By Stelios Orphanides
Urs Meisterhans, the controversial Swiss financier who gave up his seat on Cobalt Air’s board of directors in December, may still be the beneficial owner of a significant stake in the company – through a nominee, a former partner said.
While Meisterhans was initially a member of the initial joint venture (JV) which led to the incorporation of Cobalt, at a certain point his name disappeared from the company’s shareholders, even though he continued to remain involved in the airline, said Peter Kelly, a former executive at Australia’s airline Qantas Airways who fathered the initial venture.
Officially, Cobalt chairman Gregory Diacou is owner of 49 per cent of the airline’s shares via the Cyprus-based Pictet Capital Ltd -which is not related with Switzerland’s financial service provider-, and AJ (Cyprus) Holdings Ltd, owned by China’s state owned military aircraft manufacture AVIC, holder of another 49 per cent of the shareholding. After injecting around €30m into the company, AVIC owns more than 97 per cent of the company’s equity. The remaining 2 per cent is owned vial Balneria Holdings Ltd by Guenther Eibel, an Austrian national.
Interviews with a number of former executives confirmed that Meisterhans was, at least until the time of their respective departures, the person calling the shots in the company and dominated the board of directors, often interfering in the management’s day-to-day work. All interviews were on condition of anonymity. The Cyprus Business Mail understands that out of the 13 expatriate executives in the airline, 11 left the company -often disgruntled.
Meisterhans resigned in late December from the airline’s board according to Alecos Michaelides, permanent secretary of the Ministry of Transport and chairman of the Air Traffic Licencing Authority (ATLA). In a leaked emailed circular sent by Andrew Madar, Cobalt’s CEO, Cobalt’s staff was asked not to provide Meisterhans access to sensitive material, including financials and business plans, until his future role in the company was determined.
The involvement in Cobalt of Meisterhans, who, according to a US court order, had been indicted in May 2015 for aggravated money laundering, securities fraud and negligence in financial operations, started in February 2015 when he was asked to participate in the JV, said Kelly who also served until July 2015 as its interim chief executive. The Swiss Attorney General’s office confirmed that Meisterhans had been indicted initially for three unspecified indictments and said that one of them had been rejected in order to be further investigated.
Kelly said that while the airline was in the process of applying for its air operator certificate, which was granted last May, the four initial members of the JV agreed to participate in it with a 20 per cent share each; the remaining 20 per cent was left unallocated. On May 13, 2015, a week before Swiss authorities indicted Meisterhans, the latter proposed to provide bridge financing of US$367,000 to the JV in exchange for the unallocated 20 per cent stake. His offer was rejected. Meisterhans refused to disclose who would provide the financing.
On July 23, 2015, two members of the JV agreed to transfer their stake to Meisterhans for €140,000 each, resulting in Meisterhans becoming owner of 60 per cent of the JV’s shares, Kelly said. He added that the Swiss financier had said back then that he did not provide the money for the buyout but refused to disclose who provided it. The decision to allow the buyout was unanimous, as provided by the initial JV agreement, and was implemented, Kelly said.
Eight days later, Meisterhans, as majority shareholder of the Cobalt JV, proposed and implemented the “gratis” allocation of 15 per cent of the JV to Diacou, the airline’s current chairman, keeping 45 per cent for himslef, Kelly said. The former Qantas executive added that the allocation of shares to Diacou was in violation of the required unanimity stipulated by the JV agreement.
The Swiss financier also transferred the remaining 20 per cent stake which remained until then unallocated, to an undisclosed group without disclosing its beneficiaries, Kelly added. Kelly’s existing stake of 20 per cent was also split in half with Kelly maintaining ownership of 10 per cent while the remaining 10 per cent stake, was allocated to the airline’s executive team.
Kelly said that he refrained from taking legal action against Meisterhans’ decision to allocate a stake to Diacou, as the JV was then in the process of raising capital. Any legal action taken by one partner against another would have created negative publicity which would affect efforts to raise capital, he continued.
Still, days later, at a meeting in early August with representatives of a “London-based capital raising company,” Kelly was made aware of the findings of their due diligence process which included a background check on Meisterhans. While the financiers liked the proposed business plan, they advised Kelly it was a “no go” for investment if Meisterhans and his associate Diacou remained in the airline company. “In September (2015), they even proposed a deal involving a buyout of Meisterhans and Diacou,” which was rejected, Kelly said.
Suddenly, on September 11, 2015, a company by the name of European Financial Services (EFS) based in the United Arab Emirates acquired 51 per cent of the JV further diluting Peter Kelly’s stake to 4.9 per cent, Kelly said.
Again, the decision to accept this was “not unanimous as required, but illegally implemented by Urs Meisterhans,” Kelly continued adding that he did not know at the time who was behind EFS. According to the official Swiss Central Business Names Index, Meisterhans is chairman of a company called European Financial Services.
Nine days later, Meisterhans dissolved the JV, and transferred all stakes to his Cyprus-based company Seringi Investments Ltd, excluding the 4.9 per cent held by Kelly and the 4.9 per cent allocated to the executive team, Kelly said. “Our stakeholdings were absorbed and reallocated,” Kelly said. “Evaporated, you might say”.
In November 2015, Seringi transferred a total of 1,650,000 Cobalt shares to Diacou’s Pictet “as is,” Kelly said. Diacou is a nominee single shareholder in Pictet while the beneficial owners are undisclosed, he added.
In a June interview given to the Cyprus Business Mail, Meisterhans said that he was not a shareholder in Cobalt directly or indirectly. Both Meisterhans and Diacou did not respond to requests for comment.
