ASKER AND BÆRUM DISTRICT COURT JUDGMENT Given: 08.09.2006 Matter no.: 06-147582TVI-AHER/1 Judge: District court judge Trine Standal Matter concerns: Action for damages against ex-employee Scancem International ANS: Attorney Kyrre Eggen v. Tor Egil Kjeisass :Attorney Vider Strømme No restrictions on access to public reproduction. The matter concerns damages or a claim for recovery by Scancem International ANS against Tor Egil Kjelsaas, formerly employed by the company. Scancem International ANS alleges that Tor Egil Kjelsaas appropriated funds from the company and that he recklessly and disloyally had financial connections with the company's counterparty in Nigeria. Scancem International ANS entered the writ of summons, received at Asker and Bærum district court, on October 20th, 2005. Tor Egil Kjelsaas entered his defence and applied that he be found not guilty. A number of pleadings have been entered. In preparing the case, right up to the proceedings in chief, Scancem International ANS applied that the court should order Tor Egil Kjelsaas to produce various documents and issue court orders to examine bank accounts etc. The Court gave this order on August 17th, 2006, ordering Tor Egil Kjelsaas to produce statements of account for his bank account at Unibank Luxembourg, but dismissing Scancem International ANS's application otherwise. This order was not complied with, allegedly because it could not be implemented during the few days left until the proceedings in chief. The proceedings in chief lasted four days, from August 28th to 31st, 2006. Neither Tor Egil Kjelsaas or the party representative of Scancem International ANS attended. Tor Egil Kjelsaas has had a heart attack and kidney transplant. His health is poor. Scancem International ANS was represented by attorney Arne-Jørg Selen, who gave a witness statement and attended the whole proceedings in chief under § 213, para. 2 of the disputes law. The Court heard eleven witnesses and made the records which appear in the rolls. Went to Nigeria in 1980 Background to the matter Scancem International ANS was incorporated on September 1st, 1986, with international cementation as its aim. The owners were Euroe and Noroem with 50% each. The Heidelberg group took over as owner in 1998. Tor Egil Kjelsaas was educated in Germany. He has worked in the Noroem system and subsequently for Scancem International ANS when it was incorporated, since the late 1960s. He was head of Scancem International ANS's African division. He worked for Scancem International ANS until 1999, and then acted as a consultant to the company over a two-year period. The consultancy agreement was produced and shows a restraint of trade clause. His contracts of employment from his time at Noroem or Scancem International AS were not produced. Scancem International ANS was involved in extensive bribery and corruption in a number of countries in Africa, including Ghana. This was Tor Egil Kjelsaas's responsibility as head of the African division. He was also the one with the local contacts. Scancem International ANS's claim against Tor Egil Kjelsaas relates to two matters. The first involves appropriating bribes and corruption which were transferred to his own account at Unibank Luxembourg. Scancem International ANS alleges that Tor Egil Kjelsaas must be liable to reimburse the amounts transferred to that account. Tor Egil Kjelsaas did not inform Scancem International ANS that the moneys were actually transferred to an account in his name over which he had control, and he lied about this during Scancem International ANS's internal enquiry in the late 1990s. Nor was he willing to produce statements for the account. The other matter involves Scancem International ANS's Nigerian involvement. In the late 1990s, Scancem International ANS decided to expand its involvement in Africa to include a project in Nigeria. It is alleged that Tor Egil Kjelsaas was one of the driving forces behind this, and that, in return, he received both a share of the commission Scancem International ANS paid to its counterparty in Nigeria and a share of the purchase price when Scancem International ANS bought out its co-owner in the project. Scancem International ANS has alleged essentially that Tor Egil Kjelsaas unlawfully appropriated funds from the company. Kjelsas was behind payment of considerable amounts to his account at Unibank Luxembourg. He concluded the contracts and ordered outpayments. He was one of Scancem International ANS's most trusted managers. Some of the payments were also made twice, such as paying the rent on a guesthouse in Ghana which was both paid for locally and by transfer to Tor Egil Kjelsaas' account at Unibank Luxembourg. Kjelsaas told Scancem this account belonged to an African politician, concealing the fact that this account was actually his. This in itself is sufficient evidence for Scancem International ANS's claim against Tor Egil Kjelsaas, unless he can show that he did not keep the money himself, which he can only do by producing the statements of account. While preparing the case, Scancem challenged [Kjelsaas] to produce statements for the account at Unibank concerned, but Kjelsaas refused