The National Judicial Board of Spain will consider an anonymous complaint about the actions of the investment company Michael Fridman L1 when buying the Spanish supermarket chain Dia. This decision was made on September 18 by the Criminal Chamber of the Supreme Court of Spain, according to the publication El Confidencial.
An anonymous complaint against L1 was received by the National Judicial Board of Spain in March 2019. It stated that L1, Dia’s shareholder, supported the company in financial tensions in order to lower its share price and ultimately cheaper to buy it back. In the spring, a dispute arose between the National Judicial Collegium and the Madrid court over who should deal with the complaint. According to El Confidencial, the Criminal Chamber of the Supreme Court of Spain put an end to this dispute, deciding that the decision on whether to initiate an investigation of the complaint is the responsibility of the judge of the National Judicial Board Fernando Andreu, since the possible damage was done to shareholders and Dia employees not in one, but in several regions of the country, and the decision should be made at the national level.
Europa Press confirmed that, by decision of the Supreme Court of Spain, it is the National Judicial Collegium that will consider the issue of Friedman’s actions. These actions, the newspaper writes with reference to the court’s decision, could have caused serious damage not only to the minority shareholders of Dia, the employees and suppliers of the company - the fall of the Spanish stock exchange could “have a serious impact on the security of the national economy”, since this is a company playing an important role in the food sector and affecting whether food prices will continue to be diverse.
In the decision, the Criminal Chamber of the Supreme Court of Spain refers to a three-page police report attached to the complaint. It follows that the suspect’s strategy was to create a conflict situation in Dia through LetterOne, lower the price of its shares and then make an offer to buy a cheaper company. In order to complicate a possible investigation of these actions, “individuals and legal entities of different nationalities” were used, a police report quoted Europa Press as saying.
A Forbes source close to Friedman said that so far no one has contacted the billionaire’s lawyers about the complaint, but they learned from the newspapers about its existence.
Fridman himself was questioned on October 21 at the Spanish National Collegium of Bankruptcy in the Spanish IT company Zed Worldwide. Spanish anti-corruption prosecutors suspect that in 2016 Friedman used “violence, intimidation, or deception” to illegally lower Zed Worldwide's price and buy it at a ridiculous price of € 20 million, well below its market value. Friedman rejects these allegations and insists on his innocence and innocence in this matter.
Formally, the Zed Worldwide bankruptcy process is in no way associated with the purchase of Dia. But according to Friedman, a source surrounded by a billionaire told Forbes, the Zed case was provoked by the purchase of Dia's L1 network. Spanish Dia lenders have long opposed this deal. “When a large national company finds itself in such a difficult situation, local people have a great temptation to say: these are bad people,” explained the Forbes interlocutor.
Dia Supermarket Chain was established in 1966 and today operates 7429 stores in Spain, Portugal, Brazil, Argentina and China. The financial performance of the company has been falling for several years. Quotes of its shares have fallen ten times since 2015. In 2017, L1 became a shareholder in a Spanish company, buying a 3% stake. Subsequently, it increased its share to 29%. In May 2019, Friedman gained control of nearly 70% of the capital of the food retailer.