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Translation - English 1.1.3.3- The Issuance of Class and Statutory Certificates
Mr. PONASSO, head of RINA’s NAV Department, described the procedure followed for issuing the ERIKA’s Class and Statutory Certificates at the end of Bijela’s survey, which we reiterate was, according to this naval engineer, a first classification survey which included the special quinquennial survey (D 4025/4, D 4024/5, D 4025/6, D 4025/9). After making all the necessary verifications and surveys, Mr. PATANÉ asked, on August 6th 1998, the authorization to issue the statutory certificates.
Pagen0 120
Section SIS (Ship In Service), signed by one of Mr PONASSO’s colleagues, responded in those terms on August 8th: "Referring to the fax dated August 6th 1998, we note that all surveys have been completed successfully and no reserve has been issued against the vessel. For this reason, we authorize the issuance of the certificates (class, statutory + exemption) whose validity extends to December 31st, 1998 [...] "(D 4038, D 4039, RINA Company’s Appendix I transmitted October 26th, 2004). Mr. PATANÉ signed the provisional certificates on August 15th, 1998, except for the ISM Certificate which had already been issued in June of that year (RINA Company’s Appendices 6.1).
Mr PONASSO stated, however, that insofar as Mr PATANÉ had found that all reserves had been lifted, the RINA Rules and Procedures gave him the power to sign the Provisional Class Certificate without prior permission from the Directorate General, which was confirmed by the RINA Company representative at the hearing, after another leader of the classification company had said, during the investigation, that the inspector had been able to issue provisional certificates only by the authorization of the SIS Service, in this case of Mr PONASSO or a member of his service (D 1728/12, D 4025/6, Hearing Notes, page 200).
Following the issuance of the Provisional Certificates, the thickness records and the Inspector's Report, established on August 8th, 1998, were sent for verification to the DAT Section, dependent of the NAV Department, which conducted calculations on the main structures of the ship and had to report any difficulty (D 1731/6 to D 1731/8, D 3579/5, D 3579/6). Then, the head of the NAV Department prepared the classification proposal that was submitted to a Classification Committee.
On December 1st 1998, this committee, headed by five people, including Mr PONASSO and the RINA Society representative at the hearing, ruled on the first classification of nine vessels, in particular on that of the Erika (RINA Company’s Appendix I, forwarded on October 26th, 2004). On December 16th 1998, Mr PONASSO signed, on behalf of the RINA Executive Board, the Final Class and Statutory Certificates (first series of the appendices deposited by RINA Company, 1/1 to 1/14). He explained that the principle of this process is not unique to RINA, but concerned all classification companies which issued, first, provisional certificates through their inspectors, then final certificates, after the documentary investigations and calculations done by central services which required a certain amount of time.
RINA Company added that since then it was intended, first, as a result of an IACS rule modification, that the toughest inspections should be conducted by two inspectors, and, secondly, that prior to the issuance of certificates, the inspector was obligated to inform the NAV Department (Hearing Memorandum, page 202).
1.1.4- The Port State Checks after Bijela’s Works
After Bijela’s works, the ERIKA was subjected to many Port State checks : on October 11th 1998, in Batoum, May 8th 1999, in Porto-Torrès, June 5th and July 8th 1999, in Odessa and November 12th , in Novorossisk.
Mr. POLLARA confirmed that no defects were noted in Batoum (D 3684/14).
According to the BEA Mer, the survey in Porto Torres, although qualified as "extended", had focused only on the various certificates. No deficiencies were noted, which consequently led to cancel the "survey priority" required by the Norwegian authorities in Stavanger, a year earlier, and to reduce the "target factor” (D 1750, page 23).
In Odessa, on June 5th 1999, a defect was observed. It was regarding the absence aboard the ship of the document of compliance (DOC) copy, ISM certification from PANSHIP Company, endorsed with an annual stamp of approval; it had been transmitted by facsimile. At the same port, a month later, there was no comment (D 2823/7).
In Novorossisk, on November 12th 1999, four deficiencies were noted: they concerned the paint of the load marks, immersion combinations, lifebuoys and fire equipment, hence solely about the ship’s equipment; for Mr POLLARA, they were corrected immediately (D 68, D 440, D 1750/23, D 2823/7).
1.1.5- The ERIKA’s Vettings Subsequent to Bijela’s Works
From the 1970's, the big oil companies were disengaging from the activities of maritime transport. Controlling until then the production flow, to refining and distribution, they had at their disposal long-term chartered fleets and used travel charters only marginally. Having become mere medium-, short- or very short-term buyers, and having to diversify their supply sources as well as their fields of exploration and distribution, they greatly reduced their existing fleets and adapted the charters to this new situation.
Thus, larger and larger volumes were transported by vessels chartered for travel. This phenomenon was increasingly highlighted as a result of maritime disasters, such as the AMOCO CADIZ-in 1978. The need to know the chartered vessels, if only for cargo safety, led to the development of inspections carried out directly on behalf of oil companies and the development of an evaluation system for the global quality of vessels, known as vetting (D 3172/6, D 3252, page 198, D 4166/24).
1.1.5.1- General Elements of Vetting Presentation
At the time, supervisors, shipbuilding technicians and former merchant marine officers, employees of oil companies or commissioned by them, were carrying out surveys aboard the ships, usually fairly brief, during their commercial stops. A period of thirty-six hours was considered a maximum for a vessel of the type of the Erika, so as not to disrupt or delay loading or unloading operations, because of deadlines imposed by contractual obligations.
The inspectors reported their survey in a standard report by completing a questionnaire (the VIQ: "Vessel's Individual Questionnaire") established by POCIMF ("Oil Companies International Marine Forum), an organization of the major oil companies. These reports included, for tankers, 14 sections (15, 16 or 17 for other ships carrying gas, chemicals or making a combined shipment): general, certification and documentation, crew, types of navigation, ISM, pollution prevention, structure (Section 7), means of cargo and ballast handling, INS (tank inerting), means of anchorage, machinery and steering gear, general appearance, ability to transfer cargo from ship to ship. The various oil companies’ representatives unanimously indicated that those checks could not be as thorough as classification companies’ inspections nor a substitute for issuing the Class Certificate. The vetting inspector was not to interrupt the loading or unloading. Furthermore, if he wished to survey the structures, particularly those of the tanks and ballasts, he should proceed in a safe manner, which in practice was fairly rare in the light of the ongoing commercial operations. Finally, he had neither the resources nor the expertise of the classification companies’ inspectors.
For all sections, except those relating to the structure, the review was visual and documentary. For structures, the check was, in principle, documentary and incidentally visual, from the opening panels lying on the deck for all cargo and ballast, if these capacities were visible in whole or in part. The visual examination could provide an indication of the ship structures’ state of maintenance by observing the condition of the tank’s access ladder, a few deck longitudinals and partition elements, from the first visible platform to the bridge and tank coating in the vicinity of the access ladder. In practice, the vetting inspectors filled the part of the questionnaire dealing with structures by referring to classification company documents that were on board and, more specifically, to those that dealt with special surveys (D 1952/2, 955 D/3, D 2207/3, D 3252, pages 149 and 150, D 3428/6, D 3432/4, D 3432/5, D 3662/1, D 3662/2, D 3831/1, D 3831/2, D 4166/25).
Once the report was prepared, fourteen days were allotted to the owner or technical manager to make his observations and possibly state corrections to the defects noted by the inspector. Then, the report was entered, by the company which had procured the vetting, in a database called SIRE ("Ship Inspection Report"). Normalized through the questionnaire provided by OCIMF, it contained only objective data, destined to be found in the SIRE base. However, it was not exclusive of another document containing more subjective assessments, but which was kept by the inspector at his company.
The SIRE System, established in 1993 by OCIMF, included specific ship information resulting from responses to the questionnaire given by the inspectors during their survey; responses which, grouped in chapters, were converted by software in the form of an electronic synthesis report stored in the database. However, in order to respect United States laws or European rules on competition, this information did not particularly indicate if the ship was or was not acceptable for the company that had procured the vetting. Optional complementary information could be entered in the database, thanks to a questionnaire particular to the ship (the VPQ), with questions focused more on safety and pollution prevention, which were answered by the managers or owners.
The reports contained in the SIRE System, which could be viewed on a computer by members of the OCIMF and by the Port States Administrations, were automatically updated and available on an "index" for a year, then deleted from the index, but available, upon request, for an additional year, and finally archived; they were then no longer made available (D 3962/1).
The TOTAL SÀ Company emphatically reminded that no international convention, community regulation or national legislation forced the establishment of a vetting service whose existence, organization and missions were voluntary, private and internal to the company ( D 2944, memorandum for TOTAL SA).
1.1.5.2- Presentation Elements of the Vetting from the Company that is now TOTAL SA
The oil company explained that, like its competitors, it had not escaped the evolution of maritime oil transport. It also indicated that its vetting department had been created in 1991, following the crash of the EXXON-VALDEZ, in order to set up a documentary monitoring system to verify certification regularity of ships proposed to chartering (D 2463/4, D 2463/6, D 3432/6, and Hearing Memoranda, pages 71 and 72).
Internal memoranda, bearing the name of their author -- the BRION Memorandum, about the creation of vetting service, the MADEC Memorandum from March 31st 1998, the name of the Head of TOTALFINA SA’s “Gas-Electricity-Trading" Department, and the THOUILIN Memorandum, contemporary of the MADEC Memorandum and the name of the head of the "Legal Affairs, Contracts and Security" (AJCS) Service within the company that became TOTAL SA -- stopped and presented the vetting principles for the TOTAL Group (D 394, D 397, D 1992, D 2466, D 2497/2). Every oil tanker (crude and products), mixed (combination carrier "), chemical or gas, proposed to charter or under a "trading" contract, should be the subject of an application for acceptance prior to the vetting of TOTAL. Being attached to the Legal Affairs and Security of the company that became TOTAL SA (D 1992, D 2466/1, D 2466/4, D 2466/7 and D 2466/8 - erroneously listed 2467 D/7 and D 2467/8 - D 2967), it was responsible for the inspection of chartered vessels or likely to be chartered by time or by trip or to be used for transporting cargo handled by the Group. This inspection was designed to ensure the quality of the ship and its crew, in the areas of security and prevention of accidents or pollution risks. It was based on the standards set by the Group in security matters, especially on the "Environment Safety Charter," on international maritime convention rules (SOLAS and MARPOL) and on the recommendations made by professional organizations (OCIMF).
The first three articles of the "Safety, Environment, Quality Charter" (D 2919), established in 1992, signed in 1995 by Mr DESMAREST upon his arrival at TOTAL, and which, according to the "Environment Safety” director of the Group, had not been changed since, read as follows: "TOTALFINAELF places at the top of its priorities the security of its activities, human health, respect of the environment, as well as customer satisfaction. Any development project, any product launch is initiated only after a preliminary examination of its risks to safety, health and the environment, taking into account its whole life cycle. TOTALFINAELF favours in the selection of its industrial and commercial partners those with the ability to adhere to its policy on safety, health, environment and quality."
