Staburadze owner heads back to courtroom

RIGA - Icelander Gisli Reynisson has already faced the Financial and Capital Market Commission in court twice and won.

Now he's hoping the third time will actually be the charm.

The Latvian financial watchdog and the owner of the Staburadze candy producer are headed to the Supreme Court with the commission claiming that Riga Regional Court didn't follow the correct procedures during an earlier trial.

"I must say that all of these processes are rather cumbersome and I wish they would end soon," Reynisson said.

"But of course I fully obey the legal system of Latvia - I am only disappointed in the operations of the commission because of the prolonged process."

The two sides ended up in the Riga court over the commission's decision in 2000 that Reynisson improperly held, directly or indirectly, more than a 50 percent share in Staburadze.

The commission then demanded that Reynisson make a takeover bid for the company as required by Latvian law, that says any person or company which owns a 50 percent stake in a company must launch a buyout of minority shareholders.

The Supreme Court won't rule on the commission's decision, only on whether the Riga court followed the correct procedures.

If it finds in favor of the commission, the case would be returned to the lower court for another hearing.

Reynisson maintains he does not control 50 percent or more of Staburadze - indirectly or otherwise - and that lower courts have backed him up.

"The process which was initiated by the FCMC was looked through by several court authorities and the last authority, Riga District Court, fully agreed with my complaint about the FMCM decision."

The 2000 wrestling match between Reynisson and the FCMC arose after the Icelander's company Nordic Foods purchased a 44 percent stake in Staburadze, said Roberts Jefimovs, a senior specialist in the supervision department at the financial commission.

After Nordic Foods' investment, Latvian savings bank Krajbanka, which owned about 11 percent of the candy company, sold its shares to another Icelander, Tryggvi Hallvardsson, in a deal brokered by Reynisson.

Hallvardsson also served as production director at Noi Sirius, Staburadze's Iceland-based candy making partner.

This move prompted a closer look by the FCMC, which decided Reynisson now indirectly controlled about 55 percent of Staburadze - above the benchmark for a required buyout.

The commission's decision to make Reynisson buy out the other shareholders was made in March 2001, but not publicized, Jefimovs said.

"About three days after they received the letter, they said they had sold (6-7 percent) of shares to another Icelander," Jefimovs said. "This agreement was dated one day before the FCMC decision ... We think (the agreement) was not made with a real date but a fake, earlier date."

The selling price of the shares also raised the watchdog's hackles.

Hallvardsson bought Krajbanka's shares at a higher price than those traded on the stock market, Jefimovs added.

But for Reynisson, the issue remains simple.

"In this case I am not a participant in the market because I do not own Staburadze shares," he said.

Nor, Reynisson said, does his acquaintance with the other Icelanders give him control of them or the Latvian candy producer.

"The root of the matter is that I am indirectly connected with the other shareholders, therefore assumptions have been made that I have undue influence in Staburadze, which is not true," he said.

But Reynisson's ownership of Staburadze's parent company Nordic Foods is enough for the commission.