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FILE NAME Cape Asbestos CAPE DATE 2024 DOC CAPE101 DOCUMENT DESCRIPTION Legal - Tibbs Case - Receiver Motion for Summary Judgment STATE OF SOUTH CAROLINA COUNTY OF RICHLAND JOHN A. TIBBS and MARGARET B. TIBBS IN THE COURT OF COMMON PLEAS FOR THE FIFTH JUDICIAL CIRCUIT Plaintiffs V. A No. 40-01759 3M COMPANY et al Defendants ** OR OR ok RK KOK OK ** In Re Asbestos Personal Injury Litigation Coordinated Docket CAPE PLC individually and as successor in interest to CAPE ASBESTOS COMPANY LIMITED by and through its duly appointed Receiver Peter D. Protopapas Third Plaintiff V. ANGLO AMERICAN PLC individually and as successor in interest to ANGLO AMERICAN CORPORATION OF SOUTH AFRICA LTD DE BEERS PLC individually and as successor in interest to DE BEERS S.A. et al Third Defendants TABLE OF CONTENTS I. INTRODUCTION .... ceccesneecesneececueeceaeceaeeceseecesaeeesneesseeeesneeseaaeeceaaeeseeaeeseeaeens 5 II RELEVANT BACKGROUND . cecceesneeceeneeceeneeceeaeesaeeeeaeecesaeeseaeeeesaeeeeeaneeeeaeees 7 A. Cape Is Responsible for NAAC's Fraud on the U.S. Market ... eee 7 B. The Oppenheimer Family Built an Empire Based on Group Control ..................... 8 C. The Operating Principles of the Group System Minimum Investment Maximum Control ....... ccencne cee cessceceeceauaeeceacaecencesaceceeseaeaeecessaeeeeceaaeeseseaeaeeeeseaeeeeseaaeeseseaeaeeeeaea 10 D. Charter Controlled Cape .. cic ceeenceceesscnee cee senaeeecesaeeceseaeaeeeeeauaeeeesesaeeseeeneuees 15 E. Cape Controlled NAAC in Its Scheme to Maximize Sales from a Deadly Product and Siphon Proceeds Out of the United States to Protect Against the Reach of U.S. Creditors ... cece cence cece sents snneeesneeee ss ceceececneecec cn e eee c sue e ecen saee ecea e uee e cee c ecee acec s esc e ese c aeee s ceace 18 1 Cape Knew of the Hazards of Asbestos but Suppressed Acted Contrary that Knowledge Knowledge 0.0.0.0... ccc ccccececeeceneneceecesaeecesseneceeceauaecesenseseseusuaeceeseauaeeesuaeeesenseaeees 23 a Cape Had Every Reason to Be on the Leading Edge of Asbestos Hazard Knowledge 23 b Cape Had Every Reason to Cover Up the Knowledge of Asbestos Hazards ......... 24 ) Dr. Walter Smither's cover of the Pneumoconiosis Research Unit PRU Investigation Investigation 25 ii Dr. Richard Gaze's cover of the harm caused by amosite asbestos 26 2 Charter Cape and NAAC Perpetrated a Fraud on the U.S. Market .................. 28 a Cape Engaged in a Purposeful Scheme to Insulate Itself from Liability While Continuing to Take Advantage of the U.S. Market ccecceececceeeeeeeeceeeeeeeeeeeeeeeneees 29 b Charter Participated in the Fraud .....0....cceeccceeceeceececeeeeeeceeaeeseeecaecesaeeceeeeaeeeeaeeeneeeaaes 36 c Cape Pivots to Asbestos Abatement ..00...0. 0c ccceccceceeceeceeceneeeceeceeeeeeeecaeeenaeesneeeaeeeeaeees 38 F. Altrad and ESAB Acquire Cape and Charter Respectively ....0...00.0... cere 38 1 The Altrad Owners Acquired 100 of Cape and Are Responsible for Cape .....000 39 2 ESAB Is Responsible for Charter 43 G. Procedural History cece ccccececeece eee ceecesaeeecesaeecensesueeseeauaeceseusaeecesseseceeeesnaneesens 45 1 This Court Appointed the Receiver When Cape Failed to Appear in an Asbestos Personal Injury Action .... 45 2. The Receiver Initiated this Party Action Against Participants to and Beneficiaries of Cape's Liability Avoidance Scheme ....cccccesccccseeccecesseeeeeeeeseseeneeecueeeeseenesees 46 H. The Altrad and Charter Third Party Defendants Ongoing Refusal to Participate in Discovery Results in Adverse Inferences .................cccccccceceseeceneeeceesesneecesseneceesenneeeeesnaeeenenes 46 1. Trial Continued Due to Party Defendants Refusal to Participate wc 47 2 This Court Enters Adverse Inferences After It Grants Two Motions to Compel ...... 47 3 The Charter and Altrad Party Defendants Persist in Refusal to Participate in Discovery coccecceccessceceesececeecuseneeccacaeceseesueecessuaeceecuaaeeeeseaneeesesuaeaeseuacaeesueceneeesescaeaerecanaeeesenenaeess 50 III LEGAL STANDARD 0.0.0 ccccceccc cece cent eee ecae cree eee aeesaeeesaeesaeesaeeesaeeseesaaesnaeeeneesaaes 52 IV ARGUMENT ... cee cence ene e cee eeaee cesses eeeaeeeaeesaaessaeecaeesaaeesaeeeaeesaaeesaeeeseeeneesaees 53 A. The Receiver Is Entitled to Summary Judgment on Liability Under Various Successorship or Veil Piercing Theories Third Cause of Action ee 53 0.0.0.0... 