The Comporta Estate, the former 'jewel in the crown' of the Grupo Espírito Santo empire, the summer playground of its family members with miles of pristine beaches and development land has become a battleground with 'the clan' using every trick in the book to regain control of the business.
The dream fell apart in July 2014 when Banco Espírito Santo, run by clan chief Ricardo Salgado, went bust after reporting a record net loss of €3.58 billion due to its exposure to a tightly controlled network of Grupo Espírito Santo companies.
This brought down Ricardo Salgado's carefully constructed house of cards, including Rioforte Investments, an Espírito Santo Group property company that owned a majority of shares in the two companies that control the beautiful Comporta estate which straddles the Alcácer do Sal and Grândola council areas on the coast between Setúbal and Sines.
For many family members, the loss of control of the Comporta estate was the final humiliation. Ricardo Salgado’s devious business methods had always been excused by the family due to the massive payouts enjoyed by the top table elite but the risk of losing this family playground with huge development potential was too much to contemplate.
Rioforte Investments’ limp rescue plan rightly was rejected by the Luxembourg court to which it had applied. The court instead appointed an administrator to sell off the company’s remaining assets and return money to creditors, including Portugal Telecom which had lent Rioforte Investments over €800 million which it was unable to repay.
In June 2015 the Portuguese State managed to halt any sell-offs by the Rioforte Investments administrator by mounting a raid on Rioforte Investments’ assets, and those of many other Espírito Santo Group companies, seizing hundreds of properties worth around €1.8 billion. This inspired move, quite legal under Portuguese law, was a pre-emptive strike in case later court action proved that the Portuguese State was owed money: if it is, these property assets already have been frozen and can be released for sale.
Comporta was seized along with other property interests and outside bidders expressing an interest in buying the estate had to be put on hold.
"In the light of ongoing procedures, we are sorry that the receivers of Rioforte Investments have no choice but to suspend the sale of assets in Herdade da Comporta - Atividades Agro-silvícolas e Turísticas S.A. and in Herdade da Comporta - Fundo Especial de Investimento Imobiliário Fechado” read a statement posted on the Luxembourg receiver’s website.
Early interest had been expressed by a US fund, Armory Merchant Holdings and the investor, Asher Edelman. Reports that a well-financed offer from the US had secured the Comporta business were premature and served only to alert the Espírito Santo family to the possibility that its cherished and valuable playground now was under direct assault.
Amory Merchant and other interested parties could go no further as Comporta, along with around 600 other properties linked to the Espírito Santo 'universe', remained frozen for the foreseeable future while the case is being put together to prosecute Ricardo Salgado for money laundering and corruption.
Inexplicably, on September 16, 2016, the Luxembourg administrator announced Rioforte’s shareholding in the two Comporta estate companies had been released for sale.
Rioforte Investments had applied to the Central Department of Investigation and Penal Action (DCIAP) to release Herdade de Comporta’s two controlling companies from the big freeze.
Astonishingly, this application was approved by the DCIAP, with any sale of assets to be ‘in accord with the principles of impartiality, transparency and objectivity that characterise the sale of assets of entities under judicial protection in the Luxembourg jurisdiction’ where ‘the proceeds of the sale will remain at the court’s disposal, as a replacement for the preventive seizure of assets and rights,’ claimed the application
This approved application removed Rioforte Investments' Comporta assets from the State’s grasp. No longer would the taxpayer come first as any sale proceeds would revert to the administrator in Luxembourg to be use as he sees fit. Both Comporta companies were included in the same application, leading DCIAP to believe that both would be sold together, as dividing their sale, (as Haitong Securities now has done,) would each be unsalable unless the Espírito Santo clan could influence the sale and manipulate events to ensure the estate remained a family asset.
Rioforte Investments owns a 59.09% stake in ‘Herdade da Comporta - Fundo Especial de Investimento Imobiliário Fechado’ and a 58% stake in ‘Herdade da Comporta - Atividades Agro-silvícolas e Turísticas S.A.’ with the minority shareholders in both companies having the right to match any offer made to the majority shareholder.
