CMA-CGM: Jacques Saade's involvement in "Damietta Gate" in Egypt
aidan778
Massaeyat » of October 17th 2006
Jacques Saade's involvement in "Damietta Gate"
New developments in the case of the Damietta company next November
The General Prosecutor launches new investigations in relation to
public funds and other irregularities perpetrated after the arrest of
Ali Massaad
The appearance of the accused and the lifting of the sequestrations are
the main issues of this case
This case locally known as the "great corruption case of the Damietta
Containers" and internationally named the "Damietta Gate" has
shaken the Egyptian, Arab and international public opinion.
>From the first audience, three of the six accused confessed, the third,
the fifth and the sixth and acknowledged having been involved in the
briberies paid to Ali Massaad, whereas the latter denied at the
beginning the whole matter.
The six accused, Ali Massaad, chairman of the board of directors of the
Damietta Container Company, Jihad Anis Dagher, employee of Leader
Company, Nabil Elie Bassil, CMA-CGM regional Finance and administrative
director, Mostapha Mohamad Khalil Abdel Monhem, Director of the
Damietta subsidiary, Jamal Abdel Razek Abdel Sadek and Ahmad Mahmoud
Ahmad Yacoub have been referred to the Penal Court by the General
Prosecutor (financial section), and the second hearing is set for
November 9th for a contradictory debate and confrontation with the
prosecution's witnesses who will appear before the court for
corruption and misappropriation of public funds.
The most surprising aspect of this case it seems is that Ali
Massaad's successor as head of the Damietta Container Company is
following the same methods as his predecessor, a matter which compelled
the General Prosecutor to launch a second investigation pertaining to
the period following Ali Massaad's management of the company. This
investigation has been postponed following the juridical holidays and
the promotion of prosecutor Wadih Hanna Nached.
Ali Massaad, known as the "Bey", is now in prison.
This case is about corruption, account manipulations, financial fraud
and a plot between the Damietta Container Company and French company
CMA-CGM presided by Lebanese national Jacques Saade whose corporate
headquarters are in Marseille. The file that is being dealt with by the
Court of State Financial Security in Egypt pertains to the
misappropriation of funds that could reach up to 20 million dollars.
The main accused is being held in temporary custody while awaiting the
outcome of this case.
This case is of major interest in its Egyptian, Lebanese and French
ramifications.
The Egyptian media has released important pieces of information
revealing that this is not an isolated corruption matter in the
shipping sector in Egypt. The former General Prosecutor Maher Abdel
Wahed has already ordered the chairman of the board of directors of the
Damietta Container Company, Ali Massaad, to be placed in custody and
his personal assets seized until the end of the investigation; the
latter decision has been notified to the Central Bank of Egypt, the
Finance Directorate and the land registry.
The General Prosecutor opened an investigation following a declaration
presented by the president of the Central Accounting Agency regarding
the statements of accounts pertaining to the company owned by the
holding company for land and shipping transport presided by the General
Mohammad Youssof already indicted in the case of the seizure of the
"Salem 2" vessel in the port of Alexandria. The president of the
Court of Appeal of the district of South Cairo, Adel Joumaa had set the
next hearing to last May 29th in order to take a decision as to the
verdict of the General Prosecutor.
The investigations have revealed a plot between engineer Ali Massaad
and the managers of the foreign shipping company regarding the
signature of an agreement according to which the foreigh company could
benefit from exceptional rebates to the detriment of the Damietta
Public Company that could reach up to 5,5 million dollars.
This scandal is worrying Egyptian public opinion as well as the
political scene, as it happens to occur after other scandals such as
the one related to the Directorate of Transport, the Bank of Cairo and
the robbery of steal and other metals.
The investigations have proven the existence of a plot between the
first accused Ali Massaad Saad and the President of the foreign
shipping company, which resulted in the disappearance of 6 million
dollars from the Egyptian treasury. It has been established, following
the house search, that the accused regularly received briberies from
France.
