Investment Dispute Over Luxury Hotel Drags On

A prolonged court case between two French investors in Siem Reap’s landmark Victoria Angkor hotel is at a standstill after auditors ordered by the Supreme Court to examine the hotel’s finances were denied access to the books this week.

In a dispute that goes back to 2005, Pierre Ader, the CEO of Fine Sky Investment Cambodia, which owns the Les Jardins du Bassac serviced apartments on Norodom Boulevard, alleges that his partner, Francois Gontier, embezzled hundreds of thousands of dollars from the hotel’s accounts between 2003 and 2009.

Mr. Gontier, who is the CEO of the French-listed company Eaux et Electricite de Madagascar (EEM), holds 75 percent of the shares in the Victoria Angkor and has successfully defended himself on four occasions—twice at the Siem Reap Provincial Court and twice at the Appeal Court.

However, the Supreme Court in June ruled in Mr. Ader’s favor and ordered a full audit of the Victoria Angkor.

“Considering there is still not enough clear evidence in this trial to make a decision, it is necessary to order an extra inquiry that requires the shareholders and their auditors to take part in a control of all the finances of the Victoria Angkor Resort and Spa between the period 2003 and 2009,” the order from the Supreme Court dated June 2012 states.

On Monday, Gabriel Teo, director of BG Associates—an auditor assigned to the case by the Supreme Court—wrote to Hanno Stamm, general manager of the Victoria Angkor, and said he would arrive in Siem Reap on Tuesday to check all bank statements, invoices and receipts from the hotel between 2005 and 2012, according to email correspondence obtained this week.

Mr. Teo wrote to Mr. Stamm saying: “It is your prerogative to consult your lawyer [on] the consequences of defying the order of the Supreme Court of Cambodia. I shall personally take any defiance of your staff as a defiance from you and inform the Supreme Court appropriately.”

Mr. Stamm responded that he would need a court order and approval from his “superior” before access to the books was granted.

Asked about whether or not an attempt to conduct an audit on the hotel had taken place on Tuesday, Mr. Stamm declined to comment.

Mr. Teo  confirmed that he had been nominated by the Supreme Court to audit the books of Victoria Angkor, though he declined to say whether or not he had visited the hotel in Siem Reap on Tuesday. “At the moment, the matter is still ongoing in the courts. It is not appropriate for me to make a comment at this juncture,” he said.

San Kong Barum, a representative for Mr. Gontier in Cambodia, said that an audit did not take place on Tuesday as lawyers representing Mr. Gontier had not been informed.

“He did not inform our lawyers,” he said, referring to Mr. Ader. “The hotel was full and the court asked that the lawyers to work together. It was not carried out correctly.”

Those representing Mr. Gontier also say Mr. Ader has next to no proof to show that funds from the hotel were embezzled, which is why the Supreme Court has ordered a full audit of the hotel.

“[Mr. Gontier] confirmed that the civil case plaintiff is not clear and based on no evidence to prove guilt,” according to a summary of Mr. Gontier’s defense at the Appeal Court issued by the Supreme Court in October 2010.

Mr. Ader said that his evidence was credible and showed clearly how Mr. Gontier had embezzled funds from the company.

“It’s a real bank document, which shows large amounts of money leaving the account,” he said. “The other evidence is a witness who worked at the hotel. He was the number two of the Victoria Angkor and he was the one that surveyed everything at the hotel.”

“If all the accounts were clear, why did they not just let the auditor have a look at them?” he asked.

Further complicating the case, the Victoria Angkor hotel, a luxury resort situated in the heart of Siem Reap and not far from the Royal Residence, has also attracted interest from the personal assistant of Prime Minister Hun Sen.

According to a letter dated March 6, 2009, and addressed to Mr. Gontier, Mr. Hun Sen’s assistant Eang Sophalleth purchased Mr. Ader’s 2 percent share in the hotel on December 22, 2008.

“Being a shareholder I would be very pleased to meet you in order to introduce myself,” the letter states.

Mr. Ader’s lawyer, Long Dara, confirmed that his client had tried selling his shares to Mr. Sophalleth, but noted that the sale had been disputed by Mr. Gontier. “Pierre Ader told me that he sold his shares to his Excellency Eang Sophalleth already,” Mr. Dara said. “But Mr. Gontier has accused the sale of going ahead without the majority shareholder in the company being informed,” he added.

Mr. Sophalleth could not be reached for comment. But Mr. Ader said Mr. Sophalleth had absolutely no role to play in the case.

Mr. Sophalleth “has nothing to do with the matter. I proposed him my shares because I was fed up with the case,” he said. “But Francois Gontier has never responded with a yes or no answer. The Supreme Court has made a very sensible decision in asking for an audit. It is nothing to do with any influence from Eang Sophalleth.”

Mr. Gontier’s lawyer, Kao Soupha, said if the court was unable to resolve the matter, he would ask the Council for the Development of Cambodia (CDC) to help resolve the case.

“If the CDC cannot solve this case, Samdech Hun Sen should intervene to allow my client with 75 percent of the shares to invest in another project,” he said.

When Mr. Ader first started doing business in Cambodia in the mid-1990s, so rare was such an investor that Mr. Hun Sen met with him personally. He and a long-time friend and business partner, Francois Henin, then invested early on in the Victoria Angkor hotel.

In 2001, Mr. Henin sold his majority 75 percent share in the hotel to Mr. Gontier.

Mr. Gontier has also been accused in France by shareholders in EEM of breach in trust. However, the Paris Court of Appeal in February last year found Mr. Gontier not guilty and ordered the plaintiffs in the case to pay 15,000 euros, or about $20,000, in damages to EEM.

© 2013, The Cambodia Daily. All rights reserved. No part of this article may be reproduced in print, electronically, broadcast, rewritten or redistributed without written permission.