The vetting service had several roles : the selection of vessels that could be used by the Group, the acceptance or refusal of the ship, supremely appreciated after a "comprehensive analysis taking into account the quality of the ship itself, the quality of its crew, and the quality of its management "(D 1943/2, D 1945/2, D 2544/3, D 2544/14, Hearing Memoranda, page 693); file maintenance of "acceptable / unacceptable" ships; Council to all Group entities for the choice of ships; and participation in the works of professional organizations responsible for promoting security and environmental protection in the field of maritime transport (for instance, OCIMF).
The vetting service consultation was systematic each time a TOTAL Group entity intervened, directly or indirectly, in the transportation of cargo, taking into account accident and pollution risks. A request for prior acceptance of the vessel was to be presented at the vetting service when the ship was under a charter or transport contract signed by a TOTAL Group company, when the cargo belonged to, in whole or in part, at any time during the transport, to a Group entity, or when it was at risk for any of them at any time during transport, and where the cargo was loaded or unloaded in a terminal belonging to a Group company or where it was the operator. Any vessel having been subject of a vetting service negative notice had to be rejected by the entities concerned, "traders”, charterers, operational or terminal services.
More precise selection criteria, delivered in accordance with a procedure established from information, either shared with all oil companies or collected by its own inspectors, were exposed in a memorandum called "TOTALFINA Intertanko" (D 396, D 4000), or other documents, such as a booklet entitled "Vetting System", in the section of "TOTAL's Criteria" (D 1998, D 2497/5).
In fact, vessels with a certificate in line with international conventions on safety and pollution prevention, classification rules and those of the flag state also had to meet certain criteria adopted by the TOTAL Group (D 2944): vessels over 25 years old and a carrying capacity of more than 50,000 tons, cumulative conditions (Hearing Memorandum, page 227), were excluded; vessels over 20 years old were selected on the condition of a dry dock passage every two and a half years, instead of the five years imposed at the time by international texts; the classification company had to belong to IACS; ten of them were recommended, particularly REGISTRO ÏTALIANO NAVALE; the vessels had to be insured with a P&I, member of the “International Group of P&I Club”," and not have changed ownership or "manager/operator" without a new inspection by the TOTAL vetting or an oil company member of the OCIMF.
These criteria were delivered on the basis of information to which the vetting service had access: the SIRE database, which it was the only one within the Group to have access to (D 1945/2), Lloyd's records on "casualties", the internal sites of the Paris Memorandum, of the Memorandum of Tokyo, of the "US Coast Guard", of IACS, the reports coming from the TOTAL Group terminals (D 1943/2), and survey reports of the vetting inspectors.
Nine superintendents or inspectors carried out such surveys. Five of them were employees of the company that became TOTAL SA and settled in Paris. The other four were established of their own account; working solely for TOTAL, they were based in the ports of Rotterdam, Antwerp, Riantec and Fos-sur-Mer (D 2544/2, D 2544/17, D 2967). Every year, a guide entitled "Inspection Guidelines" was sent to the inspectors (D 2005). This guide was based on the OCIMF questionnaire (VIQ: "Vessel's Individual Questionnaire"). According to the memorandum "TOTALFINA -Intertanko,” the vettings made at the invitation of owners or technical managers were charged $1,300, not including transportation expenses (D 3997/7
In light of the information obtained, the vetting service sent a notice online on a Group’s internal database, the SURF database, intended for the users, in particular those responsible for charters. This notice could take one of three forms. The vessel was either assigned a "yes" status, which meant that it had been inspected by a member of the TOTAL vetting service and that it was "workable". The awarding of a “yes” status, however, was limited at the time, depending on the age of the vessel: 24 months for a vessel less than 10 years old; 18 months for a vessel between 10 and 15 years old; and 12 months for a vessel over 15 years old. Or the vessel was "unclassed" and the vetting service needed to be consulted by any appropriate means. Or the vessel was awarded the word "no" because it did not meet the vetting criteria.
On the first screen page or first window of the SURF database, the Group user could find out the status given to the ship, and also its name, carrying capacity, the year of its construction and its flag. He had access to a second window or screen page with certain technical characteristics of the vessel, the date of the last inspection, the acceptability deadline for the vetting of TOTAL and the following notes: twelve, eighteen or twenty four months. (D 2544/6, D 2545/2).
A third screen page was accessible to enable him to ask the vetting the position of a vessel whose status was unknown (D 2204/3).
1.1.5.3- Elements of Comparison with Other Oil Companies
The report of the National Assembly’s Inquiry Commission noted that if the vetting systems had been harmonized, notably under the leadership of the OCIMF, the oil companies’ practices remained fairly varied and noted on the subject: "During the hearings of various oil company officials, many of the commissioners felt somehow as if they were attending a "beauty contest", each of the contributors being very keen to demonstrate that its selection system was ever so to the point and transparent"(D 3252, page 198).
Launched as soon as the sinking had occurred by the oil companies (D 401/34), this parade which gathered the main competitors also took place during the criminal procedure.
BP Company, which Mr. THOUILIN wrote it had "the highest authority in this area", indicated that its vetting service had about thirty people, that it inspected 1,500 vessels a year, that in 1999, 13% of them had been denied due to structural problems, and that in addition to common criteria for different companies, the attention of the service was especially focused on the reputation of the owner and the profile of its fleet (D 1953, D3252, pages 198 to 200).
The SHELL Marine Operations Coordinator for the European region listed the criteria taken into account by his company’s vetting service: the list of accidents, the change of shipowner or operator, the age of the vessel, its dry dock and special survey program, the existence of a classification company belonging to the IACS, operator audit, the shipowner’s other vessels, service inspection reports, terminals and Port States, information on the integrity of the structure given by the classification company and provided by the shipowner (D 1955/2).
The head of the EXXON MOBIL Third Vessel Quality Management System for the United Kingdom fleet insisted on the abundance and quality of information which the subsidiary responsible for vetting could have at its disposal, even specifying that it retained in-house important files on some 800 owners (D 2207/3).
Finally, Mr. de CORBIERES, CEO of TEXACO Company France refused that a vetting official be heard alone by the investigators, demanding to be present and accompanied by two company lawyers, and explaining that such a hearing would be likely to create "a major stir within the company towards TOTALFINA" (D 2239).
1.1.5.4- The Vettings of the ERIKA after August 1998
We reiterate that during the execution of the contract linking it to TEVERE SHIPPING, PANSHIP Company had undertaken to obtain approval of the most important oil companies (D 3712). Most often at the request of its technical manager, the Erika was inspected on October 23rd 1998, in Genoa, by REPSOL and BP, on November 21st 1998, in Melilli, by TOTAL, on January 25th 1999, in Thessaloniki, by SHELL, on April 3rd 1999, in Porto Torres, and on November 20th 1999, in Termini Imerese, by TEXACO, on November 23rd 1999, in Augusta, by EXXON and BP, and on December 3rd 1999, in La Coruna, by REPSOL .
1.1.5.4.1- The BP Vetting, October 23rd 1998 in Genoa
Two companies, REPSOL and BP, had proceeded to the vetting of the Erika in Genoa on October 23rd 1998. The report prepared for REPSOL did not seem to appear in the documentation provided by Mr POLLARA under the heading "Surveys / Approvals by the Most Important Oil Companies" (D 1698, Appendix 52, 239 pages).
For BP, several reservations had been made regarding, notably, the maritime charts or maintenance of the engine room, but after correction, the ship had been accepted for a period expiring on
October 22nd 1999 (D 1953/2, D 2014, D 2015, D 2393/8 to D 2393/13, 3684/14, D 3939/38). The confidential part of this report, intended only for the Company, concluded that in Bijela, "the owners" had spent the time and money needed to repair the vessel, whose general appearance was good, probably under pressure from the Classification Company and several possible charterers (D 2393/14). In May 1999, the company that had chartered the ERIKA learned that the vessel’s inerting system was no longer in operation, which
challenged this approval. The technical manager had subsequently
indicated that this problem had been resolved (D 1953/3).
1.1.5.4.2- The TOTAL Vetting, November 21st 1998 in Melilli
Mr TRAGIN, former crew officer of the Merchant Marines, was the appointed inspector to the vetting. He established a SIRE report, stating notably that the cargo and ballast could not be inspected. In the document entitled "Print Database of TOTALFINA Vetting" were the commentaries of the November 21st 1998 survey, dated November 23rd, which is worth quoting in its entirety.
"Vessel well maintained
Full SBT - Inert Gaz ~ Cargo heating Not ill-equipped
Gateway OK
Social Security .Papers in good order..
Engine : good condition
Engine bilge water directly transferred to the slop and "Load on top". They recognize that the shippers are unaware of this and that in any case these are only small amounts (here, there were II m3). What is bizarre is that they indicate it on the Hydrocarbon Register. Emergency fire pump launching bottle: EMPTY - no emergency compressor except "by hand" Only 2 Diesel generators-No emergency group Only 1 boiler (Winches and steam COP)
Air Bottles of the ER Quick closing valves : weak pressure 4Kg instead of 6 I had to embark from the natural harbour in the morning, the port being closed for who knows how long-perhaps I was not expected so soon . Emergency tank of the steering device 1/4 full.
No CDP fire detection (Rounds registered once per shift)
May not be taken for Time Charter (Emergency group and only 2 D.G)-only one boiler- no emergency compressor ; Acceptable limits in spots when we will have verified
- That the fire pump is available at all times
- That the elimination methods of engine bilge water have changed" (D 4018).
On November 23rd 1998, PANSHIP responded to the inspector’s various points (D 401/22). His answer was judged satisfactory (D 2544/16), but the vetting service requested communication of a RINA certificate guaranteeing the integrity of the structure and tanks of the vessel, established on November 23rd 1998 and transmitted the following day (D 401/25).
According to Mr THOUILIN, this piece was requested because the vessel was more than twenty years old; in fact, the decision to accept made specific reference to that fact (D 401/32, D 2497/16). Regarding PANSHIP, the vetting service noted that the company benefited from the ISM certification "issued by the RINA.” Mr THOUILIN said that the head of this service, Mr GRANDPIERRE, knew that PANSHIP managed several vessels that had not known any incidents (D 3636/5). The party concerned, however, did not give this information and noted that it was Captain MAUREL, a member of the vetting service, who alone had made the acceptance decision (D 2544/3). On November 24th 1998, Mr MAUREL forwarded the acceptance of the Erika in the charter to the technical manager, for a period of one year from the date of the vetting inspection, or November 21st 1998 (401 D/32).
