthcare. 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'[1]. In 2008, Kaye is reported to be 78 years of age[2]

Kaye's first company in Britain was called Harris, which was sold to Florida based IVAX Corpin in 1990. Harris was then renamed Norton Healthcare, which was later changed to Ivax Pharmaceuticals UK. Kaye is reported to have 'made £23m from the deal and has a £12m stake in the parent company'[3].

The Ivax Corporation is a huge Florida-based health company. Norton Healthcare, the largest generic drugs company in Britain, is a subsidiary of IVAX. Kaye earned $550,301 at IVAX in 1998 (plus share options worth up to $1.5 million) and $521,520 in 1997.[4]. In ??? IVAX was aquired by Teva which is described as 'Israel's largest company'. The aquisition is reported to have created 'the world's largest generics company'. He lives in a luxury apartment in Grosvenor Square, London.[5]. In 2002, Kaye is reported to live in Mayfair[6].

Kaye is reported to have stepped down as chairman of Norton Healthcare in 2003[7]. Plunkett's Health Care Industry Almanac reports IVAX profits totalling $243,200,000 for 2001, $131,000,000 for 2000 and $70,700,000 for 1999. Their sales totals were $1,215,400,000, $793,400,000, and $656,500,000 respectively.

South Africa's Apartheid regime

Kaye was a supporter of the South Africa's Apartheid regime[8], the Afrikaner-led National party[9]. Such claims are reported to be contested by Kaye’s lawyer. However, as Osler states[10], 'it was admitted that Kaye did back one National Party candidate on grounds of childhood friendship' (John Erasmus[11])and Osler reports that Kaye 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'.

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[12]. Bornman is reported to have told the Express that Kaye had been a "substantial" backer of the National party[13].

Financing Labour

Kaye spent £5,000 in 1997 and 1998 on tickets for Labour gala dinners and donated £100,000 to Labour in 1999[14]. 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.[15]

In 2008, The Independent reports[16] 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[17]) in 2006 and 'channelled over £50,000 in donations and loans to Peter Hain's deputy leadership campaign'[18]. 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"[19]. 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[20]. 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?'[21]

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'[22].

Gifts for influence

The Guardian reported that[23]...

'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'.

Moniot[24] adds that the 'gifts' given by Kaye's drugs company (Alumina) went 'to people working in the health sector, including academics who sat on the South African government's advisory panels, the head of the Medical Research Council and the minister of health'. The list of 'gifts' also included shares and trips abroad. The official inquiry into the scandal found that Kaye had "no scruples about applying dishonest or unethical methods".

In 1996, Norton Healthcare was severely condemned by the British Pharmaceutical Association for offering "unnacceptable inducements" (including mountain bikes and Marks and Spencers vouchers) to pharmacists who increased their orders for Norton products.[25]. It is reported that Labour's health minister complained that "it is completely unacceptable for pharmaceutical companies to encourage health professionals to use their products through free gifts and other sweeteners"[26].

In 1998, the government announced that it was giving Norton a £990,000 Regional Selective Assistance grant to set up a new plant in London. The purpose of this grant is to boost employment in the local area and to promote "inward investment in the manufacturing sector"[27]. Yet, as The Guardian goes on to report, Norton's parent company revealed that it would stop manufacturing in the UK (and move to Ireland) the week before the government announced this funding! In October 1998 it closed down all its other manufacturing and packaging plants in South East England and moved them to Ireland, cutting 500 jobs in the process. This "re-structuring" helped the IVAX Corporation's share price to rise by 80% in 1998 - Kaye is the second largest shareholder, with a stake worth $136 million held by the I. Kaye Family Trust (via a Guernsey-based company called Charter Trust, which in turn hold the shares via another company called Azure Ltd).[28]

Barring Union Activity - a violation of rights

Kaye refuses to recognise Trade Unions at Norton Healthcare because they are "not in line with company philosophy"![29] According to Osler, 'In May 2000, a Kentucky judge ruled that Norton unlawfully violated the rights of its nurses at one of its US hospitals, by barring them from union activity in their own time. This was held to be in violation of the National Labor Relations Act'[30].

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![31] 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'[32]. IVAX's "Easi-Breathe" inhaler has been named a Millennium Product by the Government and is displayed in the Dome[33]. Norton Healthcare is reported to be 'the biggest supplier of generic drugs to the NHS'[34].

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'[35]. 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'[36]. 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'[37]. The NHS reportedly spends £39million a year on amoxycillin[38] and in the Evening Standards 'Experts are reported to have said that the NHS 'could have been overcharged by as much as 30 million'[39]. 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'[40].

The six pharmaceutical companies being investigated by the Serious Fraud Office were[41]:

The Daily Mail reports[42] 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'[43].

