Further Mabofi Statement re Emfesz
APPEAL COURT IN HUNGARY CONFIRMS THAT THE APPROVAL OF ROSGAS AS THE OWNER OF EMFESZ BY THE HUNGARIAN ENERGY OFFICE (MEH) WAS UNLAWFUL
ROSGAS NO LONGER ALLOWED TO EXERCISE RIGHTS AS SHAREHOLDER
The Budapest Municipal Court of Appeal has on the 5 May 2010 upheld the January ruling of the Metropolitan Court in Budapest confirming that the approval by the Hungarian Energy Authority (MEH) of the fraudulent transfer of Emfesz to Rosgas was unlawful.
This ruling is final and binding, and is not subject to appeal by Rosgas.
Rosgas is no longer authorised by the MEH to be the owner of Emfesz. Rosgas is now obliged to make a fresh application to the MEH. The Law regarding such applications changed in 2009 such that any fresh application by Rosgas has to involve the active participation of Mabofi, which will, of course, not be forthcoming.
As a result of this ruling Mabofi has written to the MEH pointing out the absence of Mabofi’s consent to the Rosgas transaction and requesting the MEH to give Mabofi full participation in any repeated process.
Mabofi will also be writing to Emfesz and to the Court of Registration informing them that, based on s 95 (3) of the Electricity Act, Rosgas is no longer allowed to exercise its purported rights as a shareholder of Emfesz, and that Emfesz shall not accept any further shareholder resolutions or instructions from Rosgas.
Background:
On 29 April 2009, Rosgas, a company registered in Switzerland and with no disclosed shareholders, informed the Hungarian Energy Office (MEH) that it had acquired 100% ownership in Emfesz from Mabofi. Rosgas requested formal approval by the MEH for the transfer. According to Hungarian law, the consent of MEH is required for the change of ownership of a Hungarian energy company. On the same day (i.e. 29 April 2009) MEH gave its consent to the transfer. This consent was given without the production to MEH of any documentation from any authorised representatives of Mabofi or any agreement between Mabofi and Rosgas relating to the purported transfer (as no such agreements existed.)
MEH acknowledged in its own resolution that it did not have any knowledge of the beneficial owners of Rosgas but was nevertheless content to give its consent. MEH granted Rosgas 45 days to disclose the beneficial owners. Rosgas failed to comply with this order and to this day has, in contravention of this order, failed to disclose it owners. As a result of this breach, Rosgas has been ordered to pay substantial fines to the Hungarian authorities.
Mabofi has always maintained that in giving its consent, MEH was in fundamental breach of its legal requirements. MEH failed to comply with the strict legal requirement that in the case of a 100% change of ownership of an energy company, Rosgas should have been asked to submit its audited financial statements. No such request was made and no financial statements were submitted. (Rosgas was only registered in December 2008 in Zurich – at that time under the name Ikron AG.)
Mabofi expressed great concern at the time that MEH acted so speedily to approve the fraudulent transfer of Hungary’s largest independent gas trader with a 20% share of the domestic market, without seeing or requesting the necessary documentation that it was legally obliged to have before giving such approval, or without any information regarding the ownership and financial status of the acquiring company. None of the rightful representatives of Mabofi were contacted, they had not concluded any agreement with Rosgas AG, and had no prior knowledge of the share transfer or of the application to MEH.
Court Ruling:
Commenting on the ruling Mabofi director David Brown said: "We are pleased with this further decision from the Hungarian Courts. The fraudulent acquisition last year of Emfesz by Rosgas for $1 was illegal and that it should never have been approved by the MEH. We regard the court ruling as a major step towards our eventual recovery of Emfesz."
Mr Brown added: “We are also continuing to work closely with the Hungarian police authorities in their ongoing criminal investigation of the role of Emfesz director Mr Istvan Goczi in this fraud."
Mr Brown concluded: "We will continue with all the necessary and appropriate civil and criminal actions against Mr Goczi and all other persons and entities involved in the fraudulent transfer of Emfesz and will vigorously protect our interests to recover ownership of Emfesz and to secure damages that have resulted from this fraud. We are confident that the ownership of Emfesz will be restored to Mabofi in the near future."