Now the dispute is taking on a new dimension: Precision Castparts has filed a lawsuit against the law firm Jones Day in a US court. The law firm advised the Schulz Group on the transaction. The allegations weigh heavily: The Berkshire subsidiary blames the lawyers for a significant role in the alleged fraud.
Specifically, the office is said to have not disclosed any documents. They are said to show that the Schulz Holding was in “a financially threatening position” before it was taken over by Precision. The accusation is also that Schulz and Jones Day made common cause.
“The fraudulent transaction would never have taken place without the substantial support of Jones Day,” argues Precision in the lawsuit filed with the Handelsblatt in a court in Houston, Texas. From there, Jones Day managed M&A advice. German Jones Day lawyers were also involved in the deal.
Berkshire initially refused to comment on the lawsuit. A New York arbitration court had already sided with Buffett in April. “This is a case of outright and all-encompassing fraud. Those involved did not accidentally make mistakes. Rather, they systematically misled the plaintiffs and then tried to cover their tracks, “the report said.
The result: Precision Castparts is to get back 643 million euros from the German Schulz Holding.
The Schulz side denies fraud. However, internal documents suggest that sales and profits were systematically manipulated using the image processing software Photoshop.
“Schulz was comparable to a house that is about to foreclosure, which Precision Castparts was withheld,” says the lawsuit against Jones Day. Among other things, a restructuring report that Commerzbank had already drawn up in 2016 is said to have not been submitted. The second largest German financial institution granted Schulz loans totaling 325 million euros.
A contract had also been withheld from Precision Castparts, according to which Schulz’s assets would have been transferred to the bank if there had been no buyer. The Berkshire subsidiary is now demanding that Jones Day and Schulz jointly pay for the damage caused. Jones Day did not respond to a request. A spokesman for Schulz announced that they did not want to comment on the lawsuit.
Jones Day is one of the world’s largest commercial law firms and in terms of turnover it is one of the top ten. Last year she came to just under $ 2.1 billion, 2,500 lawyers work for her. The law firm, which was founded in 1893, does most of its business in the USA; in Germany, with almost 80 lawyers, it recently achieved sales of 66 million euros.
The law firm attracted a lot of attention in this country with a major order for Volkswagen to deal with the diesel scandal. In the course of this mandate, public prosecutors searched the offices of the firm. Jones Day fought against it until the Federal Constitutional Court – ultimately unsuccessfully.
In Germany, the authorities are involved in the Schulz case. The Düsseldorf public prosecutor’s office for white-collar crime is investigating Wolfgang Schulz, known as a local entrepreneur and patron of the Krefeld Pinguine ice hockey club.
Seven former managers are also accused. There is a suspicion of “joint fraud in particularly serious cases, the falsification of documents and accounts,” said a spokesman for the authorities in May. As a result, various Schulz companies filed for bankruptcy. When it comes to a possible charge is currently not foreseeable, it is said in defense circles.
Warren Buffett has been looking for takeover opportunities in German medium-sized companies for years, which he values for its persistence. The star investor is known for its high ethical standards.
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