Who is this man Milan Panic?: How did an American millionaire become Prime Minister of Yugoslavia? And what's in it for him? Keith Botsford reports

Keith Botsford
Wednesday 22 July 1992 23:02

Milan Panic as Prime Minister of Yugoslavia is reminiscent of Groucho Marx's Rufus T Firefly arriving in Fredonia in Duck Soup: Firefly (Panic) is bewildered, the public is baffled, and Margaret Dumont (as Slobodan Milosevic) is perplexed. Who is this man Panic?

As with many such transient figures on the world scene, there are fresh-minted official biographies, and Mr Panic's is largely supplied by himself. Born in 1930, of poor parents; peddled vegetables in the Thirties; joined Tito's partisans in 1944 (when he would have been all of 14); trained as a chemist (at an unspecified university); became national cycling hero, depicted variously as Yugoslav champion and as an Olympic competitor (he was actually an reserve); defected to the West in 1956 on the way to a race in the Netherlands, finding his way, with his family, to the United States in 1960.

His appointment as Prime Minister earlier this month was the brainchild of nationalist writer- president Dobrica Cosic of Yugoslavia - or that Yugoslavia, Serbia and Montenegro, which remains - who had been himself 'elected' to his office only a few months previously.

When this prime minister scheme was first cooked up, obstacles immediately arose; for example the US prohibition (based on a clause in the Constitution) against accepting office on behalf of a foreign nation and retaining one's (American) citizenship. Mr Panic has made evident in several interviews that he still considers himself 'an American'.

The subject is one on which the State Department is evasive, but it would appear that he did obtain a waiver. How this was achieved is wreathed in ambiguity. A visit to James Baker, the American Secretary of State, hardly produced reassuring words, for Mr Baker went no further than asking Mr Panic for 'acts and not words'. And as Margaret Tutwiler, the State Department's spokeswoman, said in delphic fashion, 'We do not endorse, support or have any views about his serving as Prime Minister.' The waiver (which was to run for 30 days) should run out in a fortnight's time. (On the other hand, Golda Meir retained her US citizenship till the end.)

But that kind of thing may well be the least of Mr Panic's difficulties. His entire past is anything but free of difficulties with the law, not to speak of his stockholders. He is widely described as 'Serbia's richest man'; there cannot have been much competition, except for the likes of the noted New York publisher Bill Jovanovich, of Harcourt Brace Jovanovich. Mr Panic's company's current worth, on which his own personal fortune - dollars 101.6m ( pounds 53m) on 3 July - is based, is, depending on the value of its stock and assets, dollars 460m. Until last year, when he was voted dollars 6m (mainly in stock options) his remuneration was some dollars 600,000 ( pounds 315,000) a year.

His company, founded in 1966, was originally called International Chemical and Nuclear, and was recently described by Business Week in America as being 'mostly a ragtag collection of acquisitions, selling everything from generics to laboratory supplies'. ICN Pharmaceuticals Inc, as it became, is basically a holding company with subsidiaries, some profitable, some not.

The difficulty for Mr Panic and for the company is that its most profitable part is Yugoslav - the result of a deal a year ago when ICN's drug and marketing subsidiary, SPI Pharmaceuticals Inc, bought 75 per cent of the country's biggest drug company, Galenika. In six months, Galenika was accounting for 61 per cent of all of SPI's revenues of dollars 364m, and 96 per cent of its dollars 53m net profit. Cynics on Wall Street, with access to Mr Panic's long record of optimistic forecasts and spirited marketing, believe he may well have accepted his Yugoslav post at least partly to bolster Galenika, for the company, which, for instance supplies Yugoslavia with its penicillin, is dependent on the United States for two-thirds of its raw materials - supplies that are currently blocked by the sanctions imposed on Yugoslavia.

Galenika is part of a long-term plan to acquire pharmaceutical plants in Russia, Poland, Hungary and Czechslovakia. But there, too, there are problems, because (a) many Eastern European drug companies are operating on pirated clones of international pharmaceuticals, and (b) all of them have, to date, operated in a controlled economic environment, meaning that there is no way to ascertain their profitability, nor to know whether they will be allowed, in a market economy, to continue with their pirated drugs.

Even then, all might be well were it not for other troubles facing Mr Panic, who has a long record of stockholder revolts and battles with the government, not to speak of his company's long- range debt, which requires some dollars 19m a year just to service.

These troubles go back a long way, and suggest that Mr Panic is stronger on salesmanship, acquisition, wheeling-and-dealing and political contacts than on research and development. His first failure was in 1970 with L-dopa, the Parkinson's disease 'miracle drug' - until its severe side-effects became known. ICN invested heavily, and its stock price (which has varied between dollars 72 a share and dollars 1.50, highly volatile even for pharmaceutical stocks) fell sharply.

In 1977, ICN was accused of misleading financial projections; it settled without admitting guilt, but stockholder suits ensued. In 1979, after an audit, Mr Panic was forced to return dollars 123,000 for personal use of company assets. (Company assets at his disposal now include, by the way, a 51-seat plane and luxury apartments and houses in Malibu, Balboa, Lake Tahoe in California, and others in Europe.)

In 1987, ICN reported that its drug, Virazole (Ribavirin), could slow Aids and the company's stock rocketed. Unfortunately for ICN, the American Food and Drug Administration refused to authorise the drug, and claimed that the scientific tests administered had been 'skewed' to assist sales of the drug by giving a placebo to patients who were more ill with Aids than those who received Virazole. ICN was investigated by both the FDA and the Securities and Exchange Commission, and in 1991, it settled by consent with FDA and paid a dollars 600,000 fine.

More recently, Mr Panic has been sued by federal regulators for defaulting on an dollars 8.4m loan he took on in buying two California motels in 1985. Those motels are operating at a loss. According to San Diego County tax records, he also owes property taxes on the motels and the county filed a tax lien on them. Richard J Carroll, from whom he purchased the motels (and to whom he leased them back), is serving a five-year term in California's Lompoc penitentiary for bankruptcy fraud.

In short, Mr Panic has not been able to stay out of trouble in his adopted America. This is despite his excellent political connections, especially in California, including an ex-member of the Nixon cabinet; Jerry Brown, the former state governor and erstwhile presidential candidate, who intervened with the FDA during the Virazole crisis; the former Senator Birch Bayh, of Indiana; Michael Dukakis, ex-presidential candidate, and many others. His Yugoslav company is even run by the former US Ambassador to Yugoslavia.

This is not to say that he is considered dishonest. Rather, he is described as 'visionary', 'creative' and a 'juggler'. In many ways, then, Mr Panic is as American (an American of the Eighties) as he says. He is one of the many who seem to have parlayed something out of nothing. And in the primitive form of capitalism now obtaining in Eastern Europe, he may do the same again. Not too many of his stockholders, and not too many Wall Street analysts, however, would bet on it.

He is often compared to Ross Perot and, given the difficulties he faces in Yugoslavia, he may do a similar 'now you see me, now you don't' on the whole business.

He and his wife, Sally, who live on a French Colonial estate in California on which Madame walks out every morning in a green robe, may indeed be, as their neighbours say, 'just ordinary rich folk', but Mr Panic does have more than a slight talent for self-promotion and for mixing business with his own pleasure, and now business with politics.

Come to think of it, not unlike Rufus T Firefly.

(Photograph omitted)

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