The SFO later (27th April 2006) reported[44] 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 [45] 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[46].

It appears that the case was due to go to trial in September 2008[47] in what The Guardian describes as 'the biggest prosecution for alleged fraud ever launched in the United Kingdom'[48]. 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[49]. The report also mentions that the Goldshield Group paid £750,000 after agreeing a similar deal in March 2008.

Subsidiaries and Brands

The IVAX Corporation's other subsidiaries include Zenith Goldline Pharmaceuticals, Goldcaps Inc., Diamedix Corporation, Baker Norton Pharmaceuticals, Immunovision and DVM Pharmaceuticals (all based in Florida), Gelkaps GmbH (Germany), Elvetium S.A. (Argentina), Baker Norton Asia (Hong Kong), Delta Biologicals (Italy) and Galena a.s. Opava (Czech Republic).

In 2002, IVAX is reported to have 'recently' aquired Puerto Rican based company ChemSource (Which develops, manufactures and sells active pharmaceutical ingredients for a variety of pharmaceuticals products)[50]

In 2002, Plunkett's Health Care Industry Almanac describes IVAX's 'Brands/Divisions/Affiliates' as[51]...

Affiliations

  • Israel Healthcare Ventures (IHCV)[55] - 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'[56].

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[57].

Notes

  1. ↑ Maguire K (2002) Profile:Isaac Kaye The Guardian 13th April 2002. Accessed 4th April 2008
  2. ↑ Grimston, J., Woolf, M. & Gadher, D. (2008) 'THE DONORS: FROM DIAMOND BROKER TO DEMOLITION MAN'. The Sunday Times 13th January 2008
  3. ↑ Maguire K (2002) Profile:Isaac Kaye The Guardian 13th April 2002. Accessed 4th April 2008
  4. ↑ Ref needed
  5. ↑ Ref needed
  6. ↑ Maguire K (2002) Profile:Isaac Kaye The Guardian 13th April 2002. Accessed 4th April 2008
  7. ↑ Brogan, B. & Gysin, C. (2008) Hain faces sack in sleaze inquiry; He could be barred - but Brown might fire him first. The Daily Mail (London). 12th January 2008
  8. ↑ Michael Gillard, 28th September 2000. Apartheid Supporter Who Is a £100,000 Backer of Labour. The Daily Express
  9. ↑ Maguire K (2002) Profile:Isaac Kaye The Guardian 13th April 2002. Accessed 4th April 2008
  10. ↑ Osler, D. (2006) New Labour and the generic medicine scam Accessed 4th April 2008
  11. ↑ McSmith, A. (2002) Fraud squad raids firm of Labour Party donor The Telegraph13th April 2002. Accessed 4th April 2008
  12. ↑ Monbiot, G. (2008) 'Comment & Debate: This scandal makes it clear: for Labour, money trumps principle every time: Peter Hain's choice of donor defaces his reputation and reveals the surrender of his party  to the super-rich'. The Guardian. 5th February 2008
  13. ↑ ibid
  14. ↑ Maguire K (2002) Profile:Isaac Kaye The Guardian 13th April 2002. Accessed 4th April 2008
  15. ↑ Ref needed
  16. ↑ Brady, B. (2008) 'I've done nothing wrong,' Peter Hain insists, as he battles for his political lifeThe Independent 13th January 2008. Accessed 4th April 2008
  17. ↑ Freshwater UK Directors Accessed 4th April2008
  18. ↑ Brady, B. (2008) 'I've done nothing wrong,' Peter Hain insists, as he battles for his political lifeThe Independent 13th January 2008. Accessed 4th April 2008
  19. ↑ Pierce, A. (2008) 'Why he fell Spending spree that sent Hain's career into a tailspin' The Daily Telegraph. 25th January 2008.
  20. ↑ Monbiot, G. (2008) 'Comment & Debate: This scandal makes it clear: for Labour, money trumps principle every time: Peter Hain's choice of donor defaces his reputation and reveals the surrender of his party  to the super-rich' The Guardian 5th February 2008
  21. ↑ Monbiot, G. (2008) 'Comment & Debate: This scandal makes it clear: for Labour, money trumps principle every time: Peter Hain's choice of donor defaces his reputation and reveals the surrender of his party  to the super-rich' The Guardian 5th February 2008
  22. ↑ Monbiot, G. (2008) 'Comment & Debate: This scandal makes it clear: for Labour, money trumps principle every time: Peter Hain's choice of donor defaces his reputation and reveals the surrender of his party  to the super-rich' The Guardian 5th February 2008