1 Charter Is Liable for Cape's Actions and Debts Under an Alter Ego Theory ........ 53 a Cape Is NAAC's Alter Ego oo... .ccccecccccesssecessceeceneeecensesceneeseaeecesaeesseaeecseesesseeeesseeersnnees 54 ) Cape exercised total dominion and control over NAAC .......ccccececseesteceeseeeesseeees 55 ii | Cape's dominion and control over NAAC caused gravely inequitable consequences eee ceecececee cence eee eeeeeceeneaeneeeeanaeeeeenaeeaeseaeaeaeeeeagaeeeeenaeeeeseseaeaeeseeaeeesennneeess 56 b Charter Is Cape's and in Turn NAAC's Alter Egos cccceecceeeeceeeseeeeteeeneeeaes 58 i Charter exercised total dominion and control over Cape and in turn over NAAC 59 ii Charter exercised its control over Cape and NAAC to produce inequitable results ..... eee cceeee cee ceeeeeeeeeceeeeeaeeceeeeaaeesaeecaeecaeeecaeeeaeesaaeesaeeesaeeseeeeaeeeaeeseeeeceesseesseeseeresees 60 2 Charter Is Liable for Unaddressed Harm Caused by Cape's Asbestos Under a Veil Piercing Piercing Theory .occccccccccccesccceessecesscescaeceseaeceseaeseesaeesesaeesasaessesseseuseessueessseeesereesenressenressenresssas 61 3 Cape and Charter Shared an Amalgamation ofInterests and Were Part of a Single Business Enterprise Enterprise nae ceeeeaaeeeseaeee cesses .. aaeeeeaaeeeeensaeeeeeseagaeeseananeeeenseeeens 64 4 AIA Is Liable for Cape's Asbestos Liabilities as the Successor to Cape Based on Its Express Assumption ofResponsibility or in the Alternative as Cape's Alter Ego with Respect to Its Continuing Litigation Avoidance .occccccccccesccccesseceescessseecesaeesusaeesusaeessseessaseesaas 67 a AIA Expressly Assumed Responsibility for Cape's Asbestos Liabilities .... 67 b Even If AIA Had Not Assumed Cape's Asbestos Liabilities It Is Cape's Alter Ego With Respect to Its Ongoing Litigation Avoidance ... ce eeeee ee. e eeeeeeete. eee senate 70 ) AIA dominates and controls its wholly owned subsidiaries through which it purchased Cape and that have provided for funds to resolve non asbestos claims 70 ii AIA has exercised its dominion and control to produce inequitable results . 72 5 Mr. Altrad Is Liable for Cape's Historic Asbestos Liabilities Based on AIA's Assumption ofLiability or in the Alternative Is Liable for Cape's Continuing Litigation Avoidance as an Alter Ego ce .. eeseeeeaeces. aeeaaeesaeeeaeeceesaeeea. eesueesaaeesieeeneesaaes 73 a Mr. Altrad Dominates and Controls AIA and the Wholly Owned Subsidiaries Through Which AIA Purchased Cape and That Have Provided for Funds to Resolve Non- U.S. Asbestos Claims cc ceccecccceeeeceececneeeceeaeeaeeneecaesneeeaesneeeaaeseeesaaseeesaeeeeeaeeenenaeenenees 73 b Mr. Altrad has exercised his dominion and control to produce inequitable results ... 75 6 ESAB Corp. Controls Charter Today and Should Be Held Responsible for Its Wrongful Litigation Avoidance ..... 76 3 V. CONCLUSION THE RECEIVER'S MOTION FOR SUMMARY JUDGMENT AGAINST THE CHARTER AND ALTRAD PARTY DEFENDANTS Pursuant to Rule 56 of the South Carolina Rules of Civil Procedure Third Plaintiff Peter D. Protopapas as duly appointed receiver for Cape PLC individually and as successor in interest to Cape Asbestos Company Ltd. k Cape Intermediate Holdings Ltd. the Receiver or Receivership by and through undersigned counsel hereby moves this Court for an Order granting summary judgment in his favor with respect to successor liability and alter veil piercing liability against ) Charter Consolidated Ltd. Charter and ESAB Corporation ESAB together with Charter the Charter Third Defendants and ii Mohed Altrad and Altrad Investment Authority S.A.S. AIA together with Mr. Altrad the Altrad Third Defendants I. INTRODUCTION In 1977 Cape the leading supplier of amosite asbestos to the United States found itself at a crossroads Cape's international sale of asbestos made it the profit center of Charter its parent within the broader network of interconnected companies with overlapping leadership ownership and holdings that formed the Oppenheimer Group System But entering