In a surprising rebounce, the investigation revealed that the managers
of the international shipping company based in Marseille (France)
reimbursed the amount of 3,1 million dollars by bankers cheque to the
Damietta Company following a compromise aimed at smothering the case,
after that the General Prosecutor started a legal action against this
company and seized the assets of Ali Massaad. This payment did not put
an end to the legal actions but led to the discovery of another aspect
of this case namely the direct involvement of the French company in
corrupting Egyptian officials.
Despite CMA-CGM's denial of any involvement in this corruption case
declaring that an internal investigation is underway in coordination
with the Egyptian authorities, the Sunday Express newspaper revealed
that CMA-CGM presided by Jacques Saade, paid 10,000 dollars per month
to Massaad, and has reimbursed as reparation 3.1 million dollars to the
Egyptian port of Damietta.
In a statement made by Jacques Saade to the same newspaper, he
mentioned that these people were paid by the CMA's Egyptian
subsidiary, that no transfers were made by the French head office and
that his company was investigating in coordination with the Egyptian
authorities. Various managers were heard including the accountancy
manager.
According to the Sunday Express, this is an extremely serious situation
and other countries, including the United States, are being worried. It
seems that political pressures have been exerted in order to prevent
CMA-CGM from acquiring from the English company P&O its shares in the
American port of Dubai for security reasons. The American authorities
are undertaking an investigation regarding this matter.
Other pieces of information collected in parallel to the secret
investigation indicated that many points in this case were still not
clear. The most important element that has been discovered until now is
the false contract -which is the main aspect of the investigation-
signed by Farid Salem, CMA-CGM general manager and brother-in-law of
Jacques Saade.
It has been revealed that Abdel Razek is the financial manager of
CMA-CGM in Egypt, presided by Jacques Saade, as indicated by the social
security registers.
All the evidence indicates that the financial offenses have been
perpetrated by the chairman of the Damietta Company, in addition to the
irregularities within the contract signed with the shipping line in
Marseille.
In an Al-Ahram article of May 26th 2006, it seems, according to the
investigations undertaken by the financial control services [official
body], the principal accused perceived important amounts on a regular
basis in exchange for those irregularities. The former General
Prosecutor Wadih Hanna Nached issued search-warrants in the offices of
the said shipping company (CMA-CGM) in Alexandria, which resulted in
the seizure of numerous pieces of evidence confirming the transfer of
important amounts from the accounts of the latter company in favor of
the accused.
According to the "magazine Rose El Youssof" that published the
result of a long investigation on the subject, the chairman of the
Damietta Company is the owner of two palaces in the city of Damietta on
the river Nile as well as a dozen estates and three villas in the
touristic village of Yasmina in Port Said, in addition to five hectares
of agricultural land in the latter city, 20 million Egyptian pounds
deposited in bank accounts in his name, his wife's and children's
and a number of bank accounts abroad which inventory is not yet known.
It was mentioned in the article that Ali Massaad had a nickname, "the
Bey", to the order of whom checks were drawn up.
The investigations revealed that the number of containers CMA-CGM sent
in transit through the port of Damietta, did not exceed 70,000 teus for
the last 12 months allowing the French company to benefit from rebates
of the amount of 5,5 million dollars. This led them to illegally modify
the contract with the Damietta Company by paying briberies in addition
to the monthly remuneration of Ali Massaad.
Rose El Youssof added that Ali Massaad pretended that he made his
fortune in Saudi Arabia, where he worked for 12 years, and in Bahrein,
where he worked 5 years; but was not able to keep the evidence that
would clear him.
A surprising aspect is that he appeared before the court, which ordered
the seizure of his assets and his wife's, wearing bad quality
clothes, in an attempt to conceal his wealth. The most astonishing is
that the law firm handling his defense is one of the major firms
specialized in shipping matters in Egypt.
The investigation is moving forward with the hope to shed light on
other thorny aspects of this case. There is a strong probability that
the General Prosecutor would prosecute Jacques Saade, chairman of
CMA-CGM; one more element that adds up to the conflict as to the
ownership of this company and increases the legal stranglehold around
Jacques Saade.
