Stockbroker Returns Fire in Legal Battle for Control of ICN : Courts: Countersuit alleges that Milan Panic illegally did company business while Yugoslav prime minister.

COSTA MESA — A Beverly Hills stockbroker alleged in a lawsuit filed Monday that Milan Panic, chairman of ICN Pharmaceuticals, broke federal law by continuing to transact ICN business while serving last year as prime minister of Yugoslavia.

The lawsuit, filed in U.S. District Court in New York by broker Rafi Khan, also disputes allegations against Khan by ICN, which is battling his attempt to oust Panic and the other seven members of the company’s board. ICN, in a suit filed against Khan last week in the same court, alleged that the broker violated U.S. securities industry rules and breached his fiduciary responsibilities by using inside information to launch a bid for control of the pharmaceuticals giant, based in Costa Mesa.

Kahn’s countersuit was filed after a U.S. District judge issued a temporary restraining order Thursday that bars Khan from soliciting shareholder proxies or taking any further action to replace ICN’s board with his own slate of directors. Judge John Sprizzo has scheduled a hearing on the case today.

The New York lawyer handling the ICN case disputes Khan’s allegations, saying that Panic never transacted ICN business while serving in the Yugoslav post.

Panic took a leave of absence from ICN in July, 1992, to serve as prime minister of his native Yugoslavia. He returned last month after losing an election to Serbian President Slobodan Milosevic. The election was marred by allegations of fraud.

During his leave from ICN, according to Khan’s lawsuit, Panic continued to receive his $619,000 annual salary. He also met with company officials in Yugoslavia and Costa Mesa personally and stayed in touch by phone, the lawsuit alleges.

ICN lawyer Arnold I. Burns said Monday that the company and government officials knew that Panic was receiving his salary and raised no objections. Panic, a Serbian emigre, abided by U.S. provisions forbidding his transacting ICN business while serving in the foreign post, Burns said.

In a brief interview Monday, Khan said he filed the counterclaim against ICN and Panic to clear his name.

“He slandered me,” Khan said of Panic. “He said I acted on inside information.”

In his lawsuit, Khan alleges that Panic was “single-minded in pursuit of his own financial self-interest” and tried to manipulate the ICN board to achieve his own personal ends.

Khan’s suit also alleges that ICN forced him to quit his job as a stockbroker for H.J. Meyers & Co. in Beverly Hills. After failing to get Khan to agree to give up his efforts to unseat ICN’s directors, ICN officials allegedly threatened to put principal H.J. (Bud) Meyers into a position in which he would incur a $2-million loss on a separate transaction.

Kahn alleges in his lawsuit that, rather than see his boss take the loss, he quit his job. He now works for another brokerage.

Barbara Harris, a spokeswoman for H.J. Meyers & Co., said commenting on Khan’s statements would be inappropriate “because of pending litigation.”

ICN lawyer Burns said that “there is nothing new” in Khan’s lawsuit and that Khan’s allegations are unfounded. “He has a vivid imagination,” he said of Khan.