By Yitzhak Dannon
In a lawsuit filed a week ago by the Israel Land Development Company Energy Ltd. (ILDC Energy) in Tel Aviv District Court, the plaintiff demands compensation amounting to NIS20 million ($5.4 million at today’s rates), for an alleged breach of contract and false representations by VNG Capital Fund, an investment fund purportedly registered in Switzerland, operating in the field of oil and gas explorations around the world; and against its CEO Nico Kruger of South Africa – the allegations implying that the company is his instrumentality or alter ego (he is referred to as the driving force behind the company and is sued personally for acts and omissions of the corporate entity).
According to the complaint, the Swiss company breached the investment agreement signed with it in a callous and contemptible manner. According to term of the agreement, as presented in the complaint, the defendants have committed themselves to invest $20 million in ILDC Energy, a company engaged in oil and gas explorations. The money, plaintiff contends, was intended to fund explorations in which defendant VNG intending to participate in as an investor. ILDC Energy claims that it intended to have the agreement performed and, accordingly, gave the defendants a number of opportunities to mend the breach, thus, it states, it even agreed to reschedule the original date set for tender of funds by defendant. However, ILDC Energy’s suit maintains, it was all to no avail, and the defendants, who had committed themselves in a binding contract, to convey a total of $20 million, transmitted the sum total of zero. A new twist, one might say, on the old zero sum game.
To make things even worse, the suit states that, following the breach of the agreement, plaintiff had conducted an inquiry by which it ascertained that the defendants made false representations, among others, as to the actual existence of VNG as a Swiss entity in the form it was represented to have, including a bogus address of the company’s main office. All this, avers ILDC Energy, was done in bad faith writ large and with active deception.
Plaintiff’s suit asserts that its inquiry has determined that VNG Capital is nowhere to be found in various relevant Swiss databases — including the website of the Swiss Financial Markets Authority (FINMA).
ILDC Energy claims, that VNG’s conduct has been causing it massive, on-going damages manifesting in losses of tens of millions of shekels in three ways: First, it is now compelled to sell on the open market shares that were, according to the terms of the agreement with defendant, to be issued to VNG at a lower cost to plaintiff; second, that it has suffered severe blows to its reputation and its good name; and, lastly, that the breach has wrought a significant decline in value of its shares.
According to the plaintiff, it is entitled to a total of NIS67.5 million ($18.25) in compensation from defendants, but, in order to keep the court’s fees law (in Israel, the amount of compensation sought determines the amount of the filing fees), plaintiff set the amount of the damages claimed at NIS20 million while reserving the right to increase the amount by future amendment in order to reflect the full extent of damages it has allegedly suffered.
Plaintiff petitioned the court to allow it to serve process on defendants in Switzerland and/or in South Africa.
No answer has been filed, as of yet.