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RITE AID EXPLORING "ALL LEGAL ALTERNATIVES"

Executive Summary

RITE AID EXPLORING "ALL LEGAL ALTERNATIVES" to address recent bribery charges against company President Martin Grass, the firm said in a recent statement. The company is assembling documentation supporting its position that Grass' arrest and the bribery charges against him are part of a "long and determined vendetta" against Rite Aid by certain members and associates of the Ohio Board of Pharmacy, according to a company spokesperson. Grass was charged with one count of bribery by the Cuyahoga County Sheriff's office in Cleveland, Ohio after being arrested on April 27. Martin Grass, 35, who was named president of Rite Aid approximately one month ago, retains his position within the company. He was arrested while handing a company check for about $ 30,000 to Melvin Wilczynski, a member of the Ohio Board of Pharmacy and consultant and former employee of Peoples Drug. Rite Aid maintains that the check was a payment made "in exchange for a corporate release settling the consultant agreement prepared by the Rite Aid Corporation legal department and signed by Wilczynski." The consulting agreement between Wilczynski and Peoples became a "legal obligation of Rite Aid" when the firm acquired The Lane Drug Company, a division of Peoples, on April 10, Rite Aid noted. However, according to Cuyahoga County Prosecuting Attorney John Corrigan, the payment was a "bribe" intended to remove Wilczynski from the Ohio board and replace him with "a pharmacist of Rite Aid's choosing." Rite Aid issued a statement May 5 disclosing that members of its management had met with members of the Ohio State Pharmacy Board and a member of the state government on March 28 "to discuss matters related to the administration and enforcement of pharmacy laws in Ohio." The four Rite Aid execs included James Krahulec, VP government affairs and trade relations and Wayne Korte, pharmacy division manager. However, the firm maintains that Krahulec and Korte "have not violated any laws of the state of Ohio at any time." Referring to charges that the company had been trying to load the pharmacy board with friends of Rite Aid, the firm asserted: "Rite Aid Corporation and Martin L. Grass believe that as the facts are thoroughly examined and become public concerning Mr. Grass' alleged actions and the activities by certain associates of the Ohio Pharmacy Board, that Mr. Grass and the corporation will be exonerated. Rite Aid and Mr. Grass deny any wrongful intent and any involvement in any criminal conduct and intend to diligently defend any criminal charges." Rite Aid has been growing rapidly in Ohio in the past few years and now has a total of 349 outlets in the state. Rite Aid acquired 103 stores in Ohio with the Lane Drug purchase. In 1987, the firm added 162 Gray Drug Fair stores in the state to its chain. Shortly after its acquisition of the Gray Drug Fair stores, Rite Aid received citations against 90 stores for security violations. Pharmacists in the stores also received citations. The company paid $ 50,000 in fines in January of 1988 to settle the charges. The company asserted in a May 1 release that the Grass case is not the subject of a federal inquiry. "Contrary to previous statements in the press," the release said: "Rite Aid Corporation . . . today was informed by William J. Edwards, acting U.S. attorney for the northern district of Ohio in Cleveland, Ohio, that there is no federal investigation of any kind underway concerning Rite Aid."
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