IN THE HIGH COURT OF LESOTHO
In the matter between:
SCHNEIDER ELECTRIC S.A. (formally Spie Batignolles) Applicant
DIRECTOR OF PUBLIC PROSECUTIONS Respondent
Charge: Application on Review
Delivered by the Honourable Mr Justice T. Nomngcongo on the 11th December 2003
This is an application on a notice of motion in limine of criminal proceedings by a company that goes under the name Schneider Electric S.A. (Formerly Spie Batignolles). The company seeks orders in the following terms:
Declaring that the summons in the criminal proceedings under Case No. CRI/T/111/99 has not been regularly and properly served on the applicant;
Declaring that Martin Walter Lins was irregularly and improperly cited as a director or servant of applicant in Case No. CRI/T/111/99;
Declaring that Martin Walter Lins is not representing the applicant in the Criminal proceedings under Case No. CRI/T/111/99;
Granting the applicant further and /or alternative relief.
The case has its beginnings some time ago when a number of individuals, partnerships and companies, nineteen in all, were indicted in this Court on a multitude of charges alleging bribery received or proferred. All these entities were included in one indictment. It came to be that it was ordered that they be charged separately. One such entity in the joint indictment was a company called Spie Batignolles. It was cited as Accused number 8. Now that, Spie Batignolles immediately took up issue with the Director of Public Prosecutions, representing the crown in similar terms as the present applicant apparently under the misapprehension that they were the
target of prosecution. They have since dropped their application when it was made clear that in fact the target was the present applicant. However the accused in the indictment is still referred to as Spie Batignolles.
The first and most obvious question was what business the applicant had in bringing this application when its name suggested that it was a totally different company albeit in brackets it refers itself as "formerly Spie Batignollies. This is the more so because in his founding affidavit one Juan Pedro Salazar says in no uncertain terms that:
"Applicant had no further interest in the Lesotho Highlands Water Project contracts transferred to Spie 2. It ceased to be a member of the joint ventures LHPC and MHPC....." (Par 12 of the founding affidavit.)
The simple answer to the question which I repeated after hearing argument on behalf of applicant was that the present applicant was the "successor in title" to Spie Batignolles and it realized that it was at risk.
What then follows is an intricate web of corporate manipulation spun somewhere in France with its yarn reaching over to the Kingdom of
Lesotho. It goes as follows:
According to one Juan Pedro Salazar who deposed to the founding affidavit sometime not quite specified a company was formed and registered in France under number B542048574. This company's name was Spie Batignolles. Salazar calls that company Spie.l. This company either by itself or in conjunction with other companies with which it formed a partnership tendered for and was apparently awarded several contracts by the Lesotho Highlands Development Authority (LHDA).
On the 19th May 1995, Salazar says this company entered into what he calls a "contribution and divestment agreement" with another duly registered French Company called Gesilec in terms of certain provisions of the French Law which he says are of the 24th July 1966. In terms of the annexed agreement the registered address of both companies was Cergy Pontoise (95863), 10 avenue de 1 Enterprise. The preamble to the agreement (a translated version has been attached marked "A2") has very
It is provided for example on behalf of the ''Contributor" as follows.
"Which, subject to the condition precedent of the realization of the Spie Batignolles/schneider SA merger, shall dc denominated SCHNEIDER SA as of the date of its special shareholders* Meeting of the 27th June 1995".
and on behalf of the beneficiary
"Which, subject to the conditions precedent of the realization of the contribution hereinunder and of the SPIE BATIGNOLLES/SCHNEIDER SA merger shall be denominated SPIE BATIGNOLLES as of the date of its special shareholders' meeting of 27 June 1995."
In terms therefore of the "contribution and divestment agreement", Spie Batignolles divested itself of all its assets and liabilities and deposited them in the French Company Gesilec which at the same time at the special shareholders' meeting held on the 27th June 1995 changed its name to none other Spei Batignolle.
