Documents leaked from an offshore law firm show a Japanese hospital and a doctor profited from unlisted shares in a Singapore medical firm, with the doctor profiting ¥100 million ($880,000) despite the hospital’s involvement in clinical trials for the company.
According to an analysis of the documents known as the “Paradise Papers,” doctors in the United States and India also bought unlisted shares in Biosensors International Group Ltd., a medical device company specializing in cardiovascular treatment. The firm was incorporated in Bermuda, a British island territory known as a tax haven.
The hospital, Sendai Kousei Hospital in Miyagi Prefecture, and the doctors in question have admitted to buying the shares, but denied their conduct constituted a conflict of interest or affected any of their decisions regarding medical treatment.
The leaked documents, similar to last year’s “Panama Papers,” were obtained by the German newspaper Sueddeutsche Zeitung and shared with the International Consortium of Investigative Journalists. Kyodo News and other media outlets are working in partnership with the ICIJ.
A total of 13.4 million records were leaked, many from the Bermuda law firm Appleby, which operates branches in tax havens around the world.
The papers show that Biosensors, which was listed on the Singapore Stock Exchange from 2005 to 2016, named at least 14 doctors in seven countries to be granted its shares.
Among the leaked files were minutes of a board meeting in June 2004, which recorded the chairman saying in discussions on stock option grants, “All of the optionees have been helpful, or are expected to play key roles, in the development of the company’s business.”
Sendai Kousei Hospital was granted a stock option — the right to buy stock at an agreed-upon price within a certain period of time. It bought 100,000 shares in July 2007 for ¥1.12 million and sold them three months later at ¥5.57 million.
Three doctors employed by the hospital also purchased the unlisted shares. One, who is no longer employed there, made over ¥100 million by selling the shares between 2005 and 2006.
The hospital conducted clinical trials using Biosensors products between 2001 and 2003. But it was only in 2007 that Biosensors offered the stock option to the hospital, said Taiichiro Meguro, the director of Sendai Kousei. The hospital purchased the 100,000 shares shortly after the offer.
The stock option was offered as “a reward” for past research, Meguro said, adding that his view is that the shares had nothing to do with the clinical trials.
“Our doctor who was carrying out research activities while studying in the United States conducted an animal experiment using the (Biosensors) device for cardiac treatment. It was a reward for enabling the company to accumulate know-how,” he said.
Around the time of the stock transactions, the hospital conducted other clinical trials using the devices of a different maker, which was using Biosensors technology. But Meguro said the hospital was not aware that the devices had any links with Biosensors.
Meanwhile, the doctor who reaped ¥100 million in profits said, “I considered my involvement in Biosensors research and my position as a shareholder separately.”
Trading of unlisted stocks itself is not illegal. But a lawyer who has expertise in medical ethics warned that exchanging money under “ambiguous purposes besides research activities could undermine the interest of patients.”
The Indian doctor who was questioned by a media partner of the ICIJ admitted to purchasing Biosensors shares but denied having used the firm’s products when he possessed them, because doing so might be “construed as a conflict of interest.”
As for the U.S. doctor in question, an official of his hospital said the shares were purchased while he was a consultant for Biosensors for about four years from 2001.
But he “never sold his shares” and also “never implanted a Biosensor product into any of his patients,” the official was quoted as saying.
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