to product those statements, even though they could be produced. The documentary evidence in the case shows that the moneys were paid into Kjelsaas's account. There is no other documentation in the case. As evidence has been produced to show that Kjelsaas concealed from Scancem that he transferred significant amounts to his own account, it is Kjelsaas on whom both the obligation to prove and burden of proof rest to show that he did not acquire the moneys. This is particularly so as it is in within Kjelsaas's power to produce that evidence, such as via statements for the Unibank account. Kjelsaas's explanation which appeared in pleadings just before the proceedings in chief is not credible. Kjelsaas claims he did not want to state that the account was in his name in 1998 'because he did not want to put the recipients at risk'. But Scancem knew who the money was supposed to go to, and the purpose of the internal enquiry was to find out whether the moneys went to Kjelsaas. The enquiry was also internal in nature. Nor is it credible that the moneys were taken out of Kjelsaas's account and given to the right people either. Scancem paid amounts to other accounts during this period which were controlled by African recipients. Tor Egil Kjelsaas's travel accounts show that he was often in Luxembourg when travelling in Europe and when travelling home, but not en route to Africa. Scancem also paid out amounts in cash locally to a number of African recipients in Ghana. Those amounts were paid out via other channels. Kjelsaas drained Scancem's involvement in Nigeria of significant funds. As head of Scancem's African business, Kjelsaas was in charge of the company's new involvement in Nigeria, which began in autumn 1997. When Kjelsaas left Scancem in 1999, he continued working as a consultant to Scancem until June 2001. He was also involved in the company's involvement in Nigeria during that time. The Nigerian business made major losses, and it was decided that Scancem should clear out. Under the contracts which were established during Kjelsaas's management, Scancem was committed to paying out significant amounts to the company Eastcoast Investment, which was Scancem's co-owner in the project. Scancem could not get out of its involvement in Nigeria without incurring more major losses. The only way Scancem could get control of the situation was to buy out Eastcoast Investment, even though its shares were worthless. Scancem International ANS would not have done this had it known that Tor Egil Kjelsaas was involved with Eastcoast Investment. Scancem was told there were Nigerian investors behind Eastcoast Investment. Scancem decided to start making enquiries to find out whether this was correct, engaging HIBIS for this. The investigations showed that most of the commission moneys paid to Eastcoast Investment went to Colin Dixon and the company Tormead Ltd. Scancem found out that Tor Egil Kjelsaas was the real owner of Tormean Ltd. on July 21st, 2003. Scancem bought Eastcoast Investment out of the project on December 1st, 2003, and also tried to trace where the money went. Investigations show that the money went mainly to another account Eastcoast Investment had, to General T.Y. Danjuma and The Volta Company. Kjelsaas was behind The Volta Company. The money which was paid out to Eastcoast Investment was part of the loss Scancem suffered from its efforts. There is no reasonable or rational explanation as to why Kjelsaas should receive considerable amounts which Scancem paid via the Eastcoast Investment company. Scancem International ANS has applied as follows: 1. That Tor Egil Kjelsaas be ordered to pay compensation at the court's discretion, but plus late interest in law from June 23rd, 2005 until payment is made. 2. That Tor Egil Kjelsaas be ordered to pay the costs in the case, plus late interest in law from when due until payment is made. Tor Egil Kjelsaas has argued essentially that what the plaintiff says is incorrect. The matter is to a large extent about evaluating evidence, in terms of both general principles and more specific factors. The writ of summons implies an allegation that the basis for damages in the matter amount to serious criminal acts, so the burden of evidence on the plaintiff is increased. It is also up to the plaintiff to furnish the proof. The evidence must then be evaluated as if in a criminal matter, and the plaintiff must produce evidence for each and every allegation. The plaintiff has only produced some of the documents which were produced or obtained in the course of its investigations. Kjelsaas has asked to be allowed to see all the documents on a number of occasions, and is afraid there are documents of importance which have not been produced. The plaintiff's evidence as presented in a matter such as the present must be based on documentary evidence. There are many aspects of the documents presented which do not stand up. Scancem itself established a system of bribery and corruption. The system required payments to be untraceable. The system can only be based on trust, and producing evidence in retrospect can be difficult. Kjelsaas finds it hard to prove he is innocent, and Scancem has a