Watson's, the Hong Kong-based drugstore chain, yesterday held a press conference to dismiss ongoing accusations that it made fraudulent insurance claims after ordering employees to damage goods as well as selling goods that had passed their expiration dates.
Watson's said they had suffered a decline in business after Independent lawmaker Lin Ruey-tou's (林瑞圖) accusations. "We hope the press conference will help our customers regain confidence in Watson's," said Nigel Healey, Watson's regional managing director, North Asia.
"Both the management and the 2,200 employees of Watson's are disappointed at the groundless accusations," Healey added.
Lin and two persons claiming to be former employees of Watson's accused the chain of ordering its staff to damage unsalable stock to claim a NT$200 million insurance payment covering losses supposedly due to the earthquake which struck Taiwan on Sep. 21, 1999. Lin also raised questions about whether the company had claimed quake aid from the government. Officials have indeed denied receiving any request for aid from the chain.
The French company, AXA, Watson's insurer, has said all of Watson's claims relating to the earthquake accorded with international insurance standards.
Lin originally said Watson's commissioned disposal companies to dump the purposely damaged stock for burial.
But Lin later said that Watson's sold the stock, for which it had claimed damage insurance, for additional profits. A salvage operator surnamed Chan (
Chan and his brother said they, along with three other partners, were to pay NT$3 million to Watson's for the damaged stock. But when they realized the products would be difficult to sell, the five partners refused to complete payment after they had paid only NT$1 million, the Chan brothers said.
Watson's yesterday said they might take legal action to claim the outstanding amount from Chan's salvage company, but denied previous reports that they had issued a letter to Chan cancelling the debt and requesting return of the goods after the allegations were first made.
Healey explained that the contract between Watson's headquarters in Hong Kong and its insurer allowed the sale to salvage operators of soiled products damaged during natural disaster, if the reduced value and safe condition of the goods were confirmed by the loss adjuster's inspection.
He said Chan's salvage agency had volunteered to remove goods that were damaged by the earthquake, while Chan signed a contract with Watson's to buy stock damaged by the earthquake but that was still in safe condition.
Healey emphasized that Watson's never allowed the sale of expired goods and always had salvage companies handle disposal matters. He said "a certain third party may not have acted appropriately in the handling of expired goods" and might be responsible for the sale of Watson's expired stock in street markets.
Healey further said that neither the warehouses which the prosecutors raided nor the stocks seized there were owned by the drug chain, as local media revealed that prosecutors had confirmed the goods to have been sold by Watson's to Chan.
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