In September 2015, China’s Haitong Securities was bought Banco Espírito Santo de Investimento (BESI) and now is run by clan member José Maria Espírito Santo Silva Ricciardi who, far from being merely an establishment figurehead for the new Chinese operation, currently leads the same team he managed before BESI had to be sold off.
Ricciardi seems free to pursue much of his own agenda which includes regaining control over former Espírito Santo assets, including Novo Banco - the former Banco Espírito Santo (BES) - where he currently is 'advising' on a bid from China's Minsheng Financial Holdings.
The Luxembourg administrator’s appointment of Haitong Securities as the financial advisor to run the Comporta sale process was a deeply flawed and questionable decision as it involved placing an Espírito Santo family member, (José Maria Ricciardi pictured left with Ricardo Salgado) in a key position to influence events and select a 'buyer' with little or no interference from his Chinese masters or from the Luxembourg receiver.
This highly controversial appointment has allowed José Maria Ricciardi an inside track on any bids submitted for Rioforte Investments’s stake in the family estate.
Haitong Securities is staffed by former BESI appointees, the same people who were dealing with potential investors before the Comporta estate was frozen. Their hidden remit seems to be to deter any outside bids by using the ‘preferential bidder’ clause meaning that existing shareholders have the right to bid for Comporta to the exclusion of outsiders yet this clause has not been made explicit in publicity materials.
One set of bidders, Armory Merchant Holdings and Asher Edelman, has been denied the right to make a bid for Comporta because of old relationships with certain minority shareholders that are not part of the Ricciardi - Espírito Santo - Rioforte cabal. It would be rash to assume that all sections of the Espírito Santo extended family are friends.
The Luxembourg administrator also thought it a sane decision, though many disagree, to appoint Rioforte Investments’ former Chief Financial Officer as a financial advisor to the Comporta sale process along with the hastily created ‘Back in Line Consulting’ which too is controlled by Espírito Santo clan members, the brothers Caetano and Carloto Beirão da Veiga, (pictured below) respectively the president of Rioforte and administrator of Comporta.
The Luxembourg administrator is running the sale of the two Comporta companies separately, presumably on the advice of all his influential advisors, and currently aims only to sell the 'Herdade da Comporta - Fundo Especial de Investimento Imobiliário Fechado' company which is worthless without the company that owns the land and seashore rights, Herdade da Comporta - Atividades Agro-silvícolas e Turísticas S.A., which is controlled by Caetano Beirão da Veiga.
"With the clan controlling the Agricultural company, no sane bidder will offer money for the Fundo Especial which leaves it open to offers from existing minority shareholders," commented one source close to this situation, adding that “Because of the many intercompany debts, guarantees etc. the Luxembourg Court should consolidate the sale of both the Fund and the Agricultural company. There should not be separate sale processes. However if there were separate processes, as was the case in the Spring of 2015, then both processes should be announced at the same time.”
José Maria Ricciardi’s, now running Haitong Securities, has not provided a date for the sale of the Agricultural company nor has any paperwork been distributed, indeed there is no law that says it has to be sold even though it now has been released for sale.
Privately, the brothers Caetano (pictured just below) and Carlotto Beirão da Veiga have let it be known to outside bidders that, come what may, they will maintain control of the Agricultural Company and if the Comporta - Fundo Especial went outside this closed shop, they would not provide access to the beach.
This threatened restriction is not legally enforceable and both brothers later denied these assertions when questioned by the Portuguese press.
Another hurdle placed in the path of outsiders to this family affair is the €106 million mortgage over the estate held by Caixa Geral de Depósitos.
Bidders are prevented from contacting the Caixa Geral de Depósitos management or any of the existing shareholders in the two Comporta companies, thus excluding serious offers from all but ‘friends of the family.’
Without any agreements covering the Caixa Geral de Depósitos mortgage prior to making an offer, a bidder successfully buying 59% of the Fundo Especial held by Rioforte Investments could see Comporta assets immediately repossessed by the bank and sold on with any residual liabilities down to the new owner.
