Martinsa case against Jove over sale of Fadesa kicks off

A Spanish commercial court on Monday began hearing evidence in a suit filed by real estate firm Martinsa Fadesa for material damages against the former chairman and main shareholder of Fadesa, which Martinsa acquired at the start of 2007 just before a massive property bubble burst.

Martinsa is seeking to recover 1.576 billion euros from the former chairman, Manuel Jove, alleging that Fadesa's top management had acted negligently and fraudulently in the sale of the company, the value of whose assets it claims had been inflated. Fadesa's chief executive officer Antonio de la Morena has also been named in the suit.

Martinsa paid 4.04 billion euros for Fadesa through a public offer after securing an agreement from Jove for him to tender his 54.6-percent stake in the company. Two years later, Martinsa Fadesa filed for bankruptcy with debts of over 7 billion euros, Spain's largest corporate failure.

Martinsa Fadesa filed the suit in March with a commercial court in A Coruña, where the company is headquartered, shortly after emerging from receivership at the start of this year.

In his testimony on Monday, Jove told the court that he did not take part in the valuation of the company, which was carried out on the basis of information supplied by the company's different territorial branches to real estate consultant Richard Ellis.

De la Morena insisted that the information given for the valuation was "at all moments correct" and denied that the deal involved the sale of arable land that Martinsa Fadesa claims was presented as urban.

Jove said he bought 200 million euros in hotel assets in August 2007 after the acquisition of Fadesa was completed after receiving a phone call from Martinsa Fadesa chairman Fernando Martín, threatening to sue him if he didn't do so. "Perhaps I was wrong, but I didn't want to go through this [court case]," he said.

However, Martín, who has not been called to provide testimony and was not present in court, denied that claim. "It is completely false that I conditioned the request for a sum of money to the presentation or not of a lawsuit," Martín said in comments to local wire service Europa Press. "Those 200 million euros were pending in the deal to acquire Fadesa."