Speech given by Rosario Marcone of Deminor Recovery Services
at the AGM of Saipem
held on 3 May in Milan, Italy
Ladies and Gentlemen, Directors and Statutory Auditors,
My name is Rosario Marcone and I represent Deminor, a company active in the field of investor protection rights and corporate governance.
Deminor assists a group of 64 institutional investors that on 28 April 2015 filed a recovery action against Saipem before the Court of Milan, seeking compensation for EUR 174.22 million damages, which were caused by Saipem, they allege, through the communication of inaccurate information to the market in the period from 2012 to 2013, as well as the unlawful delay in the publication of privileged information, the publication of which was finally made on 29 January 2013 with the first “profit warning”.
Among the notes to the Annual Report as at 31 December 2017 the Company informed shareholders that on 12 March 2018 the Public Prosecutor’s Office at the Court of Milan notified Saipem of the conclusion of preliminary investigations. Market manipulation and false statements are the offenses allegedly committed by Saipem in the period from 2012 to 2013, the same period in which the group of investors assisted by Deminor complains of having suffered damages.
[FIRST GROUP OF QUESTIONS] In respect of these preliminary investigations, I kindly ask the Chief Executive Officer, Ing. Stefano Cao, whether the Milan Public Prosecutor’s Office has made a request for referral to trial. If so, on what date was this request for referral to trial been made? Further, on what date was the Company notified of the preliminary hearing? When will the hearing take place?
I refer to resolution no. 18949 of 18 June 2014, with which Consob sanctioned Saipem for delaying the publication of privileged information, which took place on 29 January 2013 with the first “profit warning.” On 28 July 2014 the Company appealed to the Court of Appeal of Milan and by decree filed on 11 December 2014, the Court of Appeal of Milan rejected the appeal, upon which Saipem filed an appeal with the Supreme Court. On 14 February 2018 the Supreme Court announced its decision to reject Saipem’s appeal.
[SECOND GROUP OF QUESTIONS] Considering that the delay with which the first profit warning was communicated to the market on 29 January 2013 has been judged, I kindly ask Ing. Cao if the outgoing Board of Directors has decided to propose to this Shareholders’ Meeting to vote for the action of responsibility towards the Board of Directors then in office. I also ask the chairman of the Board of Statutory Auditors, dott. Mario Bussi, if the Board of Statutory Auditors intends to deliberate in this regard.
I refer to resolution no. 20324 of 2 March 2018, with which Consob ascertained the “non-compliance of Saipem’s 2016 consolidated and statutory financial statements with the regulations governing their predisposition”, the content of which is illustrated in the section “Information relating to the remark expressed by Consob pursuant to Article 154-ter, subsection 7, of Legislative Decree No. 58/1998, and communication by Offices of Consob on 6 April 2018” of the Annual Report as at 31 December 2017, Saipem announced that the Board of Directors resolved on 5 March 2018 to propose an appeal against resolution no. 20324 in the competent judicial offices. On 16 April 2018, in compliance with the same resolution, the Company announced that Consob’s findings have a negative impact of EUR 1.84 billion on Saipem’s balance sheet of 31.12.2015 and a negative impact of EUR 127 million on the balance sheet of 31.12. 2016.
[THIRD GROUP OF QUESTIONS] I kindly ask Ing. Cao if and on what date the appeal against resolution no. 20324 was filed before the Regional Administrative Court of Lazio. I also request for which reasons the Board of Directors decided to appeal against Consob’s conclusion of non-compliance of the consolidated and statutory financial statements for the year that ended on 31 December 2016 while, instead, referring to the proceeding of non-compliance of the consolidated financial statements for the year that ended on 31 December 2012 the Company decided to “prevent any possible differences with Consob in relation to the interpretation and application of accounting principles” (see Saipem press release of 28 October 2013).
On 14 February 2018 Saipem announced that it has agreed with Sonatrach (Algeria) to settle their mutual differences amicably and that they have signed an agreement to put an end to the pending litigation in: (1) the ARZEW project; (2) the LPG project; (3) the LZ2 project; and (4) the MLE project. Neither in the press release nor in the Annual Report as at 31 December 2017 did Saipem disclose the amount of the settlement. However, on 15 February 2017, according to some press articles, the CEO of Sonatrach, Abdelmoumen Ould Kaddour, indicated that the settlement amount was between USD 150 and 300 million.
[FOURTH GROUP OF QUESTIONS] I kindly ask Ing. Cao to disclose the exact amount of the settlement. I also ask to clarify whether this amount includes the compensation of USD 135 million that the arbitrators in the litigation concerning the LPG project, in a decision taken by majority vote, recognized to Sonatrach for loss of production on the basis of the alleged gross negligence of Saipem. Finally, I ask to clarify how and when Saipem will account for the settlement payment.