into settlement discussions 1 Eleven entities within the Altrad Group along with Mohed Altrad its founder and President were named as Third Defendants Seven of those 12 defendants failed to respond to the Third Complaint Altrad UK Ltd Cape Industrial Services Ltd. k Altrad Services Ltd. since June 1 2021 Cape Holdco Ltd Cape Industrial Services Group Ltd Cape UK Holdings Newco Ltd Sparrows Offshore Group Ltd and The Sparrows Group LLC As a result on December 6 2024 the Court entered default against those seven responding Altrad entities several of including Altrad UK have the same registered address of Cape Intermediate Holdings Ltd. i.e. the current name of the Cape Asbestos Company Ltd. in England at 6-7 Lyncastle Way Barleycastle Lane Appleton Warrington See generally Order Entering Default December 6 2023 its ever asbestos product liability lawsuit in Tyler Texas that summer the threat of becoming embroiled in U.S. litigation loomed We here having heard more disturbing information recently about the value of Texas awards are rapidly coming to the conclusion that Cape and Cape Fibres should take a risk on the UK enforceability and withdraw as in practice we cannot foresee any court or government here enforcing a judgment which would have enormous financial and employment repercussions when we really cannot be said to have a moral responsibility and are simply victims of the US product liability cult An urgent meeting is obviously essential as clearly you cannot indefinitely continue my instructions of taking no further steps in the proceedings Suggest 21st and 22nd July in London. Cape did not face the decision of how to respond to this looming risk alone It was a subsidiary in a much larger Group System controlled by the Oppenheimer family Designed to dominate the mining industry the Oppenheimer Group System employed a system of top bottom control to manage what was by that time over 1,000 companies under the Anglo American Corporation of South Africa Ltd. Anglo American umbrella While the Oppenheimers and their close allies ran the companies as one the Group System afforded them the flexibility of walling off liabilities and evading responsibilities or authorities at critical moments such as this Given the Group System's modus operandi Cape's predictable reaction to the looming risk of U.S. liability for the known harms of its asbestos was to ) strip its wholly owned U.S. subsidiary North American Asbestos Company NAAC of assets and shutter it ii ostensibly flee the jurisdiction and iii establish a new Lichtenstein corporation still part of the Oppenheimer Group System to mask Cape's identity in the United States so that it could continue to profit from asbestos sales to the U.S. market Because of the Group System protections these ? Ex 1 Cape General Counsel A. Cape_Receiver_00133865 Cape_Receiver_00133865 Cape_Receiver_00133865 Penna telex to Lord Bissell in Chicago July 4 1977 decisions were effective Cape and Charter have evaded their U.S. liabilities for the devasting harm caused to U.S. claimants exposed to Cape's asbestos for more than four decades Even now decades later Cape and Charter along with their new owners Cape's case AIA and Mohed Altrad its founder President and majority owner and in Charter's case ESAB ESAB continue to refuse to answer for the harm they caused in the United States Through baseless legal challenges to this Court's appointment of the Receiver to serial improper appeals of this Court's discovery orders to an outright refusal to participate in the discovery process the Charter and Altrad Third Defendants persist in the scheme of litigation avoidance Even with the Charter and Altrad Third Defendants continued obstructionism the evidence adduced by the Receiver is damning It is also completely unrebutted and further supported by the adverse inferences drawn by this Court as a result of their discovery misconduct For the reasons set forth below there is no genuine issue of material fact that could prevent summary judgment in the Receiver's favor with respect to his equitable claim of alter ego and veil- piercing liability II RELEVANT BACKGROUND A. Cape Is Responsible for NAAC's Fraud