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Gemplus and Indirect Subsidiary Zenzus Prevail in Arbitration Against Former Chairman Marc Lassus

Thursday 15 April 2004 10:35 CET | News

Gemplus International and its indirect subsidiary Zenzus Holdings has prevailed in an international arbitration proceeding seeking repayment of a loan made to former chairman and co-founder Mr. Marc Lassus.

Zenzus provided a loan to Mr. Lassus in September 2000 to pay the subscription price of stock options granted by Gemplus. In January 2003, Gemplus and Zenzus brought arbitration proceedings seeking repayment due to Mr. Lassus breach of his obligations. Mr. Lassus denied the existence of the loan and argued that the funds granted were a reward or gift. The arbitration tribunal has rendered its decision finding unanimously in favor of Gemplus and Zenzus. The arbitrators held that they had no doubt that there was a loan based upon abundant evidence and no contrary evidence of a gift or reward, and found Mr. Lassus in breach of his obligations. The tribunal noted that the testimony of Mr. Lassus own and only witness supported the finding of a loan, and that significantly Mr. Lassus himself did not offer testimony to rebut Gemplus and Zenzus arguments regarding the loan. In its final award, the tribunal ordered Mr. Lassus to make repayment in full of the loan in the amount of euro 71.9 million, plus interest of approximately euro 7.0 million to date, attorneys fees and costs as well as the costs of the arbitration, all in a total amount of approximately euro 80.9 million as of today. The tribunal rejected all of Mr. Lassus various procedural arguments and claims under both English law (relevant due to the agreed seat of the arbitration in London) and Luxembourg law. In addition, the arbitrators upheld Zenzus and Gemplus position that the loan was valid as governed by either English law (place of residence of Mr. Lassus) or Gibraltar law (location of Zenzus), which are identical on this issue. The tribunal further ruled that even if Luxembourg law were to be applied, as argued by Mr. Lassus, the loan would not have violated any Luxembourg laws, as further supported by the testimony of Mr. Lassus own witness, and was sufficiently documented to comply with Luxembourg legal requirements; Mr. Lassus claims that the loan was illegal under Luxembourg law or insufficiently documented were specifically rejected as unfounded. The arbitrators finally held that payment of Mr. Lassus claim for US$ 10 million in severance compensation was to be deferred until after Mr. Lassus has made payment in full to Zenzus and Gemplus. Since the second quarter of 2002, Gemplus has maintained a provision for the entire principal of the loan plus accrued interest (less the severance liability mentioned above), since the potential for any repayment of the loan would depend on the financial strength of Mr. Lassus, which is uncertain. Until there is reason to change this analysis, the arbitration decision will not affect Gemplus financial statements. The final award of the arbitrators is not subject to appeal except on narrow grounds applicable to arbitration awards. Counsel for Mr. Lassus expressly confirmed to the arbitrators at the end of each days hearing that Mr. Lassus had no objection to how the arbitration was conducted. Given the arbitrators thorough consideration and findings against Mr. Lassus on all of his technical and procedural objections, including under Luxembourg law, Gemplus believes any further challenges by Mr. Lassus on these bases would be without merit. Gemplus welcomes this decision and will continue to focus its energies on its future and the numerous available business opportunities.


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Categories: Payments & Commerce | Cards
Countries: World
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Payments & Commerce