problem proving him guilty. Any doubt as to the evidence must go against Scancem. Only copies of documents have been produced, some of them poor quality. It is impossible to say anything more about whether they are genuine. Given the serious nature of Scancem's allegations, it should be considered at the outset as at least equally likely that other players could do criminal acts – including giving incorrect names, accounts etc. This increases the demands on the documentation. The documents produced are also incomplete. Kjelsaas cannot know in what direction those not produced may point. Kjelsaas has repeatedly asked for them to be produced, something which was agreed. The reports are largely internal, drawn up by the plaintiff's own staff, based partly on sources and assumptions instated. Such documents and explanations which cannot be proven are of very little value. Parts of the evidence produced are on the borderline of what should not be admitted at all under the immediacy of proof principle and § 189 nos. 1, 3 and 4 of the disputes law. Some of the evidence is also immaterial. The key witnesses have not been brought. Kjelsaas has requested information about Colin Dixon, about investigations against him, and to what extent Dixon still works or has contracts for Scancem. There was no reply to this during the proceedings in chief. As to the payments to Kjelsaas's account at Unibank Luxembourg, there cannot be said to be any evidence that Kjelsaas appropriated the money. The reason Kjelsaas gave information about the accounts in 1998 which was incorrect was because he did not wish to put those who received the money at risk. What name the account is in is immaterial to the dispute. Kjelsaas was using an old account he had himself, as this was easiest. It was difficult for many recipients in Africa to open accounts abroad. Kjelsaas withdrew cash in London or Luxembourg and passed it on to the correct recipients. Kjelsaas took money to Africa by air. The movements in the Luxembourg accounts do not show who ultimately got the money. It was useful for the account to be in his name when taking cash out. Kjelsaas was shown the trust that he could transfer money like this, possibly with the 'disguise' which was appropriate in the individual case. There are no complaints from those who were supposed to receive the money which would indicate they did not get what was agreed. The 'investments' Scancem made in this way also yielded a great deal. Be that as it may, it cannot be established that Tor Egil Kjelsaas keeps all the money which is transferred to the account. Kjelsaas did not control the Eastcoast Investment company, Scancem International ANS did not look into why the company made the payments they claim Tor Egil Kjelsaas received. Presumably, to some extent, this is about contractual obligations, and also about bribery and corruption which took the 'routes' it was sensible to take in each case, given who the recipients were. Kjelsaas cannot remember any payment for around USD 190,000.00, and he denies owning The Volta Company. Kjelsaas denies receiving amounts unlawfully. An action for damages based on bribes which were lost is unlikely to succeed. Kjelsaas sees the matter as objectionable. In reality, Scancem is claiming damages for corruption funds lost, for which no 'receipt' can be produced. As Kjelsaas sees it, Scancem's claim should be put in a class with reprehensible legal matters, something which is bound to affect how the evidence is evaluated. There is no evidence of any financial losses or of a cause and effect for the Nigerian efforts. Nor is there any more detailed information on Eastcoast Investment, and it is hard to see how Scancem can have suffered losses because the company chose to use money one way or another. Tor Egil Kjelsaas has applied as follows: 1. That Tor Egil Kjelsaas be found not guilty. 2. That Tor Egil Kjelsaas be awarded costs in the case plus late interest under the late interest law § 3, para. one, from 14 days from when judgment is pronounced until payment is made. Observations by the court: The parties are agreed that the bribes which were made were not contrary to Norwegian law or national legislation in Ghana or Nigeria. They are also agreed that the matter cannot be regarded as reprehensible, but such that Tor Egil Kjelsaas believes the evidence must be seen in the light of the fact that the matter is on a part with what could be reprehensible. The Court does not see any reason to go into the question as to whether this is a reprehensible matter in law in any more detail. The nature of the accusations requires that considerably more excess of proof is required to meet Scancem International ANS's demands. The way in which evidence has been produced in this matter is unconventional. The matters were not reported to the police, and the company's own investigations have not been examined or quality assured by anyone outside it. The company's auditors were only involved in connection with the matter during internal examinations in 1998-2000. These external examinations were carried out by a British company, HIBIS, which works mainly on ordinary internal controls at its