on the U.S. Market The story of Charter Cape and NAAC's conscious coordinated to protect Cape from U.S. liability related to the sale of tens of thousands of tons of raw asbestos fiber into the U.S. market is not just about three companies It is a story of a highly efficient and integrated operation that originated in the South African mining industry spread internationally made huge profits by suppressing the known health risks associated with asbestos and successfully avoided the attendant based liabilities for the harm caused by their operation Nobody questions the identity of the wizards behind the curtain Ernest and Harry Oppenheimer NAAC Cape and Charter are not separate The Oppenheimers and their super- 7 executive committee controlled all of these companies The evidence of bottom control is abundant completely unrebutted by the Charter and Altrad Third Defendants extends to both daily activities and critical decisions Indeed there is no more compelling evidence of control and dominion than the directive Charter gave Cape that its profits were not Cape's to control The Oppenheimer control over Charter and Cape here aligns fully with the analysis of the South African Group System submitted to this Court by Dr. Steven Press Dr. Press's report outlines the hallmarks of the Group System control perfected by the Oppenheimer family and clearly documented in the relationship between Charter and Cape Charter and Cape's use of the Group System to cover up their knowledge of the hazards associated with asbestos as detailed in Dr. Barry Castleman's report and corroborated in NAAC's and Cape's historical documents is a scheme for which Charter's and Cape's successors Altrad and ESAB should be held liable This story is most clearly told through NAAC due to NAAC's participation in the U.S. litigation system as compared to Charter and Cape which maneuvered to minimize their participation in that system But the Group System permeated the relationships among Charter Cape and NAAC one and the same makes each company equally responsible for the bad acts of the group These companies must be held responsible for their conscious choices to send tens of thousands of pounds of raw asbestos fibers into the U.S. market and strategically avoid those liabilities through complex corporate maneuvering They cannot be permitted to continue to profit on their scheme B. The Oppenheimer Family Built an Empire Based on Group Control To dominate the South African commodity mining industry the Oppenheimer family perfected the South African Group System Although the full picture of these corporate relationships remains murky it is generally acknowledged that the Oppenheimers reach extends 8 to some six hundred corporations involved in everything from diamonds and gold to insurance and investment houses The details of ownership have never been fully revealed but evidence indicates that ultimate control over all the companies remains firmly in the hands of E. Oppenheimer & Sons a privately held family concern For all practical purposes then the entire conglomerate functions under the direction and at the will of the Oppenheimers This system in which the Oppenheimer family could create an empire with only limited investments in hundreds of companies is best described in the family's own words Ernest Oppenheimer the original Oppenheimer family patriarch explained it has been shown that the mining companies individually and the industry as a whole have benefited to an enormous extent through the presence of strong parent companies The advantages of the Group system are manifold the financing of the individual mining enterprises is facilitated thereby the parent company provides the link between the various producing companies and promotes operation on matters of common interest and perhaps most important by engaging a staff of highly skilled experts is able to give valuable technical assistance Harry Oppenheimer Ernest's son who controlled the family empire for decades after his father further explained that he control of the parent company in each group over its associated concerns is normally fully effective The controlling corporation undertakes the