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Thursday, 13 February 2014

Parcelatoria Gonzalo Chacón versus Procom Desarrollos Urbanos s.a., Pt I: Judge of ‘Audiencia Provincial de Madrid’ rules that Procom, owned by (formerly) SNS Property Finance, has behaved fraudulently

Last Friday, I wrote an article upon Jaafar Jalabi, a regular reader of this blog in Spain. Mr. Jalabi is owner / managing director of the construction and operation company Parcelatoria Gonzalo Chacón (PGC) in Madrid.

Over the last few years, Mr. Jalabi has been involved in a series of serious legal battles with ‘Procom Desarrollos Urbanos sa’ (Procom or PDU): a Spanish construction/operation company for shopping malls.

Jalabi and his company PGC have not only been falsely accused of criminal acts against Procom, but Procom also filed for a fraudulent injunction (a court order requiring a person to do or cease doing a specific action) upon PGC’s ‘notes payable’.

This company Procom/PDU was a full subsidiary of the former Dutch real estate financing company SNS Property Finance (SNS PF). At this moment, SNS PF is called ‘Propertize B.V.’ and it is a full subsidiary of the Dutch state, after the nationalization of SNS Reaal.

Today, I had a very long interview with Jaafar Jalabi and he told me everything about the (il)legal ways in which Procom/ PDU acted against his company. It was a shocking story, which I am going to deploy in at least three or four episodes in the coming weeks.

Here is the first of this series of articles, based upon my conversation with Jaafar Jalabi of Parcelatoria Gonzalo Chacón (PGC) in Madrid. In this part, he told me about the origin of his deal with Procom Desarrollos Urbanos s.a and the beginning of his legal disputes with Procom / PDU.

I print an almost full transcript of the interview with Jaafar Jalabi, for reasons of completeness, as this is a highly sensitive case with legal implications:

Jaafar Jalabi: My history with PDU started as follows:

With American partners, I developed a large shopping mall in Madrid, called Madrid Xanadu, which included an indoor snowdome. This concept was later copied by Dubai.

I was (partial) owner of the whole shopping centre, with my American partners. I was also the builder and operator of the snowdome venue.

Procom approached me and they wanted to do something together with me in Valencia, on a 50/50 basis. Besides that, I would separately build and operate a snowdome within this project in Valencia. In those days, Procom was owned/operated by a Dutch project developer, Albert van S. [I use an initial here, as I don't want to involve people by name, when I'm not 100% sure - EL]. 

Van S. belonged to the group of people, who were involved in Bouwfonds. The main power behind Procom in those days was Bouwfonds Property Finance. The company also had some Spanish minority investors.

Albert van S. owned 60% of the shares of Procom, Bouwfonds owned 20% and the two Spanish investors each owned 10%. I didn’t know any of these people personally.

Jaafar Jalabi of Parcelatoria Gonzalo Chacón
Picture courtesy of: Ernst Labruyère
Click to enlarge
I only did business with an older man called José Antonio Arenas Ural. Arenas had a portfolio of shopping centers, which he sold to ING.

He approached me and we agreed to do the Valencia shopping centre together. This was in 2003. That was a year when the real estate business in Spain was still booming.

In 2005, I felt that Bouwfonds PF was reckless and very aggressive, without really understanding the situation in Spain. Therefore I wanted to introduce the renowned Spanish retail group ‘El Corte Inglés’ (ECI) to Procom, in order to make ECI part of the project.

Bouwfonds immediately said no against El Corte Inglés as a partner. Subsequently we had a clash [Both PGC and PDU owned 50% of this shopping mall project in Valencia – EL]. Initially I offered to buy Bouwfonds out from the project. I organized a meeting with myself, the chairman of El Corte Inglés and José Arenas Ural.

Arenas stated that Bouwfonds neither wanted to have ECI taking part in the deal, nor it wanted to be bought out by ECI and Parcelatoria Gonzalo Chacón. Arenas instead wanted to buy PGC out.