clients. HIBIS in turn engaged others to trace the cashflows, actual bank transactions etc. These conducted their investigations amongst other things by ringing the banks at lunchtime and claiming, incorrectly, that they were working at the bank's internal audit department or on a special assignment. So, if they obtained information and documents from the banks, they did so unlawfully. HIBIS was unwilling to state who they hired, nor how individual information or documents were obtained. The evidential value of HIBIS's reports is therefore low, as there is no way of checking the individual items of information, how they were obtained, specifically what was said or assumptions for the information/statements. It must also be borne in mind that the information which was obtained might be out of context or incorrect, without the data being corrected or completed later on. The documentary evidence HIBIS obtained is of greater evidential value. There is no reason in the Court's mind to believe that these documents are incorrect or forged. Tor Egil Kjelsaas has made absolutely no contribution to clarifying the matter, or to undermine Scancem International ANS's claims against him. Tor Egil Kjelsaas's health has deteriorated, admittedly, but he could have produced account statements, company documents etc. Tor Egil Kjelsaas's failure to assist in clarifying matters affects how the Court sees the evidence. Scancem International ANS's culture of bribery and corruption in Ghana in the 1990s was built around Tor Egil Kjelsaas. It was Tor Egil Kjelsaas who had the contacts in Ghana, who agreed how much the bribes would be in each case, and who instructed the payments along with another member of staff. It was not the other members of staff's job to check Tor Egil Kjelsaas's information, or what amounts were to be used to grease who or how they should be greased. The system was based on an extremely high level of trust in Tor Egil Kjelsaas, even if Selen has stated that there were all kinds of gossip and rumours about him from 1993 onwards. Payments were made in a number of ways. In some cases, payments were made directly in cash in Ghana by the company's financial managers once the money had been taken from Scancem International ANS's account, sometimes money was taken from banks outside Africa and shipped into Ghana to be handed over in envelopes and sometimes bank transfers were made to accounts in Luxembourg, Switzerland etc. No list has been produced of the total amount involved, or how this was treated for accounting purposes. Between January 1993 and March 1998, amongst other things, USD 2,680,000.00 was transferred to an account at Unibank Luxembourg, of which USD 90,000 every other month amongst other things. Scancem International ANS thought the account was owned by PV Obeng, a former Minister of State in Ghana. Now [??] 19m In the light of Arne-Jørg's internal investigations amongst others, the company held an internal investigation into a number of matters in 1998-2000, including the transfers to this account. Tor Egil Kjelsaas stated at the time that he did not know whose name the account was in and that he had no control over the account, except that he knew that he had taken money out of the account on two occasions after the authorised signatory on the account had sent authority to the bank. The Court finds that Tor Egil Kjelsaas was aware that, or at least understood, that the investigations were directed against him, but that he still opted to give incorrect information about the account. The Court regards this matter as serious. Scancem International ANS investigated in the same connection with PV Obeng whether the amount transferred to the account, noted that it referred to Nigeria, which appeared to be correct. Obeng confirmed this. It is not clear whether he was asked to confirm receipt of the other amounts transferred to the account at the same time. Obeng is still a consultant to Scancem International ANS, and the Court cannot understand how he was asked to confirm receipt of the moneys transferred to Tor Egil Kjelsaas's account or not. Nor can the Court understand how Scancem International ANS could accept a system well into the 1990s in which one man decided both on the rules for bribery, who was to be bribed and with what amounts, and also left it to him to make the bribes himself, without checking in any way whether those bribes were necessary or whether those to be bribed actually received the money. Scancem International ANS failed to establish any kind of control system, accepting on the contrary a system which meant that cashflows were hard to trace, partly because the money was handed over in cash and partly because it was transferred to bank accounts which could neither be traced nor controlled. It is in the nature of bribery culture that there is no way of tracing, either by the tax authorities or by those who receive the money who they are acting or working for. Seen in this light, there is no way of documenting who handed the money over in cash or that money was actually handed over. The only thing which can actually be established in this case is that the money was transferred to