administration of all the companies in the group provides centralized secretarial services attends to the share 3 Ex 2 Debora L. Spar THE COOPERATIVE EDGE THE INTERNAL POLITICS OF INTERNATIONAL CARTELS 76 1994 4 Ex 3 T.E. Gregory SIR ERNEST OPPENHEIMER AND THE ECONOMIC DEVELOPMENT OF SOUTH AFRICA 98 1962 > Ex 4 Union's Group Mining System H.F. Oppenheimer The Mining and Industrial Magazine of Southern Africa Vol 44 No. 9 Sept. 1954 at Cape_Receiver_0215701-6 Cape_Receiver_00215701-6 Cape_Receiver_00215701-6 9 transfer work and maintains a central buying department to ensure that the buying for all the group companies is conducted by experts The Oppenheimer family's perfection of the Group System led to nearly unparalleled financial results In its issue dated July 1 1989 The Economist wrote By any measure the Oppenheimers are the Rockefellers Morgans and Gettys of South African all rolled into one Anglo American the holding company which the family created and still guides is vast It is at the center of the world's largest mining group producing a fifth of the communist world's gold Anglo also has a firm grip on the platinum market and towers over the South African economy with interests in industry farming and finance De Beers its sister company controls the 7 world diamond market C. C. The Operating Principles of the Group System Minimum Investment Maximum Control The Oppenheimer Group System's dominance was predicated on the theory of minimum investment maximum control The Group System relied on three pillars ) minimum investment outside investment to spread risk ii maximum control all companies as a single unit with bottom control and iii illusion of separateness to limit liability and risk Minimum Investment The Group System did not require full ownership of subsidiary entities even a controlling share Dr. Steven Press an expert on the Oppenheimer empire 6 Id 7 Ex 5 The Oppenheimer Empire South Africa's Family Affair THE ECONOMIST July 1 1989 73-75 8 Ex 6 Anglo American Corp. FORBES June 15 1973 49 at Cape_Receiver_0215757 Cape_Receiver_00215757 Cape_Receiver_00215757 Ex 7 A.J. Limebeer The Group System of Administration in the Gold Mining Industry Optima vol 1 no 1 1951 26-30 10 describes the Oppenheimer Group System as a complicated web of perhaps hundreds of companies that was typically not detectable in majority stock shareholdings Indeed in an cuff portion of an interview in 1969 Harry Oppenheimer addressed taking control of big enterprises stating hen I say control I don't necessarily mean 51 per cent Instead the Oppenheimer family owned a portion of each company in the web but relied on outside investors to supply additional capital and perhaps most importantly to spread the risk Dr. Press's account of the founding of Anglo American Corporation of South Africa Limited Anglo American a Third Defendant that is not the focus of this Motion best describes this investment strategy As he explains early in the company's history Ernest Oppenheimer relied on an Anglo American investor to help guide Anglo American's purchase of a crucial diamond asset Late in the course of World War I Ernest Oppenheimer received insider information concerning the fate of diamonds in German Southwest Africa German colony that South Africa had occupied after defeating German colonial forces here A South African state official and former treasury secretary H.C. Hull who had been a participant in Anglo American's founding indicated to Oppenheimer that the German rights holders in Southwest Africa were willing to sell their diamond claims Oppenheimer was able to purchase the diamond rights because of his American investors in Anglo American The Oppenheimers focus on investment 9 Ex 8 Expert Report of Steven Press Nov. 8 2024 Press Report at 12 10 Ex 8 Press Report at 83 citing Ex 9 I'm not keen on power Anglo Supplement to the Financial Mail July 4 1969 at Cape_Receiver_0215719-24 Cape_Receiver_00215719-24 Cape_Receiver_00215719-24 11 Ex 8 Press Report at 42 12 Indeed according to Press in 1935 William Westrup an Anglo American director described the goal of attracting U.S. investors Mr. Honnold cofounder of Anglo along with Ernest