Damietta "Gate" to date is the last link in a series of legal
proceedings facing Jacques Saade.
If this case is taking an official aspect in Egypt given that it
involves a number of irregularities, corruptions and misappropriation
of public funds, other legal proceedings have been launched in many
countries in which the conflict between the brothers Jacques and Johnny
Saade is raging around the ownership of CMA-CGM, the first shipping
company in France and the third worldwide.
Six years after the signature of a contract on September 16th 2006
between the two parties aimed at ending the conflict but which deprived
Johnny Saade of his legitimate rights due to a deceitful set-up, new
facts could reveal unexpected developments in the coming months very
probably in favor of the latter.
The internet site www.mistralholding.com owned by Johnny Saade's
company Mistral Holding s.a.l., contains a huge amount of documents,
compromising reports and legal evidence, that explains in detail the
conflict between the two brothers which is being reported at the top of
the news in the Lebanese, arab and international press. Among these
documents a report issued by the financial expert Antoine Gaudino
explaining the circumstances that led to the said conflict.
One can read in the report that the conflict between the two Saade
brothers as the major shareholders of the CMA-CGM Group is mentioned by
the media as a family feud due to Jacques Saade's statements, but
Johnny, who owns 48.44% of CMA's shares accuses his brother of hiding
information in general and more specifically regarding transactions
initiated by Jacques Saade in France and elsewhere.
The conflict actually starts by the lack of transparency during the
acquisition of CGM by CMA, and Jacques Saade's attempt at controlling
the group for his sole personal benefit.
The preliminary investigations undertaken by Gaudino on August 29th
1997 at the request of Mistral holding, revealed that the management
system established by Jacques Saade on behalf of CMA made Johnny Saade
fearful, as major shareholder, of the company's future.
With further investigations, various fiscal irregularities and others
have been discovered, and are part of the conflict between the
brothers.
The main historical stages of this conflict are the following:
The Limited company CMA (Compagnie Maritime d'Affretement) was
created by brothers Johnny and Jacques Saade on September 8th 1986 and
registered at the RCS of Marseille on April 8th 1987 under number 340
353 911.
The initial capital was FFr.250,000. It was to be increased following
various share capital increases in 1986, 1987 and 1993 as well as on
May 26th 1994 further to an extraordinary general assembly to reach
FFr. 60,000,000 divided in 600,000 shares with a nominal value of
FFr.100.
At the latter date and according to the shareholders' registry, the
shares were distributed between three Lebanese companies: Merit s.a.l.,
owned by Jacques Saade, 48.41%; Mistral Holding s.a.l., owned by Johnny
Saade, 48.41%.
The six shares attributed to the "Jacques Saade Family" are held by
Mr. Jacques Saade, his spouse Mrs Nayla Salem, his daughter Tania, his
son Rodolphe, his brother-in-law Mr. Farid Salem and Mr.Tristan
Vieljeux.
The three Lebanese companies are all registered at the Beirut registrar
of Companies and domiciled in the same city and the same address.The
company Rodolphe Saade & Co is owned by Jacques Saade and Johnny Saade,
50% of the shares each, respectively through Merit s.a.l. and Mistral
Holding s.a.l.
CGM s.a. (Compagnie Generale maritime), with a capital of FFr.
1,275,948,600 and registered at the RCS of Nanterre under number 562
024 422, has been transferred by the French government to the private
sector by ministerial decision on October 21st 1996.
The capital of CGM is distributed as follows: 90% of the shares came to
be held by CMA, 6% personally by Jacques Saade and 4% between three
other shareholders.
CMA got 96% of the CGM shares whereas the 4% remaining were held by
three other shareholders; and Jacques Saade's stake reached 51%
whereas Johnny's, through Mistral holding, did not reach 49.9%.
The first findings revealed a certain number of irregularities, the
most important of which related to general assembly meetings.