Tor Egil Kjelsaas's account at Unibank Luxembourg and that he made incorrect statements about the account during the internal investigations. There is no information, however, on what happened to the money after that. While the Court regards it as serious that Tor Egil Kjelsaas did not assist in clarifying matters on this point, it also finds that Scancem International ANS is also to be greatly reproached that they did not ask PV Obeng whether he had received the money. What Obeng did with the money subsequently is none of Scancem International ANS's business. It has been stated that there were duplicated payments, in that the same amount was paid out locally in Ghana and transferred to the account at Unibank Luxembourg. There is no evidence or proof what the amounts paid were supposed to settle, e.g. rent. It is therefore unlikely that the payment was divided in two, so it is a double payment. Scancem International ANS was also aware of these matters ever since the internal investigations, but the company did not make any further investigations this time. The Court finds that, if Scancem International ANS itself accepts and assists in a system such as that described, it cannot subsequently use that system's shortcomings against its staff. Scancem International ANS made major payments and transfers on a relatively undocumented background, and did little to ascertain whether the money reached the right person, even if the company suspected that was not the case. The Court therefore finds that there is insufficient evidence that Tor Egil Kjelsaas retained some or all of the money himself, and finds that Tor Egil Kjelsaas must be found not guilty on this part of the claim. As far as the Nigerian business is concerned, the Court does not find it in any way proven that Scancem International ANS suffered any financial losses for which Tor Egil Kjelsaas is liable. The Nigerian project is said to have made major losses, but the reason for this, or the amount of those losses, has not been proved to the Court. Information has been given that this is because of opposition from Colin Dixon, but it has not been proven in law that matters are such, still less that this is something for which Tor Egil Kjelsaas is responsible. Scancem International ANS paid out contractual commission to EastCoast Investment. The Court finds it proven that USD 190,000.00 was transferred to Tormead Ltd. Tormead Ltd. is owned by Tor Egil Kjelsaas. From the copy of the bank statement which was produced, this is stated as a 'loan'. Tor Egil Kjelsaas does not remember the transfer, and cannot therefore explain it. It is clear that he was involved in some business in Africa, however, at least after he broke his ties with Scancem International AS. As the Court understands it, Colin Dixon represented Eastcoast Investment on General Danjuma's behalf. Scancem International ANS was closely in touch with him and the former is still working for Scancem. The background to the transfer to Tormead Ltd. is unknown, but Scancem International ANS should have asked Eastcoast Investment, Colin Dixon or General Danjuma about that. As the matter is now presented to the Court, there is no considerable surplus of probability that Tormead Ltd. and Tor Egil Kjelsaas receiving the amount involved any breach of Tor Egil Kjelsaas's duty of loyalty to Scancem International ANS. Once Scancem International ANS bought Eastcoast Investment out for USD 3.2 m, the latter transferred approx. USD 790,000.00 to The Volta Company. There is no surplus of probability that this company is controlled or owned by Tor Egil Kjelsaas, or that those moneys went to him. The information from HIBS on this point is both unclear and of little evidential value, and cannot be allowed any decisive importance. The Court does not therefore find as far as Scancem International ANS's Nigerian business was concerned that Tor Egil Kjelsaas is liable to pay damages to Scancem International ANS either. Tor Egil Kjelsaas has therefore won the case, and remains to be found not guilty. He will in principle be awarded his costs in the case under § 172 para. one of the disputes law. On the other hand, the Court finds that the exception in paragraph two of this provision applies. Tor Egil Kjelsaas is to be reprimanded for not having contributed to clarifying the matter, and the Court has been somewhat in doubt as to the outcome of the case. As the Court sees it, it was a fact that the moneys which were to be used for bribery in Ghana were transferred to Tor Egil Kjelsaas's own account and that he failed to report this correctly, giving Scancem International ANS every reason to bring the matter to court. The same applies to that part of the claim which relates to the Nigerian business. Costs in the case are therefore not awarded. The Court therefore finds: 1. Tor Egil Kjelsaas is found not guilty. 2. Costs in the case are not awarded. Court rises. Trine Standal The translation above was done by professional translators: 1st Translation Company Ltd. 24 Holborn Viaduct London EC1A 2BN and certified by the firms Translation Manager, William Valero de Palma Translation Manager Source: GHP/Asare Gabby Otchere-Darko