  23. ↑ Maguire K (2002) Profile:Isaac Kaye The Guardian 13th April 2002. Accessed 4th April 2008
  24. ↑ Monbiot, G. (2008) 'Comment & Debate: This scandal makes it clear: for Labour, money trumps principle every time: Peter Hain's choice of donor defaces his reputation and reveals the surrender of his party  to the super-rich'. 5th February 2008.
  25. ↑ Death of the Noble Idea Posted February 5, 2008 Big money trumps everything in politics, even the most dearly-held beliefs By George Monbiot. Published in the Guardian 5th February 2008
  26. ↑ Monbiot, G. (2008) 'Comment & Debate: This scandal makes it clear: for Labour, money trumps principle every time: Peter Hain's choice of donor defaces his reputation and reveals the surrender of his party  to the super-rich'. 5th February 2008.
  27. ↑ Monbiot, G. (2008) 'Comment & Debate: This scandal makes it clear: for Labour, money trumps principle every time: Peter Hain's choice of donor defaces his reputation and reveals the surrender of his party  to the super-rich'. 5th February 2008.
  28. ↑ Ref needed
  29. ↑ Cited in Osler, 2006. Original source:
  30. ↑ Osler, D. (2006) New Labour and the generic medicine scam Accessed 4th April 2008
  31. ↑ Osler, D. (2006) New Labour and the generic medicine scam Accessed 4th April 2008
  32. ↑ Osler, D. (2006) New Labour and the generic medicine scam Accessed 4th April 2008
  33. ↑ Ref needed
  34. ↑ Livingstone, T. (2008) I find it hard to see how he can continue if he is the sort of man who forgets about pounds 100,000'. The Western Mail. 12th January 2008
  35. ↑ Maguire K (2002) Profile:Isaac Kaye The Guardian 13th April 2002. Accessed 4th April 2008
  36. ↑ Serious Fraud Office Suspected fraud on the National Health Service Press release 10th April 2002. Accessed 4th April 2008
  37. ↑ The Times 'The week that was Britain'. 27th December 2003
  38. ↑ Newling, D. (2003) 'Drug firms 'in price-fix scam'. The Daily Mail. 22nd December 2003
  39. ↑ Goodway, N. (2003) 'Drug firms face action over '170m NHS fraud'. The Evening Standard 22nd December 2003.
  40. ↑ Bowers, S.(2006) Financial: Pharmaceutical: Norton pays NHS £13.5m over price fixing claims. The Guardian April 5th 2006
  41. ↑ Serious Fraud Office Suspected fraud on the National Health Service Press release 10th April 2002. Accessed 4th April 2008
  42. ↑ NEWLING, D. (2003) Drug firms 'in price-fix scam'. The Daily Mail. 22nd december 2003
  43. ↑ Burleigh, J. (2003) 'NHS TO SUE SEVEN DRUG FIRMS FOR FIXING PRICE' OF MEDICINES'. The Independent. 22nd December 2003
  44. ↑ Serious Fraud Office Fraud on the National Health Service. Appearance at Magistrates Court Accessed 4th April 2008
  45. ↑ Medical News Today Norton Settles NHS Claim For 'Price Fixing', UK 9th April 2006. Accessed 4th April 2008
  46. ↑ BBC News Drug group backs £2.8m settlement. 30th April 2008. Accessed 30th April 2008
  47. ↑ Livingstone, T. & Shipton, M. (2008) 'I made a mistake but it was an innocent mistake'. The Western Mail. 25th January 2008.
  48. ↑ Monbiot, G. (2008) 'This scandal makes it clear: for Labour, money trumps principle every time: Peter Hain's choice of donor defaces his reputation and reveals the surrender of his party  to the super-rich'. 5th February 2008
  49. ↑ BBC News Drug group backs £2.8m settlement. 30th April 2008. Accessed 30th April 2008
  50. ↑ Plunkett's Health Care Industry Almanac (2002) 'Individual Data Profiles On Each Of THE HEALTH CARE 500'. January 2004
  51. ↑ Plunkett's Health Care Industry Almanac (2002) 'Individual Data Profiles On Each Of THE HEALTH CARE 500'. January 2004
  52. ↑ Hebrew University of Jerusalem Isaac Kaye Accessed 9th April 2008
  53. ↑ Hebrew University of Jerusalem Isaac Kaye Accessed 9th April 2008
  54. ↑ Siegel, J. (2007) 'HU researchers cited for work on obesity brain surgery Alzheimer's'. The Jerusalem Post. 6th June 2007
  55. ↑ Hebrew University of Jerusalem Isaac Kaye Accessed 9th April 2008
  56. ↑ Israel Healthcare Ventures Home Page Accessed 9th April 2008
  57. ↑ Crotty, A. (2007) 'Fluctuating iTraxx index puts Primedia buyout on the edge'. The Star. 13th august 2007
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