If we conduct an in-depth analysis of the various contracts signed between CMA and the other companies belonging to Jacques Saadé, the number of irregularities would be surprising and impossible for an analyst to work out.
In order to be more specific on the manipulative capabilities of Jacques Saadé in financial accounting and documentation, we will mention the loan agreement signed between Rodolphe Saadé & Co. s.a.l. and CMA.
On the eve of CGM’s purchase by CMA, it was necessary for the company’s management to abide with the privatization terms and conditions set by the French Government. It was in fact necessary for CMA’s equity funds to reach a certain minimum level, this condition being essential for the official privatization decree to be issued in favor of CMA.
Rodolphe Saadé & Co. was one of CMA’s creditors. According to the auditors’ special report for the year 1995, the account in favor of Rodolphe Saadé & Co at CMA reached 50,605,194 French Francs on 31 December, 1994 and this account remained unchanged by the end of the year 1995.
It was therefore easy to convert this amount into a long term loan; thus it was shown in the 1996 consolidated accounts as a shareholders’ loan assimilated to equity funds instead of it being considered as miscellaneous debtors and creditors, all of which with the endorsement and consent of CMA’s auditors Coopers & Lybrand Audit firm and the signature of Philippe Willemin.
A loan agreement between CMA and RS & Co which already covered this conversion was about to expire, and it was suddenly necessary to find a way to keep, even artificially, the equity capital of CMA.
Therefore, a renewal of the loan agreement between CMA and RS & Co was signed straightaway on 15 November, 1996 within the framework of various adjustments that were needed to precede the takeover of CGM.
However, what seems to have escaped Jacques Saadé, is the fact that this agreement, oddly signed by him on behalf of both parties, could not be legally valid, since by the end of 1994, RS & Co had no longer any representation, due to the non-renewal of its Board of Directors, and consequently, this agreement could in no event be considered legal 15.
Faced with the reaction of Johnny Saadé's advisors right at the beginning of the dispute, and following the discovery of a whole series of embezzlements and irregularities of all kinds, and in order for him to deal with this situation, Jacques Saadé replaced this contract with a loan agreement backdated to 11 October, 1994, a date falling very shortly before the end of his mandate as chairman of RS & Co.
But here again, and despite of the above, the latter document was false for the simple reason that it had never been authorized by a shareholders’ meeting. Therefore, a power abuse has without doubt been committed, bearing in mind that this contract was never mentioned in any report issued by CMA’s auditors for the years 1994 and 1995 16
Moreover, the proof of forgery is obvious whenever compared to the auditors’ special report for 1995.
As a matter of fact, it is mentioned in this report and more particularly within the section “Agreement with R.S. & Co.” that the loan remuneration is set at 7,72% whereas it is mentioned within the illegal back-dated loan contract that the remuneration was set at 9%. How could it be possible to justify this difference in rates between the two documents, if not by the non-existence of this contract on the date the auditors’ report was signed?
If this loan contract signed on 11 October, 1994 really existed and was not forged and back-dated, the auditors’ report for the year 1995 would have taken it into consideration by mentioning 9% as the rate of remuneration between R.S. & Co and CMA as clearly stated in the said contract.
This was further evidence of the forgery related to the loan contract of 11 October, 1994.
It is therefore clear that Jacques Saadé has signed an illegal contract dated 15 November, 1996 and replaced it with the false and back-dated contract dated 11 October, 1994, all of which in an attempt to circumvent the legal proceedings brought forward against its managerial methods.
UNLAWFUL MEETINGSAmong the numerous techniques used by Jacques Saadé and his aides to prevent Mistral from participating in CMA’s management and share capital increases, Mistral was at all costs not to be informed of the meetings of the Board of Directors –and was thus prevented from participating in the group management-, and in CMA’s Board meetings (Assemblee Generale), despite the fact that Mistral was holding 50% of the company’s shares. Jacques Saadé deliberately avoided notifying Mistral of the Extraordinary Board meetings (Assemblee Generale) that took place at the company’s head offices on 12 December, 1996 and whose purpose was to authorize CMA’s capital increase to 75 million French Francs through the issuance of new shares.
Being perfectly aware of the mail delivery delays between France and Lebanon and despite the fact that Mistral was usually notified through an official letter and a fax, Jacques Saadé deliberately sent the notice for the Extraordinary Board meeting (Assemblee Generale) to be held on 12 December, 1996, only by letter with acknowledgment of receipt. The latter courier was only received by Mistral on the 26 December, 1996, in other words after the General Assembly Meeting! Mistral’s absence was thus guaranteed. Everything was set in place in order to prevent Mistral –directly and indirectly holding 50% of CMA’s shares from being informed of the 12 December, 1996 Board meeting and thus casting its vote in relation to CMA’s capital increase.