This Non-disclosure Agreement document issued by Haitong Securities, the one that prevents any bidder from contacting existing shareholders, is a legal rarity in itself but serves to restrict the number of solutions available to an outside bidder who might wish to team up with an existing shareholder in a development plan for the estate.
The administrator in Luxembourg is likely to be presented with a final offer recommended by Haitong Securities that does not represent the true value of the estate's freehold and development potential.
The Right of First Refusal held by the existing minority shareholders enables them to match any outside bid, thus the family still controls the estate and it is up to Haitong Securities to suppress any outside bids by splitting the sale of the two controlling companies and then possibly itself funding the shareholders' offer that matches the one form an outside bidder.
If the administrator in Luxembourg is fondly imaging that the sale of the Comporta estate's Rioforte shareholdings are running smoothly, then he has failed to observe how neatly he had been tucked up.
The minority shareholders in both Comporta companies have written to Back in Line Ltd, 'Representatives of the Receivers,' to inform its directors that through Haitong Bank SA, which is advising Rioforte, they are aware that the sale is back on and they insist that Ricciardi’s Haitong Securities makes it clear to potential bidders that the minority shareholders have the right to match any offer made. This will avoid any legal challenge should Haitong Securities break ranks and support an outside bid.
Suspicions have been aroused as there has been no mention to date of this First Refusal clause in the documentation issued by Haitong - the minority shareholders are concerned that a new bidder will buy the shares owned by Rioforte without them having had the chance to match the offer price.
The Luxembourg Court may not know all that is going on in its name, (it does now,) and if colluding with Haitong Securities to ensure the Comporta estate remains in clan hands, should be held accountable. Generous observers conclude that the receiver is likely to be lazy rather than crooked.
As it stands, any bidder purchasing the 59% of Comporta – Fundo Especial held by Rioforte Investments on offer is swallowing a poison pill and inevitably will be frustrated by Caetano and Carlotto and other clan members who maintain their control over the Comporta estate.
The extended Espírito Santo family is nothing if not tenacious but by frustrating the ‘best offer’ sale of assets of a Rioforte controlled company, Espírito Santo family members may already have crossed the line, following the shameful example of greed and duplicity set by Ricardo Salgado, the ‘Dono Disto Tudo’ - the owner of all he surveys...
Carloto Beirão da Veiga, administrator of the Comporta Estate
__________
Comporta Estate history
1836
Rice farming began. The Herdade da Comporta was incorporated into the Companhia das Lezírias do Tejo e do Sado, which belonged to the Portuguese Crown.
1925
The Companhia das Lezírias sold the Herdade da Comporta to the British company The Atlantic Company, Ltd.
1955
The agricultural production and the pine forest were extended. Work began on improving basic facilities and renovating villages, building schools and housing.
1975
The estate was nationalised, and was only returned to The Atlantic Company, Ltd. between 1989 and 1991.
1991
The development of the Herdade da Comporta started with the renovation and improvement of the land and buildings so as to maintain and protect its natural, architectural and agricultural heritage.
2004 to the present day
The company’s name has been changed to Herdade da Comporta - Actividades Agro Silvícolas e Turísticas, S.A. One of its goals is to develop a high-quality tourist destination and to become a model for sustainable development in Europe, while still operating as an agricultural estate and preserving its environmental and cultural heritage.
This project originated from a rigorous Global Sustainability Programme based on the integrated development of the entire Herdade da Comporta.
Tourism development is centred on two areas, Comporta Dunes and Comporta Links. Both locations are characterised by low-density construction and a focus on sport, health and wellbeing.
This proposal is greatly enhanced by seven nearby villages as well as projects such as the redevelopment of the coast and beaches, plans for eco-tourism and various cultural events.
The Herdade da Comporta Global Project is based on respect for the land integrity and magnitude, as well as sustainable development and improvements on the living standards of the local people.
The companies controlling the estate, ‘Herdade da Comporta - Fundo Especial de Investimento Imobiliário Fechado’ and ‘Herdade da Comporta - Atividades Agro-silvícolas e Turísticas S.A.’ owned 59% and 58% by Rioforte Investments which currently is in receivership under the jurisdiction of a court in Luxembourg.