1.1.5.4.3- The SHELL Vetting, January 25th 1999 in Thessaloniki
SHELL proceeded with the vetting of the ERIKA on January 25th 1999 in Thessaloniki. The inspection called for a number of explanations from the company (D 1955/5, D 2011, D 2391). The Erika had been chartered by SHELL for a voyage between Rotterdam and Ireland in December 1997. It had been inspected on behalf of SHELL on February 10th 1998 and ranked as "suitable" In April 1998, it had come to load a cargo of fuel oil in Petit-Couronne, chartered by an independent trader. In May 1998, it had done the same at Sola (Norway).
Following this stop, on May 20th 1998, the ship had been downgraded from "suitable" to "terminal use only", as well as in a report transmitted by the terminal, which meant that the vessel would not be chartered by SHELL, that it could no longer carry SHELL cargo, but that it could eventually come to a SHELL loading terminal on behalf of a third party, subject to acceptance by the terminal.
The vessel was again inspected upon SHELL’s request on January 25th 1999, a survey during which some isolated "weaknesses" were found (D 1955/5). PANSHIP Company informed the company of the measures it had taken to remedy the situation (D 1698, appendix 52/228). But the restriction "terminal use only" was confirmed by a letter dated March 2nd 1999 addressed to PANSHIP, which indicated, in its penultimate paragraph, that the vessel's age made it unfit for chartering and transportation of SHELL cargo, but that the tanker could, subject to the express direction of the terminal, come load up on behalf of a third party at a SHELL terminal (D 2012). The TOTAL Company observed that, at the beginning of the letter, it was mentioned that the ERIKA would be included on the list of vessels "acceptable for SHELL business" and that, if it had not ultimately been accepted for chartering, it was not the tanker itself, but a general rule of the SHELL Group in terms of age of vessels (D 2944, pages 36 and 46, comments by Mr. THOUILIN, D 3428/10, D 3939/39). The fact still remained that PANSHIP had been informed by SHELL, as early as March 1999, that the Erika was no longer acceptable, because of its age, for charter or transportation of cargo and that it could be welcomed at a terminal subject to the explicit agreement of its officer (Hearings Memorandum, page 268).
1.1.5.4.4- The TEXACO Vettings, April 3rd 1999 in Porto-Torres and November 1999 in Termini Imerese
We reiterate that the hearing of the TEXACO France vetting officer had not been possible, taking into account the requirements of this company’s leader. In remark 7 of the SIRE Report (Structural Conditions) corresponding to the April 3rd 1999 survey, it was noted that the inspector was unable to examine the cargo tanks and ballasts, and that from the Captain’s reports came the following observation: "Zinc wear 5% - replaced at last dock passage in 1998 - The ballasts are shown to be inspected every 3 months" (D 2209, D 2214).
Following the vetting of November 20th 1999, PANSHIP commentaries made claims to reparations, that of the revolution counter of the auxiliary diesel generator No. 1, in a fax sent to TEXACO on December 7th 1999 (D 401/57 , D 2018, D 2397/23). Given the delay allowed for the technical manager to transmit his observations, the SIRE Report had been available only after December 7th 1999. In a fax dated December 8th 1999, the oil company informed PANSHIP that the vessel was considered acceptable until August 20th 2000 (D 401/36).
1.1.5.4.5- The EXXON and BP Vettings. November 23rd 1999 in Augusta
On November 23rd, in Augusta, the ERIKA underwent two vetting controls. The first was conducted by the company STANDARD MARINE SERVICES, on behalf of EXXON (D 2018, D D 2397/51 to 2397/56). After this control, PANSHIP voiced its comments, on December 8th 1999, where it stated the repairs or corrections made in the wake of the inspector’s remarks. On December 10th, the Erika was declared "technically acceptable" by EXXON, until November 22nd 2000 (D 401/35, D 2207).
The ERIKA underwent a second survey, on November 23rd 1999 in Augusta, for the BP Oil Company. According to this company’s representatives, after the inerting system incident during the stopover in Castellon in May 1999, it had been decided to no longer regard this vessel as acceptable for chartering until a thorough survey was conducted by an inspector appointed by BP. The Augusta vetting, on November 23rd 1999, showed that there were "high risk" factors (D 2016, D 2395/3).
After the report had been forwarded to PANSHIP and the company had responded that the weaknesses identified were corrected, BP informed the interlocutor on December 10th 1999, that in the absence of information on a number of corrections and repairs, the vessel could not be accepted (D 1952/2, D 1952/3, D 1953/3, D 1953/4, D 2016).
According to Mr POLLARA and TOTAL SA Company, in the same way that BP Company had accepted the Erika in October 1998, after an inspection and exchange with PANSHIP, this oil company would have ultimately accepted the vessel if dialogue, which was interrupted by the sinking, had been able to continue (D 1207/3 and 4, 1698 D, page 31, D 2823/8, Hearing Memorandum pages 325 to 329, "Synopsis Table of BP and EXXON’s Various Vetting Correspondence 1998-1999", this document reported by TOTAL SA on March 5th 2007).
For RINA Company, the BP inspector’s remarks had nothing to do with structural failures, but rather with the incorrect management and maintenance of navigation equipment, safety, pollution prevention, cargo and ballast systems, engine room and steering gears, all elements related to the technical management of PANSHIP. The plate ("scupperplate") found corroded during the inspection was not part of the deck and did not contribute to the strength of the structure (D 2567/24, D 3753/9).
The inspector’s report and its consequences were discussed so much that it seems necessary to mention the main passages of the documents in question, a reiteration of the prior texts being an interpretation in principle.
" [Comments Evaluated at High Risk (D 2016, D 2395/3)] :
6.7 [Heading 6 : Pollution Prevention] : Were the provisions taken to avoid
a spill at sea adequately taken?
No -Comments: The main deck’s scupperplates, located on both
sides of the deck, behind the distribution system, are cracked and suffer from
perforating corrosion on the port side [...]
12.9 [Heading 12 : Engine Room and Rudder] : Are contingency plans in place for the engine room and are they respected?
No -Comments: it was possible, and in both cases, had been done, to lock the entrance doors from the inside, with a lock. The markings of the emergency evacuation route in the engine room were done [reported] with normal paint and not with reflective paint or signs;
13.4 [Heading 13 : General Appearance and Condition] ; Are the pipes on deck in satisfactory condition? No - Comments: The fixed access bridge secured to the forefront of the ship does not cover the entire length of the main deck. Staff must move over 10 metres without protection on the main deck portside, without protections imposed by SOLAS Chapter II-1, 3 ~ Reg3 [...]" (D 2389).
The other observations totalled twenty-four. It was reported that all had been discussed and obtained the "agreement" of the ship’s Captain, Mr MATHUR, and that of PANSHIP’s current superintendent, Mr AMITRANO (D 2389, D 2395/4 to D 2395/10).
The report went on : "The vessel showed its age in a number of areas as reflected in the comments. Maintenance, whether it be that of the materials or the external appearance, was neglected in some areas. The decks indicated that flake and paint repairs were done regularly, but deep punctures indicated former corrosion on the main deck.
The pipes and other equipment were in varied general conditions, well repainted or lacking maintenance, as is the case for the drain hatches and pilot access. On the outside, the hull appeared in good condition with normal traces of damage resulting from shock and a few broken pieces of plaster "(D 2389/21). Concluding his report reserved for the oil company, the inspector answered the following questions as such: "In your opinion, was the vessel adapted to BP’s commercial needs at the time of the survey? No. If not, is your recommendation that a further survey is necessary? Do not know "(D 2395/22).
In a fax dated December 7th 1999, PANSHIP indicated to BP what action had been reserved for comments made in the vetting (D D 2395/33 to 2395/40). On December 10th 1999, BP’s Vetting Service asked PANSHIP if it had actually corrected a number of defects: "can you confirm that the following items have been corrected in their entirety: 6.7 Refurbishment at the first opportunity of corroded/split scuppers 12.9 The engine room’s emergency exit signage must be redone 13.4 All these points should be rectified
4.1 Speed and distance recorders must always be repaired [..] We regret that we cannot accept the vessel without this additional information. We also note, on the basis of data obtained during our technical control, that the vessel is nearing its twenty-five years, and that past that age it is necessary to act in accordance with the MARPOL (13G) Regulation” (D 2395/43, D 2395/44).
From the vetting report, on the one hand, and mail addressed to PANSHIP on December 10th 1999, on the other, the result is that, in the opinion of the inspector, the Erika was not acceptable to BP and, that, as of December 12th 1999, the tanker had not been accepted by the company.
Contrary to what was said and written to stress that the Erika had always been accepted by the largest companies that had inspected it (notably, D 401/34, D 1698, page 31, D 3684/13), on the day of the sinking, two of them had not approved the vessel for charter or for transportation of cargo, one, because of its age, and another, due to its condition
l.l.1.4.6- The ERIKA’s Last Vetting,. December 3rd 1999 in La Coruna
This vetting was done by REPSOL. The oil company’s letter of acceptance was dated December 10th, 1999. It showed that several deficiencies had been found and that PANSHIP had certified, by a fax dated December 8th, that the defects had been corrected. Taking note of these corrections, the vessel was therefore considered acceptable by the company for a period of six months (D 1289/5). Mr MATHUR, then Captain of the vessel, said that no survey of the ballasts and tanks had been carried out, but that the documents onboard relating to them had been examined (D91/7
1.1.6- The Classification Company’s Controls Before Biiela’s Works :
Between August and November 1999, RINA Company carried out certification control for ISM certification of PANHIP and the ERIKA. Over the same period, the Classification Company performed the vessel’s first annual inspection after Bijela’s works.
1.1.6.1- ISM Certification Control
During the investigation, Mr. PONASSO and RINA Company reported on the circumstances in which the ISM certification of PANSHIP and of the ERIKA had been controlled (D 3760/2, D 3760/3, D 3760/5, D 3772, D 3914/5 to D 3914/10, D 4024/6, D 4025/11, D 4033/4, D 4033/5, D 4034/8, D 4034/9).
In August 1999, one of the vessels operated by PANSHIP had been held back in the United States. After the intervention of a RINA Company inspector, an audit of PANSHIP was conducted on August 12th and 13th. Eighteen non-conformities were identified (Appendix 5.5 of RINA Company, D 3772), including some "really important" ones, which led to question the maintenance of certification (D 1788/28, D 2851/1 ).
PANSHIP proposed corrections, the delivery of which was checked at a new audit on November 12th. At that time, the Classification Company believed that adequate measures had been taken, which justified Mr POLLARA (second set of documents sent by Mr POLLARA (transmitted March 31st, 2004, D 3898), File No. 5). One point, which did not, however, concern a specific requirement of the ISM Code, remained unresolved.
The results of the operating company’s control led RINA Company to carry out audits, under the ISM Certification, of several vessels operated by PANSHIP. That of the ERIKA occurred on September 6th 1999, when it should normally have been scheduled for December 2000 (D 3776).
