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US firm sued for vaccine procurement fraud

Ukrainian enterprise Ukrvaktsina is seeking damages from Olden Group for violations of the Racketeer Influenced and Corrupt Organizations Act

State-owned Ukrainian medical procurement and storage enterprise Ukrvaktsina has filed a suit against US company Olden Group, seeking damages for fraud, conspiracy and violations of the Racketeer Influenced and Corrupt Organizations Act (RICO). The federal suit, filed in Portland, Oregon, alleges that Olden Group was a key part of an international conspiracy to unlawfully increase the price of vaccines intended for use in the Ukrainian public health system between 2008 and 2009.

The complaint alleges that Olden Group, among others, used offshore shell companies to launder the proceeds of the scheme — more than US$50m, paid by Ukrvaktsina and the Government of Ukraine — through banks in Latvia, the US and elsewhere.

In recent years Ukraine has been increasing its anti-corruption efforts. On May 21, 2010 the country passed law 2258-VI "On amendments to the Law of Ukraine 'On prevention and counteraction to legalization (laundering) of proceeds from crime'". In the same month the Cabinet of Ministers of Ukraine ordered a comprehensive anti-corruption investigation, led by US litigators Trout Cacheris in collaboration with Kroll and Akin Gump Strauss Hauer & Feld. The case against Olden Group is the first court action to arise from this investigation.

According to Plato Cacheris of Trout Cacheris, the lawsuit has been filed in the US because "the Government of Ukraine believes that these cases should be litigated in a legal arena that is transparent and will assure the best prospect of recovery."

20th September 2010

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