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A civil case has been initiated in the claim of JSC Olainfarm for the damage caused

Pursuant to the decision of the shareholders' meeting of September 22, 2020, the Management Board of JSC Olainfarm has filed a lawsuit against the former members of the Management Board of JSC Olainfarm. By the decision of the Vidzeme Suburb Court of Riga City on 12th of April 2021, a civil case has been initiated in the claim of JSC Olainfarm against former members of the Management Board who entered into an agreement with Banestar Management Limited, causing losses in the amount of EUR 26,067,760.05.

In April of 2019, the Management Board of JSC Olainfarm became acquainted with the economic activities of the company and the previously signed contracts. It identified transactions regarding marketing outsourcing services from Banestar Management Limited, a company registered in Cyprus, which raised doubts about their potential fictitious nature, economic validity and legitimacy. In addition, the amount of the contract did not match the number of services received and the marketing activities were lacking supporting documentation. Initially, cooperation with the company was temporarily terminated, then completely suspended and the company turned to the State Police that initiated criminal proceedings about the situation, declaring the company a victim. The suspicious transactions occurred between 2 January 2017 and 4 April 2019.

At the request of the person directing the criminal proceeding, in April 2019 JSC Olainfarm engaged an independent, international auditor to verify the reasonableness of business operations and the payment made for marketing services to the Cypriot company, realized by previous higher-level management. The auditor’s report, received in August 2019, indicates that an in-depth analysis confirmed – as a result of this transaction, potentially significant losses were caused to JSC “Olainfarm”.

Milana Beļeviča, Member of JSC Olainfarm Management Board emphasizes: “JSC Olainfarm is currently on the path of transformation, improving the efficiency and management of the company. Our goal is to improve the transparency of internal processes and decision-making, as well as to prevent such risks in the future in order to ensure sustainable operation of the company and added value to the company's shareholders, employees, partners and society as a whole.”

Olainfarm, a part of Olainfarm Group, is one of the leading pharmaceutical companies in the Baltic States offering high quality medicine and chemical pharmaceutical products. The Group’s  business strategy “FORWARD” highlights the main company’s vision – to become one of the TOP10 Central and Eastern European manufacturing companies by 2025.

With nearly 50 years of expertise, Olainfarm Group delivers sustainable healthcare products and services with added value to patients in more than 50 countries all over the world via its key subsidiaries – pharmaceutical company Olainfarm, food supplements & medical devices producer Silvanols, elastic & compression material producer Tonus Elast, pharmacy chain Latvijas Aptieka and healthcare & diagnostics centres DiaMed & OlainMed.

Additional information:  
Jānis Dubrovskis
Investor Relations Advisor of JSC Olainfarm
Phone: +371 29178878
Email: janis.dubrovskis@olainfarm.com


Source: GlobeNewswire
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