Subject to six remarks, including three non-conformities related to the absence of documents onboard concerning vessel surveys carried out before August 1999, periodic analyses of the lubrication of the rear propeller shaft and to the existence of certain documentary mentions (D 4033/4), for which the proposed corrections were allowed, the survey had been satisfactory to the Classification Company auditor (D 3776/8).
The vessel sank before RINA Company had conducted an audit, already programmed, designed to verify that the proposed corrective actions had been delivered (D 3760/4).
1.1.6.2- The First Annual Inspection of the ERIKA, August 16th and November 24th 1999 in Genoa and Augusta
The ERIKA’s class certificate had been issued on August 15th 1998 after the special quinquennial inspection and Bijela’s works. The first annual inspection began in Genoa on August 16th 1999. Restrictions relating to the Port of Genoa Regulation made it impossible to inspect internal spaces (for instance, the ballasts) (D 2567/12). The inspection ended on the following November 24th, in Augusta. Mr PONASSO explained that the RINA Company Regulation allowed to proceed with the inspection within three months before or after the due date and that a grace period, exceeding that of three months was given for the time necessary to the inspection, if it had already started (D 4033/7).
Two separate inspectors had come aboard the tanker, one in Genoa,
the other in Augusta. The second one, Mr ALGA, established a report on
November 24th 1999. In the "Remarks" Paragraph (D 1698, Appendix 49/8,
Appendix 3.7.2, page 2, RINA Company), he stated:
"Forward peak
Collision bulkhead :
First level under the upper deck :
Found corrosion and thickness reduction of the plating on about 4 meters of the forward collision bulkhead
Found corrosion and thickness reduction between shell longitudinal and collision bulkhead,
Found corrosion and thickness reduction of the longitudinals! II, III, IV, from the portside side and starboard side
Found corrosion and thickness reduction at the intersection of the side longitudinals and the collision bulkhead
First greenhouse : found corrosion and thickness reduction. Recommendations : examine again with thickness measures, and / or repair, if necessary the forward peak up until ["uniW"] January 2000
Ballast tanks No. 2 portside and starboard ;
Deck longitudinals, suspected areas : found thickness reduction in deck longitudinals Did not conduct thickness measurements of suspected areas required by the ESP (“Enhanced Survey Program").
Ladder : : found thickness reduction on the upper part. Recommendation : up until ["untïl"] January 2000 : examine again the deck longitudinals and carry out thickness measurements of the portside and starboard ballasts 2’s suspected areas and repair, if necessary,the upper parts of the ladder" (D 1698, pages 27 and 28, D 1750, page 36, RINA Company conclusions, pages 35 and 36).
Mr ALGA sought the class certificate stating that the vessel would be subject to a survey in the aforementioned period, without making any reference to the technical origin of this reserve (D 3958/3). Heard on rogatory commission, he said, that during the inspection, its only interlocutor was an employee of PANSHIP, Mr AMITRANO, who had accompanied him during his findings, and that after having spoken to the RINA Company office head in Augusta, Mr. RICCA, they had all decided to allow two months to make repairs that were not urgent, as they did not concern the structural elements but only elements of reinforcements. Since Mr AMITRANO indicated at the end of the inspection that the ERIKA should depart immediately, the inspector was not able to establish his report before the vessel's departure (D 1016, D 1032). Mr POLLARA observed that during the inspection, the RINA Company inspector did not prescribe works, but thickness measurements that could be made up until the end of January 2000 and said that they were to take place in Livorno (D 3197/11, 3684/12 D, D 4043/7). However, he was unable to say when these measures were planned (Hearing Memorandum, pages 339, 341 and 342).
This annual inspection ended two days before the ERIKA was freighted for its last trip by the SELMONT Company, new time charterer.
Cette visite annuelle s'achevait deux jours avant que Ï'ERIKA ne fut frété pour son dernier voyage par la société SELMONT, nouvel affréteur à temps.
1.2- The ERIKA’s Last Voyage
1.2./- The Chartering Contracts
On September 14th 1999, the TEVERE SHIPPING Company time-chartered the ERIKA at the SELMONT Company from Mr. DUCCI and Mr. CLEMENTE
1.2.7.1- The New Time-Charterer : Mr. DUCCI’s and Mr. CLEMENTE’s SELMONT Company
After having repeatedly affirmed to be mere employees, Mr. DUCCI and Mr. CLEMENTE admitted that they were the "owners" and the leaders of SELMONT International, a company registered in the Bahamas, and of AMARSHIP, a Swiss company, Mr. DUCCI being responsible for the operational side, and Mr CLEMENTE, administrative and financial matters. Under an agreement signed on September 15th 1999, AMARSHIP was acting on behalf of SELMONT, as a service provider. It was noted, however, that AMARSHIP had only received payment from SELMONT in July 2000, in the amount of $13,256 (D 1806, D 1807, D 2145, D 2146, D 2147, D 2330, D 3040, D 3586, Hearing Memoranda, page 299).
The SELMONT Statutes were signed on May 3rd 1999. Between that date and the time charter of the ERIKA, on September 14th 1999, SELMONT had no activity (D 3,040/3). Following discussions between Mr. SAVARESE, Mr. POLLARA, Mr. DUCCI, and Mr. CLEMENTE (Hearing Record, pages 302 and 303), the SELMONT Company concluded a charter party with TEVERE SHIPPING, presented as a "standard time charter" for a period of six months, renewable (D 1801, D 1802). Neither Mr.DUCCI nor Mr CLEMENTE had maritime training or experience, one invoking his capacity as commercial manager and the other as an administrator (Hearing Memoranda, page 300). SELMONT chartered the ERIKA without either one of its leaders having previously had the vessel inspected. Us explained that under the charter party, subject to English law, if SELMONT, the charterer, was free to inspect the vessel whenever he deemed necessary, it did not have an obligation. TEVERE SHIPPING, the freighterer, guaranteed the smooth seaworthiness of the tanker, the existence of class, statutory and safety certificates, of vessel compliance with the conventions and relevant international standards, and that it was common for the charterer to rely on such assurances (D 2332).
The freight, for the first two six-month periods, was up to $7,175 per day, and during the following twelve months, at $7,375, payable directly to the Bank of Scotland and "in advance per calendar month" (Clauses No. 8 and 44, D 1801, page 11, D 1802, page 1). We reiterate that under the charter party concluded on September 18th 1996, TEVERE SHIPPING put the ERIKA at EUROMAR’s disposal for a period of three years (Clause 4), at a price of $7,000 per day (clause 8), payable in advance bi-monthly to the Bank of Scotland. The agreement with SELMONT provided, under commercial limits, those fixed by the Institute Warrant's Limits, with the exception of Albania, the United States and countries being under embargo (D 1802, page 5).
Mr. SAVARESE explained that he had decided to change its time charterer because EUROMAR, the family company, and especially one of his brothers, did not wish to renew the charter party agreement with TEVERE SHIPPING. He added that it was "very important" to him that Mr. DUCCI paid, by greed, the ship’s freight and supply with fuel (D 1211/4, D 11211/2, D 1808/4toD 1808/6). Mr. DUCCI confirmed that explanation, stating that SELMONT provided an advance payment every month, which was not the case with EUROMAR (D 2330/4).
Between September 14th and December 12th 1999, SELMONT had no other activity than to freight the tanker for trips, on six occasions (D 3040/3). According to Mr CLEMENTE, who justified it, SELMONT payments had staggered at the rate of $211,295 to the Bank of Scotland, the beneficiary named in the charter party, for the period of September 21st to October 21st 1999; $156,413 to the Bank of Scotland, for the period between October 21st and November 21st 1999; $154,066 and $105,025 paid for the benefit of EUROMAR, the 1st and 10th of December 1999 (2061 D/4).
Mr. CLEMENTE and Mr. DUCCI stated that the December 1st 1999 payment had been made by the due date, but that the December 10th payment, two days before the sinking, was conducted in anticipation of
the monthly December 21st 1999 to January 21st 2000, at the request of
Mr SAVARESE who had explained that he needed money
(D 2330/6). The latter stated that EUROMAR was a company on whose account
he was receiving funds, that he had "current liabilities"
with the shipyard, and that in order to cope with the traditional end of year expenses, he had requested an advance from Mr DUCCI (Hearing Memorandum, Page 315).
1.2.7.2- The Chartering Contract for the ERIKA’s Last Voyage
On September 2nd 1999, TOTAL TRANSPORT CORPORATION, a subsidiary of TOTALFINA SA, chartered the Erika, for a trip loading 25,000 tonnes of crude oil, on September 11th 1999, in La Skhirra, Tunisia,
with a destination of Varna in Bulgaria, where the vessel arrived on September 17th
(D 1983, sealed No. 23, D 2017, D 1698, Appendix No. 80). In 1999, four subsidiaries
TOTALFINA SA Company, TOTAL REFINING DISTRIBUTION (TRD)
TOTAL INTERNATIONAL LIMITED (TIL), TOTAL TRANSPORTATION
CORPORATION (TTC) and TOTAL PETROLEUM SERVICES (GST)
were involved in international sales, at least in Europe, and in transportation of the Group’s petroleum products.
1.2.7.2.1- TOTALFINA SA that became TOTAL SA an dits subsidiaries
TRD, TOTALFINA SA’s French subsidiary, TRD, was in charge of refining and distributing in France. Its product sales on the international market were made through TIL, another international trade subsidiary, formed in Bermuda since 1957, because of the exchange control constraints that existed at the time. TTC, registered in Panama in 1956, was the subsidiary specializing in maritime charter. At the time, Mr THOUILIN was President. Finally TPS, a TOTALFINA sub-subsidiary, was a service company, based in London, which acted on behalf of TIL and TTC, the latter having no staff of its own.
Thus, the roles were shared between TRD, industrial producer not intended to intervene directly on the international market and selling products to TIL, responsible for getting the most out of them by reselling them in thirds; TTC, dedicated to chartering, TPS which has since become TOTAL GAS & POWER SERVICES LTD (TGP), called to represent TIL, and TTC in commercial transactions (D 2183, pages 2 and 3, D 2969 Hearing Memoranda, page 293).
Mr. THOUILIN stated that, in general, all international trade companies used specialized subsidiaries for purchase and transport, with the aim being to locate each specific activity in an adapted legal structure. H added that TRD, TIL, TTC and TPS, subsidiaries and 100% sub-subsidiary of their parent company, had no legal or financial independence, TPS activity, however, is "independent" (1944 D/3, D 2497/4, D 3636/2, Hearing Memoranda, pages 291 and 292). The officer appointed to represent TOTAL SA Company during the criminal procedures stated explicitly that TOTALFINA SA did not charter any vessel at the time since the chartering was done by its TTC subsidiary (D 2463/23).
It was by following this pattern of organization, that in 1999, TIL was selling to the ENEL Company, Italian producer of electricity, fuel oil that was to be shipped to a port in Italy.