Oppenheimer was a resident of the United States and was in close touch with various financial houses there In consideration of his efforts to obtain American capital and introduce the Corporation's shares in America Mr. Honnold was made a permanent director ... his remuneration was granted in effect on American capital Id at 40 citing W. Westrup to Receiver 11 from the outside allowed them to leverage significantly more capital and capitalize on the social networks of those investors for additional investment and insider knowledge of new opportunities to build the empire Maximum Control The Oppenheimers used certain hallmarks of control to dominate the companies within the group It allowed the Group entities to function as a single unit no matter how much the empire expanded As Dr. Press describes these hallmarks include the deployment of directors to the boards of individual Group companies maintaining a culture of subservience among directors in individual companies within the Group dominat financing arrangements made by and for individual companies within the Group and siphon off profits and dividends from individual companies and moved them to entities at the head of the Group which used this revenue stream to pay dividends to shareholders in the Group parent's holding companies The following table of interconnected board memberships across NAAC Cape Charter and Charter's parent Anglo American illustrates how Harry Oppenheimer deployed and redeployed individuals across Oppenheimer Group companies to assert bottom control over them of Revenue in Johannesburg William L. Honnold Papers Collection H.MSS.0381 Box 42 Folder 32. Honnold himself attested to the strength and importance of these American connections Id at fn 105 citing Letter from Honnold to E. Oppenheimer Aug. 17 1943 William L. Honnold Papers Collection H.MSS.0381 Box 42 Folder 32 emphasis added 13 Ex 8 Press Report at 12 14 Id 12 1976 Chairman Anglo American Harry F. Oppenheimer De Beers Harry F. Oppenheimer Charter Sidney Spiro Minorco W.D. Wilson Cape R.H. Dent NAAC C.G. Morgan Deputy Chairman Sir Keith Acutt W.D. Wilson A Sir Philip Oppenheimer Spiro L.G. Sackville Max E. Meyer Directors Sidney Spiro William Graham Boustred Z.J. De Beer J.N. Clarke Murray Hoffmeyr D.A. Etheredge G.C. Fletcher H.R. Fraser C.J.L. Griffith N.K. Kinkead G. Langton D.G. Nicholson Nicky Oppenheimer Sir Philip Oppenheimer B.W. Paln Gavin Relly F.S. Berning L.G. Sackville U. Oilvie Thompson Gordon H. Waddell Sidney Spiro Sir Keith Acutt E.T.S. Brown E.M. Charles P.J.L. Crokaert E.G.J. Dawe W.D. Wilson Murray Hoffmeyr G.A. Carey J.N. Clarke F.S. Berning J.E.H. Collins Z.J. de Beer G.A. Carey Smith Murray Hoffmeyr F.S. Benning H.R. Fraser G.C. Fletcher Sidney Spiro Geoffrey Higham F.P. Parkes B.3 Stevenson M.W. Stevenson R. Gaze M.H. de Kock R.H. Dent H.B. Dyer G.C. Fletcher H.R. Fraser J.O. Hambro A.S. Hall N.K. Kinkead L.G. Murray Harry F. Oppenheimer Sir Philip Oppenheimer Richardson A.E. Oppenheimer J. Ogilvie Thomson B.W. Pain B.W. Pain J. Ogilvie Thompson A. Wilson Gavin Relly M.W. Thomas N.K. Kinkead = R.A.W. Caine Sir Philip Oppenheimer M.A.F. Newton Harry R. Oppenheimer J.G. Mackeur lan J.G. Richardson W.R. Doughty B.W. Pain A.E. Hepper Gavin Relly J.R. Sim LG Stopford J.G. Richardson J. Ogilvie Thompson G.A. Smith Gordon H. Waddell H.R. Fraser E.P. Gush L.G. Stopford P.C.D. Burnell Sir H. Tucker Sir J.E. Pearman F.M.F. El is E.P. Grush A. Wilson Alternate M.W. Stephenson Alternate G.A. Carey Alternate Robert Brook R.H. Dent former Geoffrey Higham former R. Gaze former Dr. Press describes this as a visual depiction of board membership for certain Group companies in 1976 Anglo American De Beers Charter Consolidated Minorco see later in this report Cape Industries and NAAC Names marked in red on this chart are repeat directors within the Anglo American / De Beers Group In a few cases such as that of J.E.H. Collins repeat directors are marked red because of additional board memberships within the Group that are not depicted in the chart Harry Oppenheimer's trusted advisors were the engine of his Group System they allowed him to run what appeared to be a web of entities as