Exclusive: The documents in which Tenaris and Paolo Rocca agreed to pay New York $9.5 million to close a corruption case

On March 10, the study Glancy Prongay & Murray (GPM) filed a petition with the judge Kiyo Matsumotoof the Eastern District Court of New York to approve an agreement of more than 100pages that he had signed on the 3rd on behalf of a group of investors who had been arguing since December 2018 against Tenaris and the CEO of Techint Group, Paul Rocafor filing forms with the SEC (the US stock market regulator) indicating ban and punish corruption while participating in a system of payment of bribes Argentine public officials in the Cuadernos case.

The judge has already given him formal admissibility and, with this decision, activated the term of 15 days that Tenaris must deposit, for himself and for Roccaa total of $9.5 million in liquid which will remain in an account in the custody of the court until the corresponding procedural deadlines have been met (notifying other investors, hearing objections at the hearing, final approval of the agreement, deducting fees, taxes and other expenses, etc.), the distribution of money.

The lawyers felt that if they won the case, they would have gotten damages for $236.4 million, but they chose to charge significantly less because of the costs, risks, and delays involved in litigation like this. The case can take years between motions and appeals, the witnesses are in other countries and this is compounded by the difficulty of dealing with a mega corporation represented by a frontline study (Sullivan and Cromwell)explained GPM’s lawyers in their presentation.

In Argentina, Rocca is safe. The Cuadernos case finally ended for him in August 2021, when the federal judge Julián Ercolini dismissed him and his two bishops Luis Betnaza (corporate and virtual director number two of the Techint group) and Héctor Zabaleta (administrative director) for “humanitarian reasons”. He said they acted out of necessity because they feared for the physical integrity of their employees in Venezuela. Tax Carlos Stornelli and the Financial Information Unit (FIU) could appeal, but did not. The then head of the anti-money laundering agency, Carlos Cruz, said he learned from the newspapers that the dismissal had been finalized.

But, just like the scandal of Odebrecht he crossed these lands without pain or glory despite the fact that he left dolls in the rest of the planet, Cuadernos also had his tail in other latitudes. The same thing happens with corruption as in many cases of crimes against humanity, when the victim countries were unwilling or unable to prosecute the aberrant crimes and had to go elsewhere to beg for universal jurisdiction. PinochetRemember, he was arrested in London on the orders of a Spanish judge.

Argentina on the matter can teach. We may not have won the Oscar, but we judge the Boards for ourselves. Nothing to hunt the genocidaires in Europe. Now, with the corruption, well, we’re not doing very well. The agreement that Rocca and Tenaris have just signed with two groups of investors to compensate them for losses due to the vertiginous fall in the value of shares in the Cuadernos case is one more example of how we must walk with the cream against the glass, seeing how justice in other countries advances against guys we send home without a day of white hair or a peso fine.

What is the case about? The thing was like that. The Cuadernos case broke on August 1, 2018. The first repentant official, Claudio Ubertiwho had headed the Road Concessions Control Body (OCCOVI), said that Betnaza had given him five or six packets of $100,000 each for Néstor Kirchner between 2006 and 2007.

Betnaza and Zabaleta also testified as repentant: they acknowledged payments for 1 million US dollars in 2008 on July 2 to the Ministry of Federal Planning, Roberto Baratafor the Argentine government to intercede with Venezuela to Hugo Chávez for the nationalization of SIDOR, a steel company in Tenaris. Betnaza said they gave the order to pay Zabaleta. In his investigation, Rocca said he didn’t know anything and that Zabaleta was autonomous to apply these payments at Betnaza’s request.

On November 27, the judge Claudio Bonadio sued Rocca without pre-trial detention for illicit association and active corruption. It was a worldwide scandal. Shares of Tenaris fell $2.64 per share, or nearly 10%. On December 5, prosecutors Carlos Stornelli and Carlos Rívolo they called the judge’s decision and called for Rocca’s arrest. The shares continued to dive and lost another 5%.

The New York court case began a few days later, on December 12, when a group of investors filed a lawsuit against Rocca and Tenaris, among others, to which new requirements were subsequently added. In April 2019, the judge ordered that all claims be consolidated into a single class action brought by Glancy Prongay & Murray LLP. The consolidated trial, to which he had access GlobeLiveMediawas presented on July 19 of the same year.

Plaintiffs accused Tenaris of making misrepresentations and omitting information in its code of ethics, code of conduct, and certified forms filed with the SEC to comply with regulators’ requirements to ensure the transparency of the financial market (for example, the Sarbanes Oxley Act, known as SOX). Each year, the company has told its investors that it fights government corruption to comply with the Foreign Corrupt Practices Act (FCPA) and the OECD Anti-Bribery Convention while, according to the lawsuit, they already knew that Rocca, Betnaza and Zabaleta were involved in illegal payments.

Tenaris and Rocca have tried to slow the progress of the class action since the trial began in 2018. In February 2020, all of the defendants filed a motion to dismiss, but in October Judge Raymond J. Dearie of the Eastern District of New York , I reject her. He only agreed to let Edgardo Carlos, Techint and another related San Faustin company out of the case, but allowed the case to continue against Rocca and Tenaris.

Regarding the CEO of the company, the magistrate said that, according to the plaintiffs, Rocca had pressured Argentinian officials to help SIDOR; that officials were sent to contact Rocca to ask for bribes; and that he himself was at a 2007 meeting where Uberti asked Techint for illegal money. “Accepting this to be true, it is plausible to infer that Rocca played a role in the alleged bribery scheme,” Dearie said.

At that time, Rocca and his minions had yet to secure the firm dismissal that Ercolini, Stornelli and the FIU would grant them in August 2021. But they were already in a good place to protect their property and their freedom: they were all without merit. Why, then, did the judge allow the civil suit? Because the standards of proof for one thing and another are completely different.

The criminal standard of the foreign court that revoked the dismissal is not the same, Dearie said, as the deductions that apply in a civil financial fraud case. In his own words: “The defendant’s emphasis on the absence of allegations that Rocca personally paid or authorized bribes is misguided. To assert Rocca’s intent, the lawsuit need only allege that he knew of facts that “suggested” that Tenaris’ public statements were inaccurate.

In December 2020, Rocca and Tenaris persisted with a request to reconsider the motion to dismiss, but on July 1, 2021, the judge again dismissed the request and the case was ready for the discovery stage, in which produce evidence for use at trial. A year later, in August 2022, the negotiations that have just been successfully concluded begin with the agreement that the new intervening judge, Kiyo Matsumoto, accepts on a preliminary basis.

● Plaintiffs waive all of their claims in exchange for a cash payment of $9.5 million to be made by Tenaris on behalf of all defendants and for the benefit of the entire class of investors affected by the losses suffered by the shares .

● The money must be deposited in an account held by the court within 15 days of the preliminary order approving the settlement (which took place on March 10).

● The net payment to investors will be lower, since fees, expenses and taxes must be deducted. Assuming all class members participate, the average payback will be $0.14 per share.

Sources linked to Tenaris indicated that the agreement provides that the conciliation does not involve any admission of liability of any kind and that the company was convinced at all times that it would prevail in court, but that it preferred to face the agreed value because litigation costs in the United States are very high

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