On June 20, 2005, PGC and Procom(Arenas) met at a public notary in Madrid. [Jaafar Jalabi showed me a board resolution to read with information concerning the deal on the shopping mall in Valencia – EL]. Procom thought that the price offered by PGC and ECI was too low. Instead, PDU promised to offer more money, when PGC and ECI would withdraw from the project.This boardroom resolution stated that PDU wanted to cancel the snowdome contract.

However, I [Jalabi – EL] didn't want to abolish the snowdome, as I wanted to maintain the operation of it. Procom said 'fine' and signed the deal, in order to buy out PGC (and ECI) on an instalment basis, for a total price of €12.96 million (roughtly 50% of the €25 million build value of the shopping mall).

The last instalment of €6.5 million would be paid on the opening date of the snowdome. I will explain that: there is only one snowdome in Spain and that is in Madrid, built by me. It was built for around €44 million euro.

The agreement with respect to the snowdome contract [for Valencia – EL] was: the developer of the shopping mall (Procom) would pay €25 million first and the rest of the amount for the shopping mall and snowdome venue would be paid by the operator of the snowdome, which would be me (Jalabi).

We agreed, as a guarantee, that I would fulfil my obligations with respect to the snowdome. That was the reason that Procom only had to pay the last 25% instalment from the total of €25 million (i.e €6.5 million) at the day of opening of the snowdome.

Based on that contract, Procom was supposed to hand over the building, in which the snowdome venue should be developed, in September / October 2008 at the latest. It was 2005, at the time that we entered into this contract,.

However, in 2006 the building operation for the snowdome building and the rest of the project had not started yet.

I started to become nervous, as my investment would be over €20 million. I said to Procom: "you are not going to fulfil your obligation to deliver the building in time!" Procom then replied: “we wanted to fulfil the obligation, but in the end we had a problem".

Procom then wanted to cancel the contract for the snowdome and I said " Fine! That's OK, but the last payment cannot happen anymore on the opening day of the snowdome, as I don't have any involvement with it anymore". Procom said "Fine" and they changed the payment date of the last instalment of €6.5 million to June 2011. We agreed upon that. And then in 2008, the Spanish real estate problems started to happen. However, these problems did have nothing to do with me or with the snowdome.

Early 2009, I started to notice that the management of Procom changed. As a creditor, I let my financial experts look into Procom's balance sheet and it became clear then that the value of the company had to be less than €0.

Their equity capital was €10 million at that time, but they had a project portfolio of about €1 billion(!). A huge leverage indeed.

The way in which Procom operated, was that every project was executed by a special, dedicated subsidiary of Procom. In October 2006, Bouwfonds PF was bought by SNS Property Finance, but they remained using the same people in Spain, at Procom. The reason for my problem with Bouwfonds in 2005 was that they operated very aggressively. They didn't care about money.

I was going to pay my 50% stake as a co-developer. When I saw their ways of doing business, I said: "You are crazy". When I tried to invite El Corte Inglés to be partner in the deal, I did so to bring balance and a rationale in the deal. They said ‘No!’

In 2009, with this high amount of leverage at the Procom/PDU (the holding), SNS PF was funding the equity capital for all the Procom subsidiaries, while the loans for Procom's projects came from Spanish banks.

In 2009, Procom had negative equity in reality. They kicked out Albert van Stek and the Spanish investors, who had participated in Procom and they stayed on their own.
Subsequently, they brought in a liquidator to gradually liquidate Procom. This liquidation company was "Directores de Transición". It was associated with the business that Buck Groenhof did in The Netherlands. It is a Zurich based office.

They didn't say anything to me, but to proof my point, I obtained this document from Procom through the Spanish court system: the board resolutions of Procom. In June 7 2010, the board of Procom consisted of SNS PF and "Directores de Transición".
Look at the autographs on the document. [I have seen the mentioned documents, which are in the possession of Jaafar Jalabi- EL].

These belonged to Johannes Advocaat, who was an assistant of Buck Groenhof and Michel Olland. They were the full board of Procom. In June 2010, they decided that they didn't want to pay my share of €6.5 million anymore [Jalabi showed me a letter that stated such - EL]. Instead, they started a legal action, in order to avoid the payment of €6.5 million.