a single unit The Illusion of Separateness This tenet of the Group System refers to maintaining separate corporate entities to create a mechanism to wall off potential risk and to create a fluid structure to evade government investigation both in South Africa and elsewhere 15 Id at 48 13 Initially these separations played an important role in maintaining a strong relationship with the South African government But it became clear that the illusion of separateness was critical in the United States where antitrust laws threatened the Oppenheimers De Beers diamond cartel As Dr. Press recounts Around 1943 the US government believed that Anglo American involved in an amalgamated enterprise with De Beers the running of a global diamond cartel Once W.L. Honnold a trusted U.S. Oppenheimer advisor responsible for engaging American capital to build Anglo American became aware that the U.S. government was intercepting his communications with Ernest Oppenheimer here was a stark shift in Anglo American's documented corporate behavior 18 Another Oppenheimer entity Rand Selection received some of Anglo Group's diamond business without any real transaction taking place Rand Selection formed a new company under its control Industrial Distributors Limited as Ernest Oppenheimer reported to Anglo American's board this new company would be the conduit for all industrial diamonds to be sold separately from the sale of gem diamonds A new company was being created by Oppenheimer and an old alter ego partially repurposed with the effect of shielding one part of the amalgamated business enterprise industrial diamonds from another and further obscuring the amalgamation of the business enterprise itself Anglo American retained 16 Id at 45 Partly the nominal separation of Anglo American and De Beers was maintained because Oppenheimer Anglo American and De Beers were seen as English concerns in a South Africa where Afrikaner nationalism was a potent force and where the threat of antimonopoly action by the state was quite real in the 1930s and 1940s To have combined all the Oppenheimer businesses formally into one unit would have brought unwanted attention 17 Id at 49 18 Id 19 Id at 49-50 20 Id at 50 14 control however because of its group system The Oppenheimer empire was able to continue its diamond sales effectively evade detection of its fa^adeof separateness The appearance of separation though highly effective was a pure fiction Harry Oppenheimer and his closest advisors used it as a fa^adefor walling off liability and government investigation This Group System model of control created by the Oppenheimers governed the relationships among Anglo Charter Cape and NAAC while separate on paper they operated as a single unit D. Charter Controlled Cape As Cape's parent in the Group system Charter controlled Cape's overall decision making on all issues including over anything related to Cape's dividend Francis Howard a Charter employee who sat on Cape's board explained that Charter not Cape set the Cape dividend the directors of Cape who were in the employment of Charter would discuss within Charter with its executive committee that recommendation There was no involvement of Cape personnel This testimony is consistent with documented Charter Executive Board meeting minutes For example the minutes dated October 28 1969 included the following entry It was agreed that in the future Cape dividend recommendations would be discussed with Charter before being presented to the board Even Richard Dent the time Cape chairman who attempted unsuccessfully to 21 " Id noting that his reference to alter ego as found in historical document Rand Selection Financial Mail Feb. 25 1972 22 Howard agreed that he was on the Cape board only because he was a Charter employee his board membership would cease if he retired from Charter See Ex 10 Deposition of F. Howard Nov. 13 1980 at Cape_Receiver_0 10 173Cape_Receiver_00100173 23 Id at Cape_Receiver_010270 Cape_Receiver_00100270 Cape_Receiver_00100270 24 Id at Cape_Receiver_01026-7 Cape_Receiver_00100266-7 Cape_Receiver_00100266-7 15 distance the company from Charter's control agreed that Charter discussed and decided the Cape