What I prefer to call the original Spie Batignolle at a meeting of the same date the 27th June 1995 merged with another French Company Schneider
SA and Spei Batignolles now assumed the latter name which was later changed to Schneider Electric SA. Interestingly however it retained the original registration number B540248574. What this means is that when the original Spie Batignolles decided to dissolve itself apparently without the sanction of any court either here or in France what ever the law is in that distant land, it left its name in Lesotho and whatever else was associated itself, including most of its employees according to Salazas would have us believe. It never even bothered to change its registration number as an external company in Lesotho. It retained its face in this country intact. On the other hand it left in France the number on the basis of which it was registered in Lesotho as external company in the hands of a completely different entity. I have no doubt in my mind that this was calculated to deceive and to send the authorities of this country on a wild goose chase. It is directly in conflict with sec. 21 of the companies Act No. 25 of 1967 which provides in no uncertain terms that:
21 (2) No name shall be reserved and no company shall be registered by a name which is identical with that for which a reservation is current or with that of a registered company or registered external company or which nearly
resembles any such name as to be calculated to deceive unless the registered company or registered external company is in liquidation and signifies its consent to the registration in such manner as the Registrar may require.
Unless otherwise ordered by the Minister, the Registrar shall not register a company by a name which in his opinion is calculated to mislead the public
Significantly Spei Batignolles is doing business as usual in Lesotho notwithstanding a non-compliance with a further provision in the Companies Act Sec. 286
(3) that "if any alteration is made in —
the charter, statutes or memorandum and articles of an external company or other instruments.......
the external company shall, within six weeks of such alteration lodge with the Registrar for registering a return containing particulars of the alteration ...."
What all this leads me to is that whatever happened in France nothing did happen in this country. If something did happen in France this was meant to mislead and calculated to deceive us in Lesotho. The present applicant was no doubt a party to such machinations as were done in France. It is hardly a coincidence that all the so called mergers deposed to by Salazar
were done by resolutions of special shareholders' meetings on the same date. All of these were done for no demonstrable reason around the time when the net was closing around one Mr. Masupha Sole, who it is alleged received bribes from Spie Batignolles.
Again this it has done not only in clear violation of the law but also in breach of its contractual obligations: Article 3. 1 of the annexed contract between the LHDA and the joint ventures of which Spie Batignolles was
a partner provides:
"3. The contractor shall not, without the prior consent of the employer (which consent notwithstanding the provisions of sub-clause 1.5 shall be at the sole discretion of the employer) assign the contract or any part thereof, or any benefit or interest therein or thereunder otherwise than by:
a charge in favour of the Contractor's bankers of any monies due or to become due under the contract.
assignment to the Contractor's insurers (in cases where the insurers have discharged the contractor's loss or liability) of the Contractor's right to obtain relief against any other party liable."
1 think it was situations such as these that Lord Denning had in mind when he observed:
"Most merchants and most traders are now limited liability companies. Not only in England but also in Countries overseas. The law, however has let down a curtain which conceals the goings on of the directors and managers of a company. Beneath this curtain all sorts of fraud can be perpetrated, on customers, creditors and on shareholders". See The Due Process of Law by the Rt. Hon. Lord Denning M.R. (London Butterworths 1980)
It is in cases like this that the court is entitled to "pierce the corporate veil" and see an entity for what is it is. The indications in this case are that in all probability the companies involved in France in what I can only regard as a scam were under the control of the same Board of directors and managers and the shares were controlled by a few individuals. The same people perceived no problem in circumventing the company laws of Lesotho without even changing the faces of their servants. It is no wonder that when Lins received summons they immediately knew, as it was put, that they were at risk. This is a classic case where " fraudulent use is made of the fiction of legal personality for purposes of improper conduct". See Company Law by Cilliers Benade 4th Ed Butterworth. p. 14
I conclude therefore that the company Spie Batignolles, whether it be
called Spei 1 or Spie II is the same economic entity for the purposes of the pending criminal proceedings in CRI/T/111/99. The applicant herein was a mere red herring intended to deflect attention from this reality. Spie Batignolles is still a partner in the joint venture Lesotho Highlands Project Contractors whether it be called Spie 1 or Spie II and the company registered as an external company under Lesotho registration number 87/18E. Martin Walter Lins being a servant of one of the partners of the said joint venture was therefore properly served with the summons in the said pending criminal trial. (See Sogreah and Others v Director of Public Prosecutions (CRI/T/111/99) This is in terms of sec.338(2) of the Criminal Procedure and Act of 1981.
Having come to this conclusion it becomes unnecessary for me to consider all the other arguments raised on behalf of the applicant and the respondent.
It is therefore ordered as follows.
The application is dismissed with costs.
Martin Walter Lins is ordered to appear and plead on behalf of the accused on the post-poned date of hearing being the 1st of June 2004.
This order be served upon the said Martin Walter Lins.
JUDGE 11 DECEMBER 2003
Mr Viljoen : For Applicant Mr Van Zyl :
For Applicant Mr Penzorn : For Respondent/Crown