Photo/Illutration Kobayashi Pharmaceutical Co.’s Benikoji Coleste Help, a supplement containing the benikoji ingredient (Provided by the company)

A Hong Kong-based investment fund is demanding four auditors of Kobayashi Pharmaceutical Co. sue current and former board members for damages caused by the health scare over its red yeast supplements, sources said.

Oasis Management, an activist shareholder that held 7.54 percent of Kobayashi Pharmaceutical’s stocks as of Nov. 19, is seeking more than 10 billion yen ($67 million) from the potential defendants, the sources said Dec. 3.

According to Kobayashi Pharmaceutical, the investment fund sent a letter to the company on Nov. 22, demanding the company’s four auditors sue seven executives who were on the board when reports of fatalities and illnesses from the supplements surfaced.

They are: former Chairman Kazumasa Kobayashi; former President Akihiro Kobayashi, current President Satoshi Yamane; and four outside directors, including Kunio Ito, a professor at Hitotsubashi University.

The two Kobayashis are members of the founding family.

If the four auditors do not sue the board members, Oasis Management itself can file a derivative lawsuit as a shareholder.

“Based on the Companies Law, the auditors will consider it and then decide,” Kobayashi Pharmaceutical said in a statement.

Kobayashi Pharmaceutical reported to the health ministry that 124 people died and 514 others were hospitalized after taking its red yeast supplement as of Oct. 6.

The company estimated that as of early November financial damage caused by health scare reached about 10.1 billion yen.

On Nov. 29, Oasis Management asked Kobayashi Pharmaceutical to convene an extraordinary shareholders’ meeting for a major reshuffle.

The investment fund wants the company to appoint three people, including a former prosecutor and a doctor, as new outside directors, and to assign lawyers to a new investigation team looking into the red yeast issue.

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