IN late April 2003, days after the Therapeutic Goods Administration ordered the world's biggest recall of complementary medicines, consumers were busily throwing out their bottles of Pan Pharmaceuticals' vitamins and packets of pain relievers and pharmacists were clearing their shelves.

Pan products could not be trusted, the TGA warned; test results had been manipulated and manufacturing processes were not up to scratch.

But in New Zealand, Europe and the US, regulatory bodies were perplexed. The TGA had issued a red alert, informing its international counterparts of the risk of Pan products. Except that many of those countries did not think there was sufficient evidence to recall Pan's products and, as it turned out, not one European country or the US withdrew Pan's products from sale.

New Zealand demanded more information and eventually issued a recall. But in Australia the recall was well under way and 320,000 concerned Australians rang the TGA hotline specifically set up for the recall.

When many think of the Pan recall, they remember the horror stories of those who fell ill from Travacalm, the travel sickness drug manufactured by Pan, suffering hallucinations, vomiting and hospitalisations. The Travacalm episode was shocking and many are understandably still angry about falling ill after taking it.

But the court proceedings were not about Travacalm and Pan took no issue with the actions of the TGA in recalling that drug. A rogue analyst - subsequently sacked - had acted alone to manipulate data, Pan founder Jim Selim told The Australian.

The court action was about whether the TGA had gone too far in its dealings with Pan - or as one TGA official said of the way it intended to deal with Pan - "go for the jugular". According to evidence unearthed in recent Federal Court proceedings, the TGA did not test one of Pan's other 6000 products that it recalled and it had not received a single complaint about any of them.

Pan would collapse under the weight of the TGA's action to suspend, without notice, its licence. Shareholders lost hundreds of millions of dollars and more than 300 people lost their jobs.

For the past five years, Selim has been fighting to clear his name. On Friday the Government agreed to pay him $55 million for claims the TGA abused its power in office and breached its duty of care. The settlement - against the Government's wishes - was not confidential. Selim said he wouldn't agree to those terms.

"First of all they proposed a confidential settlement and I said, 'No way,"' Selim says. "They have been deceiving me, deceiving the public, deceiving the prime minister. I said I will take this much ($55 million) and not a cent less."

The Government's lawyers agreed to Selim's demands two hours before the offerexpired.

Like him or loathe him - and many people don't like him - Selim has had a remarkable victory. Not that many people want to talk about it. The Government has ruled out a public inquiry. The Department of Health and Ageing released a brief statement last week, helpfully bringing up the Travacalm issue and stating that Selim was given only $55 million and was demanding $234million in the case, playing down his win. The Opposition is not commenting.

Officials have refused repeated requests for comments on the actions of the TGA's officers, the ones whose actions triggered the $55 million payout and many of whom are still on the TGA payroll. But with a class action set to be launched this week the TGA may not be able to maintain its silence.

For a start, TGA officials may reappear in court to give evidence in a class action. Those who were slated to give evidence, but who didn't get the chance before the case was abruptly brought to a halt by the Government's lawyers, may also appear.

One TGA officer who didn't give evidence in the recent Federal Court case was Pio Cesarin, a TGA director and delegate of the secretary to the Department of Health and Ageing. Cesarin's was the hand that signed the paper recalling Pan's products in April 2003. It was the largest recall the world had seen and cost other businesses tens of millions of dollars.

Before Cesarin was called to the witness stand, Selim's lawyers suggested something quite extraordinary. They discussed offering Cesarin a certificate before he gave evidence. Any evidence he gave could not be used in possible criminal proceedings.

Selim's lawyers were set to allege that Cesarin had "created a false instrument", the recall notice.

"Currently (Cesarin) says that he claims he made the recall decision on April 27. We propose to submit he did not make the recall decision," Selim's barrister Justin Gleeson told the court. "It was made ... at the very latest the 24th (April) and it was made by Mr (Terry) Slater.

