BOGDAN DRĂGOI IS NOT OUT OF THE WOODS YETThe request of SIF Oltenia to have the decisions of the Ordinary General Shareholder Meeting of SIF Banat-Crişana of June 2019 will be heard in court again

Ziarul BURSA #English Section / 11 februarie 2021

The request of SIF Oltenia to have the decisions of the Ordinary General Shareholder Meeting of SIF Banat-Crişana of June 2019 will be heard in court again

The decision of the shareholders of SIF Banat-Crişana to exonerate Bogdan Drăgoi, analyzed by the court of first instance

The drawing up and the carrying out of a package of measures for the recouping of an alleged loss caused by former executives Lakis and Bîlteanu is another item on the agenda rejected by the shareholders of SIF1

The lawsuit between SIF Oltenia (SIF5) and SIF Banat-Crişana (SIF1), in which SIF5 is asking for the annulment of a decision of the shareholders of SIF1 of June 20, 2019, which has involved rejecting the payout of dividends and the dismissal of the management of SIF1 made up of Bogdan Drăgoi and Radu Străuţ.

The Timişoara court of appeal has decided, on February 9, the elimination of the ruling of the County Court of Arad rendered in july 2020, and has ruled the retrial of the case in the court of first instance or in the qualified court, information published n the Romanian courts portal.

In the ruling that has now been invalidated by the Timişoara Court of Appeal, it was acknowledged, at the time that SIF Oltenia, together with Flaros, (which now is no longer a party in the lawsuit), did not have have a standing to bring proceedings, and the lawsuit filed would be inadmissible, but through the ruling of February 9 the Court basically established the resumption of the entire case.

For the general shareholder meeting of June 20, 2019, which had been initially summoned in order to appoint the financial auditor, a group of shareholders gathered behind SIF Oltenia had asked the making of additions to the meeting agenda of several items which essentially sought the removal of the management of SIF Banat-Crişana, with CEO Bogdan Drăgoi.

Aside from the dismissal of the leaders of the SIF, the Craiova group, led by Tudor Ciurezu, (at the time president of SIF Oltenia), had asked for the paying of dividends of 77.62 million lei from the profit of 2016, which had been allocated as "Other reserves" and unused according to the intended destination (a buyback program) as well as the drawing up and taking of a package of measures to recoup the loss caused by the failure of SIF1 to file a lawsuit as a plaintiff claiming damages in the lawsuit of Bîlteanu and Lakis, former leaders of SIF - Banat Crişana.

The two had been sentenced, each, to three years in prison with suspended sentences, for the malicious use of Industrialexport's credit or assets and on three counts of stock market manipulation.

But the requests of the group coagulated around SIF Oltenia made in that Ordinary General Shareholder Meeting were categorically rejected by the shareholder, in meeting in which almost 40% of the shareholders of the SIF voted, and about 70% of the votes were against the requests of the Craiova-based investment company.

According to the information presented in the informational materials of the meeting, SIF Banat-Crişana did not bring a civil lawsuit in the Bîlteanu - Lakis case because the independent auditor contracted by the company for that case had not found any loss caused to SIF1 by the trades in Azuga Turism shares. The document of the SIF mentioned that the analysis had been coordinated by a team of lawyers of SCA David and Baias, for the legal aspects of the transaction, and for those of a financial nature, by the financial consultants of Pricewaterhouse Coopers. The independent auditor conducted a study in detail of the transaction concerning the purchase of the block of shares, as well as of the subscription by SIF Banat-Crişana of the newly issued shares as part of the share capital increase of Azuga Turism.

Speaking about the participation of SIF Banat-Crişana in the share capital increase of Azuga Turism, it was mentioned that in the report of the auditor it had been concluded that the subscription of the shares had been done at face value, under favorable circumstances, as the price per share was a lot smaller than the market values/investments estimated by the evaluation experts.

Those explanations were unsatisfactory to Liviu Ungureanu, the CEO of Flaros, (a company in which SIF Oltenia held 81%), which subsequently sent a note to the ASF in which it claimed that in fact, in the meeting, the management of SIF1 refused to present concrete data about the failure of SIF Banat - Crişana to bring a civil lawsuit in the criminal proceedings against Lakis-Bîlteanu.

In addition, the director Flaros was of the opinion that the decision not to constitute a civil party in the case was deeply illegal, because the members of the Board of Directors of SIF1 had substituted themselves to the shareholders, who did not have the legal possibility to express their will in connection with the action for damages (statement proven by the provisions of art. 155. paragraph 1 of Law no. 31/1990). In his opinion, the information material presented to the shareholders by the management of SIF1 regarding the reasons for not bringing a civil lawsuit in the proceedings did not satisfy the shareholders' information requirements and, moreover, there was a risk of some relevant information being hidden from shareholders. At the time, Liviu Ungureanu, as a shareholder of SIF1, requested that the ASF ask the senior management of SIF1 to provide additional information and documents on their failure to bring a civil lawsuit in the criminal proceedings brought in 2014 against the former directors of the company.

Now the lawsuit will resume.

It bears mentioning that at the reference rate for the SIF Banat-Crişana Ordinary General Shareholder Meeting of June 20, 2019, among the shareholders of SIF Banat-Crişana were investment funds financed to different degrees by SIF1 and SIF Muntenia (SIF4), which many market players have asked the ASF to acknowledge that they were acting in concert.

For that general shareholder meeting, SIF Oltenia submitted a request with the ASF in which it was asking the Authority to rule the suspension of the voting rights for Torch Investment, SIF Muntenia and three investment funds (OPUS - Chartered Issuances SA/AA Luxembourg, Fondul Închis de Investiţii Active Plus and FIA ROUMANIAN STRATEGY FUND AA/Vaduz), an approach which was left unanswered by the ASF, according to the SIF.

One day before the General Shareholder Meeting, the ASF has informed that according to its own analyses only the group made up of Aris Capital, Torch Investment and Smart Capital Investment, which held 12.22777% of SIF1, was presumed to be acting in concert in relation to SIF Banat - Crişana and has asked for the management of the company to limit the voting rights of the group to the legal threshold of 5%.

Note 1

The list of shareholders of SIF1 on June 6, 2019, according to some ASF documents:

- Opus-Chartered Issuances - 4.99%

- SIF Muntenia - 4.97%

- Aris Capital - 4.83%

- Smart Capital Investments - 4.72%

- Atlas-Investment Solutions - 4.36%

- Romania Strategy Fund - 4.11%

- SIF Oltenia - 3.77%

- SIF Moldova - 3.57%

- Torch Invest - 2.67%

- FII Active Plus - 2.59%

- Metropolitan Life Fond de Pensii - 2.47%

- Morgan Stanley & Co International Plc - 2.43%

- Aripi Fond de Pensii - 1.98%

- Pension Reserves Investment Trust Fund - 1.48%

- International Romanian Equity - 1.05%

- Vital/Aegon Fond de Pensii - 1.03%

- Broadhurst Investments Trust Fund - 1.02%.

In total 268.61 million SIF1 shares, the equivalent of 51.91% of SIF Banat-Crişana.

Note 2

Dragoş Bîlteanu and Najib El Lakis, former executives of SIF Banat-Crişana, stayed in preventive arrest between December 2014 and April 2015, and then went into house arrest and later under court supervision. The loss they caused allegedly exceeded 20 million Euros, according to the judicial sources consulted by BURSA in January 2015 (one month after the two were arrested), by using Industrialexport and a large number of offshore companies. The court of first instance issued no ruling on the loss caused, also because the two aggrieved parties, SIF1 and Industrialexport, did not bring a civil lawsuit.


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