Long before the privatization of CGM, Jacques Saadé had, over a long period, accumulated means and practices aiming at progressively and arbitrarily diluting Mistral's holdings in CMA's capital in order to gain the greatest control possible and to reduce Mistral's ownership.
This premeditation appears in the systematic practices of Jacques Saadé and his team in concealing all information related to CMA’s management for the period preceding the privatization of CGM and its takeover, and even long afterwards.
Neither Mistral, then owner of 50% of CMA's capital, nor its chairman, Johnny Saadé, were made aware of the CGM takeover.
Mistral, a member of CMA's Board of Directors, was not provided with notice of any CMA Board of Directors meetings aimed at deciding the CGM takeover.
This premeditation is obvious in particular from the following facts:
- MISTRAL was not aware of the general shareholders meeting of CMA held on 12 December ,1996, which decided to increase CMA's capital by 75 million French Francs and granted the company's Board of Directors powers to implement it.
- After having indicated that CMA's equity was increased on 30 December, 1996 to total 200 million French Francs, in particular by the contributed capital of two vessels in the context of subordinated loans, the details of which were not communicated, and after having indicated that the increase in capital by 75 million French Francs was no longer necessary, Jacques Saadé called for a Board of Directors’ meeting for 7 March 1997, during which it was decided to call an extraordinary meeting (Assemblée Extraordinaire) set on 27 March, 1997 to decide the increase of CMA’s capital by 12 million French Francs so as to "reconstitute CMA's equity".
- Asked to respond to a new increase in capital that was decided arbitrarily and in conditions that are obviously irregular on 12 December, 1996, Mistral, acting as a cautious shareholder and concerned about the company's assets, criticized legitimately the procedure followed, and, moreover, demanded full clarifications on the reasons for this increase in capital and on the potential use of funds to be committed.
- Mistral s.a.l. was dismissed from CMA’s Board of Directors in the course of 1997, a measure intended to prevent it from accessing any information.
- On the date of subscription and while awaiting the JEX's (execution judge) decision regarding the presentation of bank guarantees, the bailiff hired by Mistral to deliver the subscription checks arrived 2 minutes and 14 seconds later than the time indicated for closing and was faced with a talking clock in the presence of bailiffs called upon by Jacques Saadé to take note of the delay and reject Mistral’s subscription.
This performance is fully explained by the blackmail exercised by Jacques Saadé who offered to accept the subscription to the capital increase on the condition that Mistral would put an end to all its legal procedures and other claims against Jacques Saadé 5.
The Set of Guarantees
It was proven afterwards that CMA was able to issue guarantees in favor of Mistral, as required by the French judges, by using the following process:
Jacques Saadé transferred through CGM an amount equal to Mistral's subscription to Bank of Beirut, while requesting the latter bank to guarantee CMA near the BFO Bank in Paris.
In turn, Jacques Saadé asked BFO Bank (Paris) to issue guarantees on behalf of CMA in favor of Mistral.
In other words, CMA was not in a position to guarantee Mistral and it was CGM that finally did, while, in parallel, Jacques Saadé was taking over the latter by arbitrarily barring CMA from this acquisition by transferring the shares held by CMA in
CGM in favor of his personal holding company in violation of Article 101.
The CMA-CGM Merger
In order to conceal these offences, Jacques Saadé announced the CMA-CGM merger, which, at the request of Mistral to the Commercial Court of Nanterre was countered by a judgment, which in turn upon appeal, was overruled by the Court of Appeal of Versailles.
On 27, November 1998, the Examining Judge (juge d'instruction) at the Public Prosecutor's Office of Nanterre, Mr. Augonnet, notified Jacques Saadé of his indictment for misuse of company assets and, after lengthy examination, placed him under judicial supervision, and, among other things, prohibited him from the direct or indirect management of CGM and any direct or indirect contact with members and managers of the company. Jacques Saadé was forced to resign from all of his corporate offices within CGM, CMA and the Holding CMA-CGM.
Under pressure from the various legal actions against Jacques Saadé, his indictment, as well as prohibition to manage, and in order to escape from the punitive sanctions that would have been taken against him, an agreement was signed with Johnny R. Saadé on 16 September, 2000 to end this drawn-out dispute.