"It means, in relation to Mr Cesarin, if he is giving evidence, firstly, we will ask that the whole of his evidence between the critical dates ... all of that evidence between paragraphs 94 and 150 (of his affidavit) should be given orally because it must be subjected to the closest scrutiny. It just can't be right. Secondly, and it's perhaps a matter for the commonwealth, but we at least raise that Mr Cesarin ought to be given the opportunity of a certificate because the logic of our submission will be that the recall instruments he created were false instruments and he should be given - I mean, he should given that opportunity."

By this stage of proceedings, four weeks into a three-month case, the court had already heard various senior TGA officials admitting to a litany of incredible activities in relation to Pan.

TGA's director of the office of complementary medicine, Fiona Cumming, destroyed notes of an April 23 meeting held by an expert advisory group, set up by the TGA to examine whether there was an "imminent risk" of Pan's products causing death, serious illness or serious injury to the public.

Cumming said she ordered the notes taken by the members to be shredded following the meeting. A recording of the group's discussion was later discovered at the TGA office and tendered into court.

"We don't have much evidence, do we?" one member said.

"The products that are actually listed in the report, we're all satisfied that there's no imminent risk? We have consensus on that one?" said another.

The group would advise the TGA that there was no imminent risk, a statutory requirement before the government could suspend Pan's licence without notice.

Despite this advice, the TGA pressed forward in its pursuit of Pan. In fact, before the TGA had even received the advice, a press officer was busily drafting a press release announcing the suspension of Pan's licence.

The TGA's No2 in command, director of the office of devices, blood and tissues, Rita Maclachlan, spent 3 1/2 days in the witness box. In a gruelling cross-examination she was often accused of not properly answering the questions put to her. Maclachlan agreed that she said nothing when misleading information was given to prime minister John Howard and health minister Kay Patterson about Pan. Maclachlan also spoke of her attitude to Pan seeking recourse to the courts if the TGA had given Pan notice that it wanted to suspend its licence.

"You didn't want to give them natural justice for reasons we have been over amply, because they might tie you up in the courts?" Gleeson asked.

"Yes," Maclachlan replied.

Despite being happy to talk to the media in the fallout of the Pan collapse, Maclachlan has remained silent since details of her court appearance have emerged. After arriving home on Friday she sped off again when she saw reporters.

Maclachlan maintained she was doing her job and was concerned about public health, but even the judge hearing the case, Arthur Emmett, found it necessary on occasion to ask her to clarify her evidence.

Bob Tribe, who retired from the TGA in 2004, also gave evidence in the case. Tribe told the court that in late March it had been decided to give Pan notice of the TGA's intention to suspend its licence.

Pan would also receive a copy of a recent audit report conducted by the TGA and be offered a chance to respond. In the events that played out, neither event would occur. A government lawyer wrote of a trap associated with that strategy. It was suggested to Tribe that this trap in the strategy to give notice to Pan would be that the company could go to court and possibly receive an injunction against its licence being suspended.

Tribe denied this was part of his thinking.

It was also brought up in court that Tribe gave evidence in the three criminal trials against Selim for destroying computer data. After two aborted trials a jury was directed to acquit Selim. Tribe gave consistent evidence in the first two trials but changed it in the third in relation to a conversation with Selim.

"Now, what explanation do you have, if any, for having given this evidence twice in a criminal trial against this gentleman (Selim) and then in the third trial admitting that it was just wrong?" Gleeson asked.

"I've really got no explanation for that," Tribe replied.

It was suggested in court that the TGA investigation into Pan cost the Government $17 million, the same amount that was recently pledged to tackle childhood obesity.

The Government also will pay Selim $50million and his lawyers $5 million by mid-September. But with a class action on the cards the Government - which withdrew its defence in the Selim case - could be up for millions more.

The Government, so far reluctant to do so, may be forced to look the actions of some of its senior public servants.

Meanwhile, in NZ, there are calls to resist a joint agency approach. New Zealand Health Trust, a charitable trust set up to promote the health of New Zealanders, says the country "only narrowly escaped being subject to the same regime".

Spokesman David Sloan says NZ businesses have known for years how bad the system is in Australia. Selim's result shows the industry's fears are completely justified, Sloan says. The TGA was "totally out of control and we want no part of it".

By Susannah Moran | August 20, 2008 The Australian