An extraordinary general assembly was held at CMA head offices on
December 12th 1996 without letting Mistral Holding s.a.l. have the
opportunity to participate. This assembly was aimed at granting the
board of directors the right to increase the share capital, in one or
many times. This authorization to the board of directors was valid for
a period of five years and aimed at increasing CMA's capital from
FFr. 60,000,000 to a maximum of FFr. 135,000,000.
The report added that until December 12th 1996 CMA's management has
always convened Mistral holding s.a.l. by rapid courier (DHL) and
simultaneously by fax, given postage delays to Lebanon. In an unusual
manner, the convening to the extraordinary general assembly meeting of
December 12th 1996 was sent to Mistral Holding s.a.l. on November 26th
1996 by recommended letter with acknowledgement of receipt.
Everything was done in order to prevent Johnny Saade to be informed in
due time and therefore to participate to the main decisions to be taken
including the share capital increase.
It is within the above-mentionned context that Johnny Saade seized the
Tribunal of Commerce of Marseille who designated on December 23rd 1996
a judicial "huissier' in order to get the documents pertaining to
general assemblies and board of directors held by CMA.
Following this judicial decision, Mr Johnny Saade was able to raise
various irregularities. Four Board of Directors meetings were held on
June 7th, September 20th and November 14th & 15th 1996 without Mistral
Holding s.a.l. being ever convened whereas the minutes of meetings
stipulated that Mistral Holding s.a.l. was "absent and excused".
A general assembly was held on March 27th 1997 in cancellation of the
share capital increase decided by the general assembly of December 12th
1996.
This did not however erase the irregularities due to the share
transfers and the acquired majority to the benefit of Jacques Saade
which jumped from 48,41% to 50,001%.
Irregularities were noticed regarding the presentation of balance
sheets. It appears from CMA's balance sheets in the offer for the
acquisition of the CGM of October 3rd 1996, that CMA was in good
financial health, that it increased its shareholders' equity funds,
reaching FFr. 700 million and the CGM acquisition project would allow
the financial rehabilitation of the latter no later than 1999.
The findings made on certain accounting entries called in question the
validity of the level of CMA's shareholders' equity which were
lower than the reality. These shareholders' equity funds were much
lower than the FFr. 200 millions and CGM's takeover was a juicy
business deal that Jacques Saade wanted to keep for himself to the
detriment of his brother Johnny.
This report mentioned, backed by the necessary documents and figures,
that the filed balance sheets were false and did not reflect the truth
about CMA's accounts, a matter that was to jeopardize the future of
the company and the interests of Johnny Saade, its main shareholder.
This report mentionned that Jacques Saade made his brother Johnny
become a minority shareholder through successive steps and by
premeditation in order to prepare the acquisition of CGM to his sole
personal benefit; the report also summarized the various attempts of
Jacques Saade to escape legal proceedings which were accumulating every
day.
Of importance in this conflict is the re-opening of a financial
investigation by the Paris Tribunal regarding the accounting
irregularities and fiscal fraud perpetrated by Jacques Saade in
managing CMA-CGM.
Other information indicate that Egyptian courts of law are entangled in
an important corruption file involving the Port of Damietta since the
90s and are attempting to determine the scale of corruption involving
the representatives of the French shipping line on behalf of their
managers in France. While awaiting new developments, the director of
the Port of Damietta has in the meantime been arrested.
On another level and following the penal lawsuit filed by Mistral
Holding, Paris Tribunals (France) have launched legal investigation
regarding the CMA-CGM balances sheets that are allegedly false. The
investigation has been entrusted to two prominent magistrates in
France. The aim of this investigation is to shed light on the possible
fiscal fraud and concealment of the real profits, a matter that goes
back to the signature of the contract that has put an end to the
conflict between brothers Jacques and Johnny Saade.
Finally, we can add to this multi-faceted judicial file that is
surrounding Jacques Saade, a matter that is worrying investigators near
the General Prosecutor of Lattakia in Syria. It involves the
falsification of official documents, the use of false documents and
usurpation of legal capacity, involving Choucri el Khoury that seems to
have acted on behalf of Jacques Saade.