Valeant's harsh words on ex-executives may play into govt probes

Mon Mar 21, 2016 7:39pm EDT
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By Sarah N. Lynch and Mica Rosenberg

WASHINGTON/NEW YORK, March 21 (Reuters) - A move by Valeant Pharmaceuticals International Inc to single out two former top executives over its accounting problems is likely a bid to win leniency with government agencies investigating the drugmaker, according to accounting and securities experts.

Valeant on Monday said Chief Executive Michael Pearson was leaving the company, and billionaire investor William Ackman, one of the company's biggest shareholders, would take a seat on its board, as Valeant tries to rectify accounting problems and save its business.

Valeant is under investigation by both state and federal agencies, including the Securities and Exchange Commission.

In a strongly worded statement, the company said "improper conduct" by former chief financial officer Howard Schiller and by its former corporate controller contributed to a misstatement of financial results. Schiller and the controller, whom a person familiar with the matter identified as Tanya Carro, provided incorrect information to the board committee and its auditors, Valeant said.

"They want to send the message to the SEC and the various states attorneys general that, 'Hey, look, we are making some of the big shots walk the gang plank, we have done the digging," said Erik Gordon, a professor at the University of Michigan with expertise in corporate governance.

Valeant declined to comment.

Schiller issued a statement denying wrongdoing and said he had declined the board's request to resign from his current role as a company director. Carro, who has been placed on administrative leave, could not be reached for comment.

Schiller, who had worked alongside Pearson for a number of years, left as CFO last year, though he returned to Valeant as interim CEO after Pearson went on medical leave.   Continued...