Posted on 09/14/2002 11:58:40 AM PDT by Tumbleweed_Connection
Samuel D. and Harlan W. Waksal, the two top executives of ImClone Systems, ordered paper shredders in early January, just as federal investigations of the company were beginning, the company said in a letter sent to Congress on Friday.
The letter says that the shredder for Harlan Waksal, now the company's chief executive, was ordered by his assistant, with Harlan Waksal playing "no role in the decision" other than "signing a routine purchase order, the contents of which he did not review."
The letter, sent by a lawyer representing ImClone to the House Energy and Commerce Committee, also said that Harlan Waksal had not shredded or directed the shredding of any documents requested by federal investigators.
Still, the revelations are likely to increase scrutiny of ImClone by the House committee, which has been investigating the company for months.
"The more evidence we uncover, the tighter the noose gets for Sam Waksal," said Ken Johnson, a spokesman for the committee. "We are especially disturbed by the fact that Harlan Waksal signed the purchase order for the shredders, given the circumstances. He has a lot of explaining to do, and he can expect a return visit to the committee."
The committee, which held a hearing on ImClone in June, expects to hold another one in early October, he said.
Samuel Waksal, who resigned as the chief executive of the company in May, was indicted last month on insider trading and other charges, including the destruction of documents to obstruct a federal investigation. A week later, ImClone itself sued him to take away his severance pay, accusing him of ordering the destruction of documents and computer files related to his "telephone communications and personal financial transactions."
That prompted the House committee last month to demand information from ImClone on any destruction of documents related to its investigation. The letter sent Friday, which was provided by someone involved in the matter, was part of the response.
In a separate letter also sent to the committee Friday, Harlan Waksal wrote that other than the documents that might have been destroyed by Samuel Waksal, his older brother, "I do not have any information or indication that records or information responsive to any of the committee's requests were destroyed, altered or withheld."
The letter sent Friday by ImClone's lawyer said the process for ordering the shredders was under way by Jan. 7. The next day, Jan. 8, the company received an informal request from the Securities and Exchange Commission for company documents. That evening, the company's legal department told department heads not to discard certain documents.
According to the letter, an assistant to Samuel Waksal sent an e-mail on Jan. 7 to another assistant saying, "Sam needs a paper shredder. He wants it for his office." The message was copied to ImClone's office manager, who is also Harlan Waksal's administrative assistant.
The office manager replied with an e-mail message that said, "Can you please order 2?" The letter said the office manager did not discuss the request for the shredder with Harlan Waksal. The shredder was placed in a conference room next to his office.
Johnson of the House committee said the company might have had an inkling an investigation was coming before Jan. 7 because Samuel Waksal's phone message log shows that he received a call from an SEC lawyer on Jan. 3. It is unclear whether Harlan Waksal talked to the SEC lawyer.
On Jan. 4, a cancer newsletter published information suggesting that ImClone might not have been truthful in describing why the Food and Drug Administration had rejected the company's application to sell a cancer drug. Samuel Waksal tipped his relatives to sell their ImClone stock just before the FDA decision was announced in late December, according to the federal charges against him.
People close to the company said the shredders, which cost about $500 each, did not arrive until Jan. 22 and supplemented a shredder that was already there.
A spokesman for Samuel Waksal, who has pleaded not guilty to all charges against him, would not comment on the shredder. An ImClone spokesman confirmed that the company had sent a letter to Congress.
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