1.2.7.2.2- Sale to ENEL Company
According to an agreement dated May 21st 1999, for a period of eight months starting on May 1st of the same year, TIL undertook to supply a quantity of between 200,000 and 280,000 metric tons, at its discretion, a fuel high in sulphur content for the production of electricity, at a monthly loading of between 23,000 and 35,000 metric tons, depending on the seller’s choice. If at the end of the period covered by the contract, the amount loaded in its entirety was less than the minimum amount expected (200,000 metric tons), the penalty was three (3) dollars per missing tonne.
It was an "Ex-Ship" sale, that is, a sale "at the finish line", the transfer of ownership being carried out at the ship’s longitudinal in the port of discharge, Customs and landing operations incumbent, as a general rule, on the purchaser, goods to be delivered to MILAZZO, a destination specified for order, and the buyer has the right to designate any other port subject to adjustment freight (D 3678). According to the TPS director of "commercial product" operations, the execution of the contract had led to the chartering of eight vessels, the ERIKA and the tanker that had replaced it after the sinking included. For the contract negotiator, there had been a total of nine charters, one for each month, plus one in the aftermath of the sinking.
Given the same kind of contracts concluded at the same time with the same Italian company, there had been, some months, several trips that could not particularly relate to one or other of these conventions. In selecting the weakest quantities transported, at a monthly travel, the list was as follows:
- May 12th 1999, F AIR SKIES : 29.615,441 tons ;
- June 9th 1999, MARINER A : 35.003,226 tons ;
- July 30th 1999, ADRIATIKI : 28.677,710 tons ;
- August 4th 1999, LIANO : 28.462,475 tons [August 23rd : 28.630,923 tons] ;
- October 3rd 1999, LIA : 28.491,436 tons ;
- October 3rd 1999, F AIR SKIES : 29.269,723 tons ;
- November 22nd 1999, PUPPY P : 19.946,176 tons ;
- December 8th 1999, ERIKA : [30.884,471 tons] ;
- December 18th 1999 BULDURI : 27.485,529 tons (D 2197, D 2198, D 2320, D 2321 and corresponding seals).
Before chartering the ERIKA, at least 199.466,17 tonnes had already been delivered and it would have been short 533.83 tons in order to reach the minimum amount stipulated in the contract. The thesis which was to assume that a TOTAL Group entity had chartered the ERIKA in a hurry to avoid paying large penalties was therefore unfounded.
The ERIKA arrived in Varna on September 17th 1999. It was, hence, freighted by SELMONT to travel six times and, for the last time, on November 26th 1999 (D 1698, Appendix 80). Mr PECHOUX, TPS charterer, treated the contract following the various stages of the usual procedure in force within his company.
1.2.7.2.3.1- Contract Negociation
It was the fourth charter of the ERIKA for the TOTAL Group since September 2nd 1999, the ship having been re-chartered on September 15th and October 6th 1999.
In mid-November 1999, the "trading" service asked Mr PECHOUX to organise the transport of three cargoes, one between November 30th and December 2nd, the other between December 6th and 8th, and a third between December 5th and 10th. For this third shipment, which was to be delivered under contract signed with ENEL in May 1999, Mr PECHOUX was caught off guard by the request on Thursday, November 18th. He addressed his broker, the PETRIAN SHIP BROKER Company, which stated that, according to the contacts he had made, it was possible to consider chartering the ERIKA, given the vessel’s current voyage and its geographical position, but he had to get confirmation. On November 18th or 19th 1999, Mr PECHOUX checked the SURF database to see if the vessel was "workable", by consulting the first screen page - "the first window" -, the whereabouts of the vessel’s name, its carrying capacity, the year of its construction, its flag and its status given by the TOTALFINA SA Vetting Department, a status which, at that time, was "yes".
What he had learned on how to control the "workability" of a ship led him to believe that the check was sufficient, although he could on the one hand, access a second window, which he knew included the date from which the vessel had been declared acceptable by the vetting service, information that he could cross-check with the duration of acceptability and, on the other hand, use a third window that allowed to ask this service its position, assuming that the status of a vessel was unknown. Questioned on numerous occasions on the date of consultation of the SURF database, Mr PECHOUX maintained that he had carried out this operation on November 18th or 19th 1999, without, however, being able to produce a written document justifying a consultation on this date.
Negotiations with the one Mr PECHOUX called the owner was postponed until Monday, November 22nd 1999, the day on which the latter conveyed an offer through brokers, offering a cargo of 32,000 tons, with a loading date ("laycan") of December 8th to 9th, in a small area in Antwerp, a known EUROMED and “worldscale" of 125 discharge zone – an index enabling freight calculation. Mr PECHOUX transmitted a counter-offer, which broadened the loading area in Antwerp-Le Havre, in order to be able to integrate Dunkirk, and maintain the proposed "worldscale" index, but for 30,000 tons instead of 32,000 tons.
After discussing it, the two sides reached an agreement for a "worldscale" of 127.50. Since the trader was not sure of the loading dates, the subject of the vessel was not brought up until that Wednesday, November 24th, at 4pm, London time; it was continued until November 26th, when the topic was lifted and the charter party concluded (sealed No. 26, Second Partial Synthesis, D 1983, D 2205/ 2, D 2320, Hearing Memoranda, pages 704 to 712).
For the three travel applications between November 30th and December 10th 1999, transmitted by the trading, there would have been only three ships available successively for charter, the 22nd, 24th and 26th of November, which would mean that when the subject of the ERIKA was brought up on November 24th, it was the only ship available, the other two having already been chartered by TOTAL.
We reiterate that under the TOTAL Group internal rules, the period of the vessel’s approval validity was one year if it was older than fifteen years, that the ERIKA’s last inspection by the TOTAL Vetting Service was dated November 21st 1998, and that, by a November 24th 1998 fax, the department had informed the PANSHIP Company that the vessel was acceptable for a period of one year after the survey, hence November 21st 1998. Thus the ERIKA’s charter contract dated November 26th 1999, for a load due between December 7th and 9th.. It had therefore been concluded and was scheduled to be executed, respectively, five and sixteen days after the expiration of the period of validity of the authorization given by the vetting service.
The company representative, as well as Mr THOUILIN and the chief of the vetting service, Mr GRANDPIERRE, indicated, however, that at the expiration of the one year, the ship was assigned, not the status of "no" , which precluded his charter, but the status "unclassed", which allowed to retain it, after agreeing with the vetting service (D 1945/4, D 2497/18, 2497/19 D, D 2544/4 to D 2544/7 , D 2545/1, D 2545/2, D 2545/15, D 2944, note for TOTAL SA, pages 16 to 18, D 3428/11, D 3428/12, D 3632/5, D 4137/13, D 4137/14, Hearing Memoranda, pages 687, 690, 692, 694).
1.2.7.2.3.2- The November 26 1999 Charter Party
The Charter Party, dated November 26th 1999 and entered into between SELMONT and TOTAL TRANSPORT CORPORATION, in the amount of $245,023.88 (D 2572/46), was not signed (D 2571/12, 2571/16 D, D 3131, D 3132, D 3133, D 3141). Mr THOUILIN, TTC President, said in his capacity as responsible for legal affairs and safety at TOTAL SA, that the signature always lagged due to the time required for the preparation of the charter and that in this case, the ship sank with the contract which was to be submitted with his signature,and had never been regularised (D 2947/3, D 2947/4).
Broadly speaking, there were several corresponding documents to a charter: a charter party concluded on the basis of a standard contract ; clauses making it possible to define more precisely, within the general framework of the charter party, the respective obligations of contracting parties on specific issues; a questionnaire summarizing a certain amount of information about the vessel given by the freighter to the charterer (owner, technical data and certification), variously called and labelled questionnaire for TOTAL, "Questionnaire 88" (Q 88), and finally, voyage instructions.
Regarding the charter of the ERIKA on November 26th 1999, there was a "Shell Voy 5"-type standard contract, concluded between SELMONT and TTC, including general and special conditions; amendments to these conditions, termed "TOTAL Terms" from July 1998; complimentary clauses to these particular conditions, designated as « TOTAL special provisions", one of which was a direct reference to "Questionnaire 88" (clause 3) and another entitled 'Compliance with Travel Instructions"; travel instructions from TOTAL DTS, "Trading / Shipping Direction" divided between the parent company "in Paris" and Group entities located in London (D 1992, Hearing Memoranda , page 374).
For TOTAL SA Company, the Shell Voy 5 document, the "TOTAL Terms" complementary clause and "TOTAL Special Provisions", and the "Questionnaire 88" constituted the Charter Party. For Mr THOUILIN, Legal Affairs and Safety Chief, the voyage instructions were also part of the chartering contract (Hearing Memoranda, pages 361 and 362).
Several clauses, general and specific, as amended or supplemented by "TOTAL Terms » or « TOTAL Special Provisions" documents, or the voyage instructions, caused a discussion on the situation and the respective rights of the freighter and the voyage charterer (D 2436, D 2463/18, D 2463/19, D 2944, D 3662/7, D 3831/12, D 3939/8 to D 3939/11, D 4137/20, Hearing Memoranda, pages 367 to 369, 371 to 378).
It was, notably for the Charter Party and its amendments, giving the charterer the right to ask for a tank inspection of the vessel at the loading or unloading port to ensure the quantity and quality of the cargo, water and residue on board (clause 17, Part II of the Charter party), or the one that allows a service called "TOTAL risk assessment department", which is situated at the company’s headquarters, to have P "owner" contacts provided by SOPEP (Clause 40 amended by "TOTAL Terms"), or even those giving the charterer compensation in the event of failure to follow travel instructions (additional clause N6) and guarantee a speed of about 12.5 knots, weather permitting (additional clause Nil).
Regarding voyage instructions, which were related to "vessels chartered on the spot [...] [to] the cargo [and] travel covered under the considered Charter Party [...]" (D 3141), it was mainly about clauses imposing several obligations on the Captain, in particular those to regularly inform TOTAL of the estimated time of arrival and to notify him of any change of more than six hours, not to transfer cargo from one tank to the other unless with the "express consent" of TOTAL, except for "emergency situation involving risk to the vessel’s structural integrity or safeguarding of human life" (clause "cargo transfer"), to report immediately to an emergency response unit at the company’s headquarters, "incidents resulting from a defect or vessel equipment failure [or] serious accidents such as collisions, groundings, explosions, fires , pollution "(clause k), and to not accept any orders coming straight from the consignors, consignees, brokers, agents, drivers or any other person without the prior concurrence of TOTAL (summary clause or "warning", Hearing Memoranda, page 375).