However, the execution of this agreement concealed obscure points that would clearly demonstrate the premeditation of Jacques Saadé with the association of Choucri El Khoury, in order to reduce Mistral's interests to nothing.
Jacques Saadé’s unlawful acts are all the more serious as it cannot be refuted that the balance sheets and forecasts made available to Mistral upon signing the above agreement were totally wrong and showed results gravely lower than reality.
It was upon hiring one of France’s most prominent Audit firms that a thorough analysis of the CMA-CGM balance sheets was made -led by the President of France’s Statutory Auditors association-, that embezzlements, accounting manipulations and a major under-estimation of forecasted results were discovered. The results of those investigations and analysis were included in a substantial report that was submitted to the judicial authorities in France and Lebanon.
WANDERING SHARESSince its incorporation, CMA's capital was distributed equally between Johnny R. Saadé and Jacques Saadé via Mistral s.a.l. belonging to Johnny Saadé and Merit s.a.l. belonging to Jacques Saadé as well as shares through RS & Co s.a.l., which capital was held equally by Mistral (Holding) s.a.l. and Merit s.a.l.
Initial distribution of CMA’s capital - as a percentage
Merit s.a.l. (Jacques Saadé) 48,415 %Mistral Holding s.a.l. (Johnny Saadé) 48,415 %
Rodolphe Saadé & Co s.a.l. 3,170 %
However, from 1991 onwards, we see the emergence of a tiny shift of six shares in favor of Jacques Saadé out of a total of 600,000 shares, mathematically insignificant, but with serious consequences.
Indeed, Jacques Saadé's premeditated intention has been, since that time, to take control over CMA. This strategy was applied through transfer orders, each involving one single share, the importance of which escaped Mistral, which could not at that time have guessed the ill-intentioned determination of Jacques Saadé.
It was easy: Jacques Saadé acted by transferring those shares to his immediate entourage from wholly-owned subsidiaries of CMA which happened to hold shares in their own mother company (namely CMA). In each transaction, one CMA share shifted directly into his camp thus minimizing Mistral's percentage of the overall share capital.
The following examples illustrate this shift of shares:
• On 22, July 1991, one CMA share owned by Compagnie Maritime Financière (a wholly-owned CMA subsidiary) was quietly transferred to Tania Saadé, on a personal basis.
• On 26 December, 1991, one share owned by Compagnie Maritime Associée was also transferred to Farid Salem, Jacques Saadé's brother-in-law.
• And again, on the same date, another share in the same company was this time transferred to Jacques Saadé's "aide-de-camp", Tristan Vieljeux.Thus, on each similar transfer transaction via CMA subsidiaries, Mistral's share in CMA's capital was gradually whittled away, in homeopathic doses, always to the direct advantage of the Jacques Saadé clan. The repetitive nature of these transfers tipped six shares in favor of Jacques Saadé. Mistral became a minority shareholder. Mission accomplished!
Distribution after these transfers – in number of shares
Merit SAL (Jacques Saadé) 290.474 Under Jacques Saadé's control 6Mistral Holding SAL (Johnny Saadé) 290.474
Rodolphe Saadé & Co SAL 19.046
In addition to the six shares diverted in order to shift the majority control to Jacques Saadé's group, other subsequent illegal transfer transactions occurred in order to strengthen Jacques Saadé's position after the dilution of Mistral’s shareholding percentage.
A striking instance is that of Rodolphe Saadé & Co s.a.l.
This company, equally owned by Johnny Saadé's group, Mistral (Holding) s.a.l, and Jacques Saadé's group, Merit s.a.l., owned 19,046 CMA shares as illustrated in the table below. From the end of 1994 onwards, this company was no longer legally represented, following the non-renewal of the mandates of its chairman and Board of Directors. But despite this fact, Jacques Saadé granted himself the right to transfer in his favor 9,523 CMA shares, disregarding all applicable laws and codes 6.
Distribution after the RS & Co transfer - as a percentage
Merit SAL (Jacques Saadé) 49,999 % Jacques Saadé’s group 0,0015 %Under Jacques Saadé's control 50,0005 %
Mistral Holding SAL (Johnny Saadé) 48,41 %
Rodolphe Saadé & Co SAL 1,58 %
It is therefore with the 1.58% of RS & Co shares, transferred in his favor that Jacques Saadé ensured to himself the absolute majority in CMA's capital.
