ICN Officials Rake Maverick Stockholder : Securities: Cousin’s affidavit says broker seeking to control the firm was involved in a fraud scheme in England.

COSTA MESA —  Mudslinging in the fight for control of ICN Pharmaceuticals Inc. increased this week as company officials have accused the shareholder who threatens to topple its board of directors of being involved in a 7-year-old securities fraud scheme in England.

In an affidavit filed Wednesday in U.S. District Court in New York, a cousin of stockbroker Rafi M. Khan told ICN attorneys that the controversial Kahn, who is waging a proxy fight, had masterminded a plot to illegally purchase stock in London-based British Gas PLC.

The first cousin, Tahir Rafiq Khan, also said that an arrest warrant for Khan was issued by Scotland Yard in January, 1987, although a local law enforcement source said that it appeared one was not listed in Interpol’s international computer system.

“If it existed, I would have found it,” said the source.

Scotland Yard spokesman Timothy Miller said Thursday that under British law, the agency cannot comment on the existence of any arrest warrant.

Robert Hasday, a lawyer for Khan, also said that he did not believe his client is the subject of a criminal investigation in England. He said the accusations were being made by an estranged family member, who he alleged is jealous of Khan’s success.

“There is a lot of bad blood between them,” Hasday said. Khan declined comment Thursday.

The accusation that Khan was involved in criminal activity demonstrates the venom in this struggle for control of ICN, founded in 1960 by colorful businessman Milan Panic.

Khan hopes to garner enough shareholder support to oust Panic and the rest of the drug company’s nine-member board on or before its Dec. 15 annual meeting. But the company has fought back in the past two weeks, accusing the dissident stockbroker and ICN shareholder--Khan holds 120,000 shares--of lying and engaging in shoddy business practices. Khan has denied the allegations.

In a move clearly designed to discredit Khan further, ICN attorney Arnold I. Burns said Thursday that he was searching for an arrest warrant for Khan and believed the affidavit would help him prove that Khan is a fugitive of Scotland Yard investigators.

“I can say that we expect the truth to surface,” Burns said from his New York office.

Burns said that he wants to use Tahir Khan’s statements in the affidavit to win a preliminary injunction against Khan at a Nov. 11 hearing before U.S. District Judge John Sprizzo.

In Tahir Khan’s affidavit, he said that he was contacted by his cousin, who was then known as Mohammed Rafi Khan, in late 1986. Khan allegedly told Tahir Khan that he wanted to illegally purchase British Gas shares that were being offered by the government in its effort to privatize the firm.

The government had ruled that individual purchasers were allowed a limited amount of shares, but Rafi Khan had devised a scheme in which he would forge hundreds of signatures, addresses and documents to buy shares worth up to $1.5 million at the current exchange rate, Tahir Khan said in court documents.

Scotland Yard investigators learned of the plot and an arrest warrant was issued for Khan, Tahir Kahn and others in January, 1987, he said. Tahir Kahn said he was arrested and paid a fine of $20,794 at the current exchange rate.

A spokeswoman for London’s Crown Prosecutors Service said Thursday that the case involving British Gas has been closed and that there are no prosecutors assigned to bring others to justice.

Both sides said they have investigators in London to search records there in an effort to bolster their own cases.

Hasday also said that while Tahir Khan said that he was not being paid for his comments, that ICN paid his air fare and hotel bills for the trip to New York to give the affidavit.