Transmitted through charterer and freighter brokers, these voyage instructions were sent by AMARSHIP on December 6th 1999, to a Dunkirk shipping agency to be handed over to the Captain of the ERIKA which was to acknowledge its receipt (D 2571/12 to 2571/16, Appendix 64 of the listing D 1698). On December 7th 1999, the ERIKA arrived in Dunkirk on ballasts from La Coruna. On the same day, he was put to starboard at the oil tanker dock at the Flanders Oil Refinery.
French to English: Financial Audit
Source text - French SGAM LUXEMBOURG S.A. Société Anonyme
Comptes Annuels
et Rapport du Réviseur d'Entreprises
au 31 décembre 2007
Table des matières
Pages
Rapport du Réviseur d'Entreprises 1 - 2
Comptes annuels
Bilan 3
Compte de profits et pertes 4
Annexe 5-11
Rapport du Réviseur d'Entreprises
Aux actionnaires de SGAM Luxembourg S.A. Société Anonyme
Conformément au mandat donné par l'Assemblée Générale des actionnaires du 27 avril 2007, nous avons effectué l'audit des comptes annuels ci-joints de SGAM Luxembourg S.A., comprenant le bilan au 31 décembre 2007 ainsi que le compte de profits et pertes pour l'exercice clos à cette date, et l'annexe contenant un résumé des principales méthodes comptables et d'autres notes explicatives.
Responsabilité du Conseil d'Administration dans l'établissement et la présentation des comptes annuels
Le Conseil d'Administration est responsable de l'établissement et de la présentation sincère de ces comptes annuels, conformément aux obligations légales et réglementaires relatives à l'établissement et à la présentation des comptes annuels en vigueur au Luxembourg. Cette responsabilité comprend : la conception, la mise en place et le suivi d'un contrôle interne relatif à l'établissement et à la présentation sincère de comptes annuels ne comportant pas d'anomalies significatives, que celles-ci résultent de fraudes ou d'erreurs, le choix et l'application de méthodes comptables appropriées ainsi que la détermination d'estimations comptables raisonnables au regard des circonstances.
Responsabilité du Réviseur d'Entreprises
Notre responsabilité est d'exprimer une opinion sur ces comptes annuels sur la base de notre audit. Nous avons effectué notre audit selon les Normes Internationales d'Audit telles qu'adoptées par l'Institut des Réviseurs d'Entreprises. Ces normes requièrent de notre part de nous conformer aux règles d'éthique ainsi que de planifier et de réaliser l'audit pour obtenir une assurance raisonnable que les comptes annuels ne comportent pas d'anomalies significatives.
Un audit implique la mise en œuvre de procédures en vue de recueillir des éléments probants concernant les montants et les informations fournis dans les comptes annuels. Le choix des procédures relève du jugement du Réviseur d'Entreprises, de même que l'évaluation du risque que les comptes annuels contiennent des anomalies significatives, que celles-ci résultent de fraudes ou d'erreurs. En procédant à ces évaluations du risque, le Réviseur d'Entreprises prend en compte le contrôle interne en vigueur dans l'entité relatif à l'établissement et à la présentation sincère des comptes annuels afin de définir des procédures d'audit appropriées en la circonstance, et non dans le but d'exprimer une opinion sur l'efficacité de celui-ci.
Un audit comporte également l'appréciation du caractère approprié des méthodes comptables retenues et du caractère raisonnable des estimations comptables faites par le Conseil d'Administration, de même que l'appréciation de la présentation d'ensemble des comptes annuels. Nous estimons que les éléments probants recueillis sont suffisants et appropriés pour fonder notre opinion.
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Opinion
ËUERNST&YOUNG
À notre avis, les comptes annuels donnent une image fidèle du patrimoine et de la situation financière de SGAM Luxembourg S.A. au 31 décembre 2007, ainsi que des résultats pour l'exercice clos à cette date, conformément aux obligations légales et réglementaires relatives à l'établissement et à la présentation des comptes annuels en vigueur au Luxembourg.
'acaud
ERNST&YOUNG Société Anonyme Réviseur d'Entreprises I
Le 16 avril 2008
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SGAM LUXEMBOURG S.A. Société Anonyme
Bilan
Au 31 décembre 2007 (exprimé en EUR)
2007
2006
PASSIF
2007
2006
54.177.790
Frais d'établissement
Frais d'établissement (Note 3)
Actif circulant
Créances (Note 4)
Créances résultant de ventes et de prestations de services Dont la durée résiduelle est inférieure ou égale à un an
Valeurs mobilières (Note 5) Avoirs en banque
Comptes de régularisation
Total de l'actif
Capitaux propres (Note 8)
Capital souscrit (Note 6) Réserve légale (Note 7) Autres réserves (Note 13) Résultats reportés Acompte sur dividendes Résultat de l'exercice
Provisions pour risques et charges
Provisions pour impôts
Dettes
Dettes sur achats et prestations de services Dont la durée résiduelle est inférieure ou égale à un an
Dettes envers des entreprises liées Dont la durée résiduelle est inférieure ou égale à un an (Note 9)
Dettes fiscales et dettes au titre de la sécurité sociale Dont la durée résiduelle est inférieure ou égale à un an
Autres dettes Dont la durée résiduelle est inférieure ou égale à un an
L'annexe fait partie intégrante des comptes annuels.
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SGAM LUXEMBOURG S.A. Société Anonyme
Compte de profits et pertes
Pour l'exercice se terminant le 31 décembre 2007 (exprimé en EUR)
CHARGES
2007
2006
Frais de personnel Salaires et traitement Autres charges sociales
Corrections de valeur sur frais d'établissement et sur immobilisations corporelles et incorporelles (Note 3)
Autres charges d'exploitation (note 10)
Intérêts et charges assimilées Autres intérêts et charges
Impôts sur le résultat (Note 13) Profit de la période
Total charges
PRODUITS
Montant net du chiffre d'affaires (Note 11 )
Produits d'autres valeurs mobilières et de créances de l'actif Immobilisé Autres produits
Autres intérêts et produits assimilés
2007
196.503.059
845.903
2006
137.566.351
351.274
Total produits
197.348.962
137.917.625
L'annexe fait partie intégrante des comptes annuels.
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SGAM LUXEMBOURG S.A. Société Anonyme
Annexe
Au 31 décembre 2007
Note 1 - Description et objet de la société
SGAM Luxembourg S.A. (la « Société ») est une société anonyme de droit luxembourgeois constituée le 10 Novembre 2004 pour une durée illimitée.
La Société a pour objet la gestion d'organismes de placement collectif en valeurs mobilières luxembourgeois et/ou étrangers agréés conformément à la directive 85/611/CEE telle que modifiée ainsi que d'autres organismes de placement collectif luxembourgeois et/ou étrangers qui ne relèveraient pas de cette directive, l'administration de ses propres actifs n'ayant qu'un caractère accessoire. La Société pourra exercer toutes les activités estimées utiles à l'accomplissement de son objet social dans le respect de la loi du 10 août 1915 concernant les sociétés commerciales et du chapitre 13 de la loi du 20 décembre 2002 relative aux organismes de placement collectif.
La Société a son siège social situé Boulevard Prince Henri, 15 à L-1724 Luxembourg et est enregistrée au Registre de Commerce et des Sociétés de Luxembourg sous le numéro B 104411.
Note 2 - Résumé des principales règles d'évaluation
Les comptes annuels ci joints ont été établis en conformité avec les prescriptions légales et réglementaires en vigueur au Luxembourg. Ils sont présentés selon les dispositions de la loi du 19 décembre 2002,.
La Société utilise notamment les principes comptables et d'évaluation suivants : Conversion des comptes en devises étrangères
Les comptes annuels de la Société sont exprimés en Euro (EUR) qui est la devise d'expression de son capital.
Les actifs et les passifs en devises étrangères sont convertis aux taux de change en vigueur à la date de clôture du bilan. Seuls les bénéfices de change réalisés ainsi que les pertes de change réalisées et non réalisées sont enregistrés dans le compte de profits et pertes.
Les produits et les charges en devises autres que l'Euro sont convertis en Euro sur base des cours de change en vigueur à la date de transaction.
Frais d'établissement
Les frais d'établissement sont amortis linéairement sur 3 ans. Au 31 décembre 2007, ces frais sont totalement amortis.
L'annexe fait partie intégrante des comptes annuels. - 5 -
SGAM LUXEMBOURG S.A. Société Anonyme
Annexe
Au 31 décembre 2007
Valeurs mobilières
Les valeurs mobilières sont évaluées au plus bas du coût d'acquisition ou de la valeur de marché.
Créances et dettes
Les créances sont inscrites à leur valeur nominale sauf si, sur base des éléments dont il dispose, le Conseil d'Administration estime leur valeur de réalisation inférieure, auquel cas elles sont inscrites à cette valeur inférieure.
Les dettes sont inscrites au bilan à leur valeur de remboursement.
NOTE 3- Frais d'établissement
L'évolution des frais d'établissement se présente comme suit :
Valeur brute au début de la période Mouvements de la période Valeur brute à la fin de la période Corrections de valeur au début de l'exercice Corrections de valeur de l'exercice Corrections de valeur à la fin de l'exercice Valeur nette à la fin de période
Note 4 - Créances
Au 31 décembre 2007, les créances sont composées de commissions à recevoir à moins d'un an en relation avec les services de gestion prestées par la Société à des organismes de placement collectif.
L'annexe fait partie intégrante des comptes annuels.
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SGAM LUXEMBOURG S.A. Société Anonyme
Annexe
Au 31 décembre 2007
Note 5 - Valeurs mobilières
Au 31 décembre 2007, la société détient des investissements dans des fonds d'investissement tels que décrits ci-dessous :
Coût Valeur de Valeur
Investissements Quantité d'acquisition marché comptable
SGAM Fund Money Market
Euro 2 765 2 968 488 3 190 109 2 968 488
SGAM Fund Bonds
Absolute Return 7 500 765 980 771 074 765 980
SGAM Fund Bonds Europe
Asset Backed 5 500 574 840 541 887 574 840
Total 4 309 308 4 503 070 4 309 308
Note 6 - Capital souscrit
La société a été constituée le 10 novembre 2004 avec un capital social souscrit et entièrement libéré qui s'élevait à EUR 2.000.000 représenté par 1.600.000 actions d'une valeur nominale de EUR 1,25 chacune.
Le 26 Octobre 2005, la Société a procédé à une augmentation de capital de EUR 500.000 pour le porter à EUR 2.500.000 par l'émission de 400.000 actions nouvelles d'une valeur nominale de EUR 1.25 chacune.
En 2006, la Société a procédé à deux augmentations de capital de respectivement EUR 500.000 et EUR 1.000.000 les 30 juin 2006 et 29 novembre 2006.
L'augmentation de capital du 30 juin 2006 a été réalisée comme suit :
396.000 actions d'une valeur nominale de EUR 1,25 souscrites par Société Générale Asset Management S.A.
4.000 actions d'une valeur nominale de EUR 1,25 souscrites par Société Générale Asset Management Finance S.A.
