APC 2015 Annual Report Download - page 45

2015 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC 43
OVERVIEW OF THE GROUP’S STRATEGY, MARKETS AND BUSINESSES
1
RISK FACTORS
7.6 Disputes
Following public offers launched in 1993 by SPEP (the holding
company of the Group at the time) for its Belgian subsidiaries
Cofi bel and Cofi mines, proceedings were initiated against former
Schneider Electric executives in connection with the former Empain-
Schneider Group’s management of its Belgian subsidiaries, notably
the Tramico sub-group. At the end of March2006, a criminal court
in Brussels, Belgium, ruled that some of the defendants were
responsible for certain of the alleged offenses and that some of the
plaintiffs’ claims were admissible. The plaintiffs claimed damages
representing losses of EUR5.3 million stemming from alleged
management decisions that reduced the value of or undervalued
assets presented in the prospectus used in conjunction with
the offering, as well as losses of EUR4.9 million in relation to
transactions carried out by PB Finance, a company in which Cofi bel
and Cofi mines then held minority interests. In its ruling, the court
also appointed an expert to assess the loss suffered by those
plaintiffs whose claims were ruled admissible. The expert’s report
was submitted in 2008. The defendants and the companies held
civilly liable contest the amounts provided by the legal expert in their
entirety on the basis of such reports drawn up by Deloitte. Schneider
Electric and its Belgian subsidiaries Cofi bel and Cofi mines were
held civilly liable for the actions of their senior executives who were
found liable. Schneider Electric is paying the legal expenses not
covered by the insurance of the former executives involved. After a
settlement agreement was signed with a group of plaintiffs, the case
now remains pending before the Brussels Appeals Court, due to (i)
appeals against parts of the March2006 ruling and (ii) a ruling made
in2011 by the Court of First Instance regarding the admissibility of
the plaintiffs’ claims.
In connection with the disposal of Spie Batignolles, Schneider
Electric booked provisions to cover the risks associated with certain
major contracts and projects. Most of the risks were closed during
1997. Provisions were booked for the remaining risks, based on
management’s best estimate of the potential fi nancial impact. One
of the main issues concerns pending litigation in France with SNCF
before the administrative court. However, the Group has been
discussing the issue with SNCF and an agreement could settle the
dispute in 2016.
New fi les implicating the Group for Spie Batignolles’ past activities
could still arise and result in costs associated with defending the
Group’s interests.
Schneider Electric and other companies in the high voltage sector
have been involved in legal proceedings with regard to an alleged
agreement initiated by the European Commission concerning gas
insulated switchgears (GIS). These procedures involve two former
Group subsidiaries operating in the high voltage segment that were
sold in 2001 and that are now part of the Siemens group. Schneider
Electric did not appeal the decision made by the Commission
with regard to this matter on January 24, 2007 and was fi ned
EUR8.1million and then introduced several legal actions in order
to recover a total or partial reimbursement of the amount of this
fi ne from its two former subsidiaries. After several legal actions, a
decision on the entire issue was made on April10, 2014, by the
Court of Justice of the European Union (CJEU). A settlement was
reached between Schneider Electric and its two former subsidiaries
in 2015, ending this dispute trhough a balanced split of the fi ne
between the three parties involved.
In relation to the GIS disputes, on May21, 2010, British company
Power Networks (LPN - formerly EDF EnergyUK) launched a claim
against the same companies, including Schneider Electric, for
damages of GBP15million in the High Court in London, England.
This claim is currently being investigated and there were no
signifi cant judicial developments in2015. However, the defendants
(including of wich Schneider Electric SE) have been conducting
discussions with LPN and an agreement could settle the dispute
in 2016.
In addition, some Group entities worldwide, including in Brazil and
Pakistan, are directly or indirectly cited in anti-trust proceedings
without, however, the proven or serious risk of conviction in this
regard having been identifi ed to date.
Schneider Electric was also among 2,000 companies worldwide
that were mentioned in the Volcker report on the Oil for Food
program published by the UN in October2005. Schneider Electric
Industries SAS was investigated by the French judiciary in 2010
in relation to this report, which stated that the Group had entered
into agreements with the Iraqi government between 2000 and
2004 under which surcharge payments totaling approximately
USD450,000 are alleged to have been made to the Iraqi
government. In May 2013, in accordance with the indictment of
the Public Prosecutor’s Department, the judge referred Schneider
Electric Industries SAS and 13 other French companies to the
criminal court, which rended its decision on June 16 2015,
discharging all the companies. However, the Bench appealed on
this decision,wich is currently scheduled to judged by the Appeal
Court of Paris i n December2016.
Various other claims, administrative notices and legal proceedings
have been fi led against the Group concerning such issues as
contractual demands, counterfeiting, risk of bodily harm linked to
asbestos in certain older products and work contracts.
Although it is impossible to forecast the results and/or costs of
these proceedings with certainty, Schneider Electric considers that
they will not, by their nature, have signifi cant effects on the Group’s
business, assets, fi nancial position or profi tability. The company is not
aware of any other governmental, court or arbitration proceedings,
which are pending or which threaten the company, that are liable to
have or, during the last 12months have had, a material effect on the
fi nancial position or profi tability of the company and/or the Group.