The ruling in the lawsuit submitted by LLC Public asset manager Possessor against JSC Grindeks shareholders Kirov Lipmans and Filips Lipmans, requesting the latter to pay back to the state the damages caused to the state pension special budget has come to force.
Riga Regional Court has ordered the enforcement of more than EUR 1.9 million from father and son Lipmans. The two now have to pay the amount back to the State Treasury.
The court decided to enforce from Lipmans family a total of EUR 1 903 294, as well as EUR 31 732 for court expenditures, as well as EUR 7 133 in case review related expenses or EUR 1 942 160 in total.
Lipmans family had previously submitted a cassation complaint but the Supreme Court’s Civil Cases Department decided against commencing a cassation proceeding. This means the ruling of the regional court has come into force, as reported by the court.
After reviewing the arguments listed in Lipmans family’s cassation complaint, the Supreme Court found to justifiable reason to consider the outcome of the appealed ruling incorrect and that the reviewed case has considerable value for court practices or further development of rights. The ruling of the Supreme Court is not subject to appeal.
As previously reported, the case is based on the findings of the Finance and Capital Market Commission (FKTK), which state that on 27 October 2010 Lipmans family acted in a coordinated manner and had gained 50.02% of shares in Grindeks and, opposite to the requirement of the Financial Instrument Market Law, did not organize a share buy-back procedure.
Lipmans family was fined for this. On 21 February 2017 the Cabinet of Ministers authorised the Privatisation Agency (now known as Possessor) to submit a plea on behalf of the state against Lipmans family to enforce losses caused to the state pension budget. Damages were caused because Lipmans family did not organize a buy-back procedure.
Possessor had previously said that the ruling of the court in this particular case would have an important meaning for court practice and further development of rights in cases of future share buy-back procedures, as well as
promotion of society’s and investors’ under standing of protection of rights of minority shareholders.
Prior to submitting the case to court, representatives of Possessor had met multiple times with Lipmans family members and their legal representatives to resolve the dispute peacefully through talks, but nothing came of it. Possessor also reports that it highly values the contribution of the board and council of Grindeks to the development of the company. However, the actions of the majority shareholders by not complying with requirements of the law – not organising a buy-back procedure for minority shareholders – must not impact the legal interests of minority shareholders, which is something backed by the Financial Instrument Market Law.
Kirovs Lipmans has said that at first FKTK had stated in an official letter that it does not consider Filips a member of the family, but then punished Lipmans family for doing what the institution had previously allowed in its official letter.
‘Only in Latvia there are attempts to punish entrepreneurs who rely on information detained in letters from state institutions instead of punishing officials responsible for selling state owned Grindeks at unbelievably low prices, causing suspicions of presentation of a ‘gift’ to ‘ old friends’, previously said Lipmans.
BNN previously reported that in 2019 FKTK fined Lipmans family EUR 131 250 for breaching the Financial Instrument Market Law. The two sides then reached an agreement for the organisation of a buy-back procedure for shares. This happened, and Liplat Holding, which is owned by Kirovs, Anna and Filips Lipmans, owns 96.78% of Grindeks capital. Kirovs Lipmans owns 43.3%, his wife Anna Lipmane owns 21.7% and son Filips Lipmans owns 35% of LLC Liplat Holding shares.
Lipmans family ordered to pay back EUR 1.9 million to Latvian state