L'augmentation de capital du 29 novembre 2006 a été réalisée comme suit :
792.000 actions d'une valeur nominale de EUR 1,25 souscrites par Société Générale Asset Management S.A.
8.000 actions d'une valeur nominale de EUR 1,25 souscrites par Société Générale Asset Management Finance S.A.
L'annexe fait partie intégrante des comptes annuels. - 7 -
SGAM LUXEMBOURG S.A. Société Anonyme
Annexe
Au 31 décembre 2007
Le 25 avril 2007, la Société a de nouveau procédé à une augmentation de capital de EUR 1.000.000 pour le porter à EUR 5.000.000 par l'émission de 800.000 actions nouvelles d'une valeur nominale de EUR 1.25 chacune.
L'augmentation de capital du 25 avril 2007 a été réalisée comme suit :
792.000 actions d'une valeur nominale de EUR 1,25 souscrites par Société Générale Asset Management S.A.
8.000 actions d'une valeur nominale de EUR 1,25 souscrites par Société Générale Asset Management Banque S.A.
Ainsi, au 31 décembre 2007, le capital social souscrit et entièrement libéré s'élève à EUR 5.000.000 représenté par 4.000.000 actions d'une valeur nominale de EUR 1,25 chacune.
Note 7 - Réserve légale
Conformément aux dispositions légales, 5% du bénéfice net de l'exercice doit être affecté à une réserve légale. Cette affectation cesse d'être obligatoire lorsque la réserve atteint 10% du capital souscrit et libéré. La réserve légale n'est pas disponible pour la distribution de dividendes.
Note 8 - Capitaux propres
Les variations des capitaux propres entre le 31 décembre 2006 et le 31 décembre 2007 se présentent comme suit :
Capital Social EUR Reserve légale EUR Autres réserves EUR Résultats reportés EUR Dividende versé EUR Résultat de l'exercice EUR
Solde au 31 décembre 2006 4 250.000 73.675 89.687 (1.200.000) 2.307.609
Augmentation de capital 1
Affectation du résultat 2006 150.000 (2.391) (960.000) (2.307.609)
Acompte sur dividendes -
Résultat de l'exercice 2007 3.323.354
Solde au 31 décembre 2007 5 400.000 73.675 87.296 (2.160.000) 3.323.354
L'annexe fait partie intégrante des comptes annuels.
SGAM LUXEMBOURG S.A. Société Anonyme
Annexe
Au 31 décembre 2007
Note 9 - Dettes envers des entreprises liées
Au 31 décembre 2007, ce poste comprend des commissions à payer à moins d'un an en relation avec les services de gestion prestées par Société Générale Asset Management S.A.
Note 10 - Autres charges d'exploitation
Aux 31 décembre 2007 et 2006, le poste « Autres charges d'exploitation » se compose comme suit :
2007 2006
EUR EUR
Commissions de gestion rétrocédées 175.629.478 123.973.930
Commissions d'administration rétrocédées 16.630.195 10.569.975
Autres charges 1.177.541 640.862
Total 193.437.214 135.184.767
Le poste « Commissions de gestion rétrocédées » correspond aux commissions que la Société rétrocède en vertu d'un contrat signé avec Société Générale Asset Management S.A., avec Société Générale Asset Management Alternative Investments S.A. et avec Société Générale Asset Management Index S.A..
Le poste « Commissions d'administration rétrocédées » correspond aux commissions que la Société rétrocède en vertu d'un contrat signé avec Euro-VL Luxembourg S.A. et European Fund Services.
Le poste « Autres charges » comprend les frais administratifs de la Société et notamment les frais facturés par une partie liée au titre de la convention de services signée entre les deux entités en date du 27 janvier 2005. Cette convention couvre les services prestes par la partie liée en relation avec l'informatique, les services généraux, les finances, les ressources humaines. Le coût de ces services s'élève à EUR 98.607 au 31 décembre 2007 (2006 : EUR 79.381 ). Le poste comprend également un montant de loyer pour EUR 23.349 (2006 : EUR 18.001) payé à une entreprise liée.
L'annexe fait partie intégrante des comptes annuels. - 9 -
SGAM LUXEMBOURG S.A. Société Anonyme
Annexe
Au 31 décembre 2007
Note 11 - Montant net du chiffres d'affaires
Le montant net du chiffre d'affaires se décompose comme suit :
Commissions de gestion reçues de neuf organismes de placement collectif luxembourgeois conformément aux contrats signés avec ces organismes : en 2007, le montant de ces commissions s'élève à EUR 178.726.274 (2006 : EUR 126.207.161).
Conformément au contrat signé entre la Société et la Société Générale Asset Management S.A. et entre la Société et la Société Générale Asset Management Alternative Investments S.A., et la Société Générale Asset Management Index S.A. (les « Gestionnaires d'investissements »), la Société délègue la responsabilité de toutes les décisions liées à la gestion des fonds au Gestionnaire d'investissement. Les Gestionnaires d'investissements des sept organismes de placement collectif perçoivent mensuellement les frais de gestion qui leur sont relatifs. Société Générale Asset Management S.A. rétrocède 2% de ces frais de gestion à la Société et Société Générale Asset Management Alternative Investments S.A. ainsi que la Société Générale Asset Management Index S.A. rétrocèdent 1% de ces frais de gestion à la Société.
Commissions d'administration reçues de quatre organismes de placement collectif luxembourgeois conformément aux contrats signés avec ces organismes : en 2007, le montant de ces commissions s'élève à EUR 17.776.785 (2006 : EUR 11.359.190)
Conformément au contrat daté du 1er juillet 2006 entre la Société et Euro-VL Luxembourg S.A., et au contrat daté du 1er juillet 2006 entre la Société et European Fund Services (les « Administrateurs »), la Société délègue la responsabilité de toutes les prestations de services liées à l'administration des fonds aux Administrateurs. Les administrateurs des trois organismes de placement collectif perçoivent mensuellement les frais d'administration qui leur sont relatifs.
Note 12- Effectif du personnel
Au cours de la période, la Société a employé en moyenne deux salariés (dont un également dirigeant de la société) et un Volontaire International d'Entreprise (V.I.E).
L'annexe fait partie intégrante des comptes annuels. - 10 -
SGAM LUXEMBOURG S.A. Société Anonyme
Annexe
Au 31 décembre 2007
Note 13 - Impôts et taxes
La Société est soumise à tous les impôts et taxes applicables aux sociétés commerciales luxembourgeoises. Le calcul des provisions fiscales tient compte d'une réduction d'impôts accordée par les autorités compétentes.
Comme le lui permet la législation fiscale, la Société n'a pas constaté de charges en 2007 en relation avec l'impôt sur la fortune sous réserve de la constitution d'une réserve égale au quintuple de la charge d'impôt sur la fortune estimée au titre de l'exercice 2007. Ces réserves devront être maintenues pendant 5 ans.
L'annexe fait partie intégrante des comptes annuels. -Il-
Translation - English
SGAM LUXEMBOURG Inc. Limited Company
Annual Financial Statements
and
Business Auditor’s Report
as of
December 31, 2007
Table of Contents
Pages
Business Auditor’s Report 1 - 2
Annual Financial Statements
Balance Sheet 3
Profit and Loss Account 4
Appendix 5-11
Business Auditor’s Report
To the shareholders of SGAM Luxembourg Inc. Limited Company
In accordance with the mandate given by the Shareholders’ General Meeting on April 27, 2007, we have audited SGAM Luxembourg Inc.’s attached annual financial statements, comprising of the balance sheet to December 31 2007 as well as the profit and loss account for the period then ended, and the appendix containing a summary of the main accounting methods and other explanatory notes.
The Board of Directors’ Role in the preparation and presentation of the annual financial statements
The Board of Directors is responsible for the preparation and fair presentation of these annual financial statements in accordance with the current legal and regulatory obligations relating to the preparation and presentation of annual financial statements in Luxembourg. This responsibility includes: the design, implementation and monitoring of internal controls relating to the preparation and fair presentation of annual financial statements that do not contain any significant irregularities, whether due to fraud or errors, the selection and application of appropriate accounting methods as well as accounting estimates that are deemed reasonable under the circumstances.
Responsibility of the Business Auditor
Our responsibility is to express an opinion on these annual financial statements based on our audit. We conducted our audit in accordance with International Auditing Standards as adopted by the Institute of Business Auditors. Those standards require that we comply with ethical regulations as well as plan and perform the audit to obtain reasonable assurance about whether the annual financial statements are free of significant irregularities.
An audit involves the implementation of procedures to collect evidence about the amounts and disclosures in the annual financial accounts. The choice of procedures comes under the Business Auditor’s judgment, as well as the risk assessment that the annual financial statements contain significant irregularities, whether due to fraud or error. In making these risk assessments, the Business Auditor takes into account the entity’s current internal control in relation to the preparation and fair presentation of the annual financial statements in order to establish appropriate auditing procedures in the circumstances, and not in order to express an opinion on their effectiveness.
An audit also includes assessing the appropriateness of the accounting methods used and the reasonableness of accounting estimates made by the Board of Directors, as well as evaluating the annual financial statements’ overall presentation. We believe that the evidence collected is sufficient and appropriate for us to base our opinion on.
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Opinion
ERNST&YOUNG
In our opinion, the annual financial statements give a true and fair representation of the property and financial situation of SGAM Luxembourg Inc to December 31 2007 as well as the results for the year then ended, in accordance with the current legal and regulatory obligations relating to the preparation and presentation of annual financial statements in Luxembourg.
Pacaud
ERNST&YOUNG Limited Company Business Auditor I
April 16, 2008
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SGAM LUXEMBOURG Inc. Limited Company
Balance Sheet
To December 31 2007 (indicated in EUR)
ASSETS
2007
2006
LIABILITIES
2007
2006
54.177.790
Preparation costs
Preparation costs (Note 3)
Current assets
Claims (Note 4)
Claims resulting from sales and services
Whose remaining term is less than or equal to one year
Securities (Note 5)
Bank assets
Adjustment accounts
Total assets
Equities (Note 8)
Subscribed capital (Note 6) Legal reserve (Note 7) Other reserves (Note 13) Deferred returns Advance on dividends Net income for the year
Provisions for risks and charges
Provisions for taxes
Debts
Debts on purchases and services Whose remaining term is less than or equal to one year
Amounts owed to affiliated companies
Whose remaining term is less than or equal to one year (Note 9)
Taxes and debts under the social security Whose remaining term is less than or equal to one year
Other debts Whose remaining term is less than or equal to one year
The appendix is an integral part of the annual financial statements.