In response to Mistral’s request, the Commercial Tribunal of Marseille appointed a judicial bailiff on December 23rd, 1996, in order to obtain all documents related to CMA’s Board of Directors and meetings (Assemblee Generale) .
It was able to discover that four Board of Directors’ meetings were held on the 7th of June, 20th of September, 14th and 15th of November 1996 without Mistral even being notified despite the fact that it was clearly mentioned on the minutes of the meetings that it was “Absent & Excused”.
In the meantime, Jacques Saadé cancelled the decisions taken by the Extraordinary Board of Directors meetings (Assemblee Generale) of December 12th, 1996.
MERGER FOR DILUTION PURPOSESIt was imperative to dilute Mistral by any mean in order to prevent it from influencing the course of decisions taken in the Board meetings and more importantly to forbid it from supervising and opposing the illegal decisions taken by the Board of Directors chaired by Jacques Saadé.
This willingness to keep Mistral away was premeditated even through the acquisition of CGM. The fact that Jacques Saadé has constantly pretended that Mistral refused the acquisition of CGM during the latter’s privatization process, had intended to justify the transfer of CGM’s shares to the benefit of Merit France S.A., Jacques Saadé’s personal company.
Mistral has never rejected the acquisition of CGM; but the way this transaction had been presented to Mistral was deliberately incomplete and did not allow it to give its unconditional agreement.
The share transfer to Jacques Saadé’s personal company took place despite the clauses set by the French privatization authorities which prohibited the buyer to transfer any shares of a privatized company –in this case CGM- within a period of two years from the said acquisition. Surprisingly enough, the Government authorities did not oppose this transfer.
Given that the meetings of the Board of Directors and the general assemblies could no longer be held without Mistral’s presence, and given that Mistral cannot twice be prevented to subscribe to share capital increases as it has previously been the case on the pretext of a few minutes delay; The last result was to step forward with a merger proposal between CMA and CGM in order to further dilute Mistral. This set-up required the involvement of the Board of Directors and the companies’ auditors.
Mistral was at that time only a CMA shareholder and had been illegally diluted by being prevented to subscribe to the last share capital increase on the pretext of a three minutes delay, as a result of which it was only holding 23% of CMA’s shares.
The merger as stated above was intended at further diluting Mistral through a fraudulent appraisal of CMA and CGM: CMA’s shares have been undervalued whereas CGM’s have been overvalued.
The merger auditors approved the figures presented by Jacques Saadé and his accomplices including the company’s auditors. As a result Mistral found itself further diluted within the merged CMA-CGM entity from 23% to 10.42%.
“COVER-UP” MERGERAccording to the agreement of 16 September, 2000, which has been challenged before the courts ever since, Mistral transferred its CMA-CGM shares to Jacques Saadé who requested this transaction be made to the benefit of an unknown Paris-based company by the name of La Teuillere S.A.
Checks were issued by a banking institution and the principal was unknown.
But here again, like all of Jacques Saadé’s transactions, this one was based on an illegal set-up.
Discovery
Upon the conflict’s resurgence, Mistral got interested in gathering more information on La Teuillere.
It appears that La Teuillere, acquired by Jacques Saadé for the sole purpose of the 16 September, 2000 transaction, was a shelf company without any activity and its insignificant capital of €40.000 had all been used-up; even though this company was able to acquire Mistral’s shares.
After further investigations, it appeared that the shares acquired by La Teuillere on behalf of Jacques Saadé were paid by CMA-CGM. This was a typical case of embezzlement of corporate funds:
• The first banker’s checK was issued by Société Générale in Paris.
It has been discovered later that this banker’s check was endorsed to the debit of a CMA-CGM account.
• Given that the balance ought to be paid at maturity, the remaining payments were guaranteed through the issuance of three letters of guarantee issued by Société Générale (Paris); and here again it was discovered that these letters were endorsed by CMA-CGM.
Upon the resurgence of the conflict, Jacques Saadé, worried about Mistral’s reaction and in an attempt to conceal this embezzlement of funds, has put in place a merger/acquisition plan of La Teuillere by CMA-CGM thus attempting to hide the 23 million dollar loan granted to La Teuillere with the endorsement of CMA-CGM in order to acquire Mistral’s shares in the French group.
This set-up was ridiculously justified by stating that CMA-CGM had a constant surplus in dollars! This merger was put into effect retroactively to the 14th of September, 2000, in other words 48 hours before the signature of the 16th of September, 2000 contract.