In 2008, Procom didn't have money anymore to finish the project in Valencia, so Procom wanted to sell the project. One of the groups to which they wanted to sell the project was Unibail Rodamco. Unibail was interested. Procom's problem was, however, that they didn't pay in full for the land on which the project should be built.

Procom only paid half of it. They were supposed to pay the other half, but at the time that the payment was due, Procom didn't have the money anymore. As a consequence the land owner received back the land and Procom was without a project. This was in July 2009.

When they lost the project, Procom said to me: "Why should we pay you now?"
I stated: "I didn't sell you a project. I sold you shares and we signed a contract for this at a public notary in 2007. You have an obligation to pay". They didn't say anything.

Instead, they wanted to reverse it. So in order not to pay, Procom filed a civil lawsuit against me. I had "notes payable" (obligations to pay), which should be paid by Procom. During the legal case, Procom asked for an injunction [see the aforementioned explanation- EL] on those notes payable.

They asked the judge to stop the ‘effectiveness’ of the notes payable with that injunction, until the lawsuit had been to trial. The judge - a temporary one - gave Procom the injunction. That was in December, 2010. Of course, I appealed against the decision, as I had an ironclad contract with Procom.

With the injunction in hand, Procom supposedly considered in April, 2011: "the best way to delay the civil lawsuit, and thus maintain the injunction, is to file a criminal lawsuit against Jaafar Jalabi as chairman of PGC”. Just to delay my case.

The injunction would run until June 2011, but they hoped to buy time with the criminal lawsuit. Look who attended this lawsuit [Jalabi shows me a paper concerning the criminal lawsuit - EL]: Johannes Advocaat and Buck Groenhof.

They issued a criminal lawsuit. Usually, in Spain it takes two or three weeks to admit a lawsuit. In this case, however, the judge didn't want to admit the lawsuit. He didn't see anything of substance against me. Procom pushed and pushed and the judge was holding back.

At that time the court of appeal for the injunction, issued its judgment. The judgment said: "release the ‘notes payable’ back to PGC. And the judge used the word "bastarda" in his official judgment  against Procom and the team of SNS PF. 

Front page of this legal verdict by
the Audiencia Provincial de Madrid
Courtesy of: Jaafar Jalabi
Click to enlarge

Page of this legal verdict in which the Court judges  
call the way of acting of Procom a legal 'bastarda' 
(i.e. an act not founded in Spanish law)
Courtesy of: Jaafar Jalabi
Click to enlarge
The judged issued a statement that the team of SNS PF and Procom have committed 'fraude processal": they fraudulently filed for an injunction. 

Page of this legal verdict featuring the concept Process Fraud
from the Audiencia Provincial de Madrid
Courtesy of: Jaafar Jalabi
Click to enlarge
If you unrightfully take an asset away from people, that is a crime. On top of that, this was a final verdict, without the possibility of appeal anymore. So I received back my notes payable. This was in January / February 2012 and my money was due already.

I wanted to get paid. Procom said: "we have no money to pay you". Subsequently, I blocked all their accounts and on these accounts combined stood a total of €304(!). So I put an embargo on some assets. One of the assets I put an embargo on, was a shopping centre in Zaragossa.

This story will continue tomorrow...


  1. Sounds so familiar. I was involved with mr Advocaat and his cronie mr van Balen Blanken in dealings with Mosa Trajectum. Never been paid. Sounds famiiar he?? Todays operators within propertize, under the guidance of mr van Olphen, still play still play under one cover with them for reasons of...? Perhaps the fact that they paint a picture that all will be fine to the Dutch taxpayer will finally not be so pretty after all. But by than they will have filled their pockets and who cares than he...

  2. Shareholders and other stakeholders in the old SNS were definitly mislead. The bank knew about the problems and could have acted upon, but decided to go their own unhealthy ways. They had opportunities and possibilities but choose differently. These shareholders and stakeholders paid the price when the bank got nationalized, while the people responsible were laughing. Now tthe bank blames it all on fraudeless dealings from their (former) employees, but in reality they act just as bad to outside parties that were being mislead and unfairly treated. They do not take their responsibilities and act like the sun is shining. Incredible whilst leaving a trail of destruction behind.