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SGAM LUXEMBOURG Inc. Limited Company
Profit and Loss Account
For the year ending December 31 2007 (indicated in EUR)
EXPENSES
2007
2006
Personnel costs Wages and salaries Other social security costs
Value adjustments on preparation costs and on tangible and intangible assets (Note 3)
Other operating costs (note 10)
Interest and similar charges Other interest and charges
Taxes on earnings (Note 13) Profit for the period
Total expenses
REVENUES
Net sales amount (Note 11 )
Revenues of other securities and loans on fixed assets Other revenues
Other interests and similar revenues
2007
196,503,059
845,903
2006
137,566,351
351,274
Total revenues
197,348,962
137,917,625
The appendix is an integral part of the annual financial statements.
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SGAM LUXEMBOURG Inc. Limited Company
Appendix
As of December 31 2007
Note 1 – Company description and purpose
SGAM Luxembourg Inc. (the « Company ») is a limited company incorporated under Luxembourg law on November 10, 2004 for an unlimited period.
The company aims to manage collective investment organizations of Luxembourg and/or foreign securities authorised under Directive 85/611/EEC as amended, as well as other Luxembourg and/or foreign collective investment organizations that fall outside the directive, the administration of its own assets being only incidental. The Company may perform all activities deemed useful to carry out its corporate purpose in accordance with the August 10 1915 Act on commercial companies and chapter 13 of the December 20 2002 Act on collective investment organizations.
The Company’s headquarters is located on Boulevard Prince Henri, 15 at L-1724 Luxembourg and is registered with the Luxembourg Commerce and Business Registry under number B 104411.
Note 2 - Summary of main assessment rules
The attached annual financial statements have been prepared in accordance with the current Luxembourg legal requirements and regulations. They are presented in accordance with the provisions of the December 19 2002 Act.
The Company uses the following accounting and evaluation principles:
Conversion of foreign currency accounts
The Company’s annual financial statements are indicated in Euro (EUR) which is the currency used for its capital.
The assets and liabilities denominated in foreign currencies are converted at exchange rates in effect on the balance sheet closing date. Only the foreign exchange benefits made as well as the foreign exchange losses realized and unrealized are recorded in the profit and loss account.
The revenues and expenses on currencies other than the Euro are converted into Euro according to the current exchange rate on the transaction date.
Preparation costs
Preparation costs are amortized linearly over 3 years. As of December 31, 2007, these costs are totally amortized.
The appendix is an integral part of the annual financial statements.
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SGAM LUXEMBOURG Inc. Limited Company
Appendix
As of December 31 2007
Securities
Securities are valued at the acquisition cost or market value whichever is lowest.
Receivables and payables
The receivables are recorded at face value unless, on the basis of the information available, the Board of Directors considers their realizable value lower, in which case they are recorded at this lower value.
The payables are recorded on the balance sheet at their redemption value.
NOTE 3- Preparation costs
The evolution of preparation costs is as follows:
Gross value at the beginning of the period Movement in the period Gross value at the end of the period Value adjustments at beginning of fiscal year Fiscal year value adjustments Value adjustments at end of fiscal year Net worth at the end of the period
Note 4 - Claims
As of December 31 2007, the claims are made up of commissions receivable within one year in connection with management services performed by the Company to collective investment organizations.
The appendix is an integral part of the annual financial statements.
-6-
SGAM LUXEMBOURG Inc. Limited Company
Appendix
As of December 31 2007
Note 5 - Securities
As of December 31 2007, the company holds investments in investment funds as described below:
Acquisition Market Book
Investments Quantity cost value value
SGAM Fund Money Market
Euro 2,765 2,968,488 3,190,109 2,968,488
SGAM Fund Bonds
Absolute Return 7,500 765,980 771,074 765,980
SGAM Fund Bonds Europe
Asset Backed 5,500 574,840 541,887 574,840
Total 4,309,308 4,503,070 4,309,308
Note 6 – Subscribed capital
The company was incorporated on November 10, 2004 with a subscribed and fully paid share capital in the amount of 2,000,000 Euros represented by 1,600,000 shares at a nominal value of 1.25 Euro each.
On October 26, 2005, the Company carried out a capital increase of 500,000 Euros to bring it to 2,500,000 Euros by issuing 400,000 new shares at a nominal value of 1.25 Euro each.
In 2006, the Company carried out two capital increases of 500,000 and 1,000,000 Euros respectively on June 30, 2006 and November 29, 2006.
The June 30 2006 capital increase was carried out as follows :
396,000 shares at a nominal value of 1.25 Euro subscribed by General Asset Management Company Inc.
4,000 shares at a nominal value of 1.25 Euro subscribed by General Asset Management Finance Company Inc.
The November 29 2006 capital increase was carried out as follows :
792,000 shares at a nominal value of 1.25 Euro subscribed by General Asset Management Company Inc.
8,000 shares at a nominal value of 1.25 Euro subscribed by General Asset Management Finance Company Inc.
The appendix is an integral part of the annual financial statements. - 7 -
SGAM LUXEMBOURG Inc.
Limited Company
Appendix
As of December 31 2007
On April 25, 2007, the Company carried out another capital increase of 1,000,000 Euros to bring it to 5,000,000 Euros by issuing 800,000 new shares at a nominal value of 1.25 Euro each.
The April 25 2007 capital increase was carried out as follows :
792,000 shares at a nominal value of 1.25 Euro subscribed by General Asset Management Company Inc.
8,000 shares at a nominal value of 1.25 Euro subscribed by General Asset Management Bank Company Inc.
Hence, as of 31 December 2007, the subscribed and fully paid share capital amounts to 5,000,000 Euros represented by 4,000,000 shares at a nominal value of 1.25 Euro each.
Note 7 – Legal reserve
In accordance with legal provisions, 5% of the net income for the fiscal year should be assigned to a legal reserve. This allocation ceases to be mandatory when the reserve reaches 10% of the subscribed and paid capital. The legal reserve is not available for dividend distribution.
Note 8 - Equity
The changes in equity between December 31, 2006 and December 31, 2007 are as follows:
Share Capital EUR Legal reserve EUR Other reserves EUR Deferred returns
EUR Paid dividend
EUR Net income for the fiscal year EUR
Balance as of December 31 2006 4 250,000 73,675 89,687 (1,200,000) 2,307,609
Capital increase 1
Appropriation of 2006 returns 150,000 (2,391) (960,000) (2,307,609)
Advance on dividends -
Net income for 2007 fiscal year 3,323,354
Balance as of December 31 2007 5 400,000 73,675 87,296 (2,160,000) 3,323,354
The appendix is an integral part of the annual financial statements. – 8 -
SGAM LUXEMBOURG Inc.
Limited Company
Appendix
As of December 31 2007
Note 9 – Amounts owed to affiliated businesses
As of December 31 2007, this item includes commissions to be paid within at least a year in connection with management services performed by General Asset Management Company Inc.
Note 10 – Other operating expenses
As of December 31 2007 and 2006, the item « Other operating expenses » is as follows :
2007 2006
EUR EUR
Retroceded management commissions 175,629,478 123,973,930
Retroceded administration commissions 16,630,195 10,569,975
Other expenses 1,177,541 640,862
Total 193,437,214 135,184,767
The item « Retroceded management commissions » corresponds to the commissions that the Company onlends in accordance with a contract signed with General Asset Management Company Inc., with General Asset Management Alternative Investments Company Inc. and General Asset Management Index Company Inc.
The item «Retroceded administration commissions» corresponds to the commissions that the Company onlends in accordance with a contract signed with Euro-VL Luxembourg Inc. and European Fund Services.
The item « Other expenses » includes the Company’s administrative costs such as the costs charged by an affiliated party under the services agreement signed between the two entities dated January 27, 2005. The agreement covers services provided by the affiliated party in relation to information technology, general services, finance, human resources. The cost of these services amount to 98,607 Euros as of December 31, 2007 (2006: 79,381 Euros). The item also includes a rent amount of 23,349 Euros (2006: 18,001 Euros) paid to an affiliated business.
The appendix is an integral part of the annual financial statements. - 9 -
SGAM LUXEMBOURG Inc.
Limited Company
Appendix
As of December 31 2007
Note 11 - Net sales amount
The net sales amount is broken down as follows :
Management commissions received from nine Luxembourg collective investment organizations in accordance with contracts signed with these organizations: in 2007, the amount of these commissions reaches 178,726,274 Euros (2006 : 126,207,161 Euros).
Under the contract signed between the Company and the General Asset Management Company Inc. and between the Company and the General Asset Management Alternative Investments Company Inc., and General Asset Management Index Company Inc. ( "Investment Managers"), the Company delegates responsibility for all decisions related to the management of funds to the Investment Manager. The Investment Managers of the seven collective investment organizations receive their corresponding management fees monthly. General Asset Management Company Inc. onlends 2% of these management fees to the Company and to General Asset Management Alternative Investments Company Inc., and the General Asset Management Index Company Inc. onlends 1% of these management fees to the Company.
Administration commissions received from four Luxembourg collective investment organizations in accordance with contracts signed with these organizations: in 2007, the amount of these commissions reaches 17,776,785 Euros (2006 : 11,359,190 Euros).
In accordance with the contract dated July 1, 2006 between the Company and Euro-VL Luxembourg Inc, and the contract dated July 1, 2006 between the Company and the European Fund Services (the "Directors"), the Company has delegated responsibility for all provisions of services related to the administration to the Directors. The directors of the three collective investment organizations receive their corresponding administrative costs monthly.
Note 12- Personnel
During the period, the Company has employed an average of two employees (one of whom is also leader of the company) and a Business International Volunteer (B.I.V).
The appendix is an integral part of the annual financial statements. - 10 -
SGAM LUXEMBOURG Inc.
Limited Company
Appendix
As of December 31 2007
Note 13 - Taxes
The Company is subject to all taxes applicable to commercial companies in Luxembourg. The calculation of tax provisions reflects a tax reduction granted by the relevant authorities.
As permitted by the tax legislation, the Company has not recorded expenses in 2007 in connection with the wealth tax subject to the establishment of a reserve equal to five times the tax burden on capital estimated for the 2007 fiscal year. These reserves must be kept for 5 years.
The appendix is an integral part of the annual financial statements. -1l-
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I offer fast, reliable, and high quality translation, proofreading, and transcription services in English and French.
I am completely fluent in both French (Canadian) and English, and I fluidly work in either direction.
I have a wide range of experience, such as Medical, Tourism, Business, Technical (engineering), Financial (Audits), History, Children's Literature, Sports, Certificates & Transcripts, and General Conversation.
I work in the following language combinations:
English->French
French->English
Spanish->English
Spanish->French
I accept and start working on an assignment as soon as I receive the confirmation on terms and conditions from the customer in writing.
As a standard rule, my translations are presented in the same layout as the originals, as much as possible. I proofread and edit before submission to ensure that final translation meets the client's expectation.
My schedule is flexible and I can adapt to your needs, and I abide strictly to deadlines.
My completed texts are forwarded electronically via e-mail by the date agreed with you. I can, of course, use fax or post if required.
I look forward to working with you.
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