The Headquarters of Jenapharm
in the City of Jena, Germany
A group of former athletes of the German Democratic Republic is suing the pharmaceutical firm Jenapharm, the successor to the state-owned firm that produced the androgenizing steroid Oral-Turinabol, which was administered by officials of the communist state to athletes. (The story is told in “Hormonal doping and androgenization of athletes: a secret program of the German Democratic Republic government”, by Werner W. Franke and Brigitte Berendonk, in Clinical Chemistry.)
Jenapharm was privatised in 1991.
According to the BBC report, the legal case against the man who oversaw the drugging program as head of the Swimming Federation of the German Democratic Republic, Dr. Lothar Kipke, resulted merely in “a fine of under $6,000 and a suspended jail sentence,” and “As a result, attention has now switched to pharmaceutical giant Jenapharm.”
Question: Why should the investors and shareholders in Jenapharm, who took over the assets of a state-owned firm, be responsible for the harm done to athletes by a totalitarian state that no longer exists and which previously owned and directed the assets that those investors purchased from the Federal Republic of Germany? As far as I can tell, this lawsuit is merely punishing the innocent.
Tom writes of a legal travesty, “As far as I can tell, this lawsuit is merely punishing the innocent.”
Distinguishing it from other lawsuits against pharmaceutical companies how?
(The above response is only partly satirical…)
Ross L.
Don’t the rights and wrongs of the law suit depend upon the terms on which the privatization took place?
I think as a general rule a privatized company should not be held responsible for the actions of its state-owned predecessor. It is difficult enough to sell off debt-ridden inefficient state companies in an uncertain economic environment without investors also having to worry about lawsuits stemming from past misdeeds. When state-owned companies in Iraq are sold off, who will know what kind of skeletons are buried in the company closets? Who would want to invest under such circumstances?
If this lawsuit is successful, it would set a very bad precedent and show that any future privatizations should be done with an explicit guarantee of immunity against such lawsuits.
The question is: who, if anyboy, should be sued (perhaps the former owners/managers?)?
Since the former owners/managers were the elite of the communist state, it’s unlikely that they would be held liable, as the case against Dr. Kipke suggests. (And indeed, there are good prudential reasons for not holding such people liable, even though the temptation to do so is quite significant. They could, after all, have fought against their removal from power, and probably would have done so had they thought that they would be made to pay for their crimes. It’s important that the ruling elite in Cuba know that, if they were to give up power without violence once the evil old Fidel finally dies, they would not face punishment.)
I find it highly unlikely that the new investors in the firm expected that they would be subject to liability for what the former dictatorship did with the assets they bought. Indeed, as Mr. Miller suggests above, that would be a recipe for never privatizing anything after a dictatorship had lost power. (I have not been able to find details of the privatization, but that the new investors would have agreed to accept liability for the criminal misdeeds of the German Democratic Republic is highly unlikely.)
“GDR athletes sue over steroid damage”
“A big group of former East German athletes is to sue a pharmaceuticals giant over the damage they suffered under the country’s doping program of the 1970s and 80s.” The chief executive of the Jenapharm…