dividend before the issue was discussed at Cape board meetings To set its subsidiary's dividend Charter's financial department was responsible for reviewing subsidiary financial reporting performing internal calculations and recommending a dividend The Charter financial department issued a memorandum to the Charter representatives on the Cape board to explain the rationale behind the dividend and to establish the dividend amount An example dated October 25 1971 just one day before a Cape board meeting opens as follows This short note comments on the papers for the Cape Board Meeting to be held on 26th October Charter is represented on the Board by Mr. S. Spiro Mr. L.G. Stopford Sackville and Mr. J.G. Richardson The memo summarizes Cape's financials including an analysis of the projected tax profits compared to recent years Based on the analysis the financial team recommended a 7.5 dividend noting that Charter's portion would amount to 196,000 the payment of which in December 1971 should not present any problems Charter's dominance over Cape also extended to secondments another hallmark of group system control As Dr. Press explains in one example of many Geoffrey A. Higham as of 1967 was a director of Cape Asbestos - two years after Higham started with Cape Asbestos in 1965 25 Ex 11 Deposition of R. Dent Apr. 7 1981 at Cape_Receiver_009892 Cape_Receiver_00098922 Cape_Receiver_00098922 " would not like to say that there was no occasion on which we did not discuss dividend possibilities with the Charter directors ahead of a Cape board meeting but the operative decision was taken at an open meeting of the ape board with all directors present 26 Ex 12 Memorandum The Cape Asbestos Company Limited Oct. 25 1971 at Cape_Receiver_00002569-70 Cape_Receiver_00002569-70 27 Id When it is borne in mind that Ordinary Dividends were not reduced in 1970 despite the 15 fall in earnings there seems little reason for thinking that there is any prospect of the 1971 distributions being increased because we are forecasting a return to profits close to the 1969 level 28 Id 16 Higham received payment for this work through Cape Building Products Limited not Cape Asbestos Later after Higham became Chairman of Cape Industries PLC the renamed Cape Asbestos Higham received payment for his work from Charter Consolidated Services Charter also relied on key executives to dominate Cape's board during crucial momentsanother hallmark of group system control By way of example Stephen Pollen an Oppenheimer insider dominated the Cape board at significant moments in the company's history Charter Executive Committee meeting minutes dated April 25 1967 address Cape Asbestos stating that Pollen has suggested that an executive committee of the board should be appointed Mr. R. Dent has agreed with this proposal and confirmed that Pollen should be appointed to the committee on its formation Similarly when the Charter executive committee determined in a November 13 1972 meeting that tighter control of the local management of subsidiaries was warranted meeting minutes indicated that " was therefore agreed that the subsidiaries would be retained directly that an executive director of Charter would take over as chairman for Mr. Dent who would remain a director that local management should be strengthened that greater financial control should be 31 exercised by Charter Consistent with the Group System Charter's control over Cape was absolute in meaningful moments throughout Cape's history Indeed several courts have found that Charter controlled 29 Ex 8 Press Report at 93 30 Ex 13 Charter Consolidated Limited Executive Committee Minute No. 51/67 Apr. 25 1967 at Cape Receiver_00002539 Receiver_00002539 31 Ex 14 Charter Consolidated Limited Executive Committee Minute No. 124/72 Nov. 13 1972 Cape_Receiver_00002554 Cape_Receiver_00002554 32 Ex 8 Press Report at 8 17 Cape See Craig v Johns Manville No. 82-0321 1987 WL 10191 E.D. Pa Apr. 23 1987 at * list of other courts finding Charter controlled Cape That conclusion also accords with this Court's adverse inferences as to Charter E. Cape Controlled NAAC in Its Scheme to Maximize Sales from a Deadly Product and Siphon Proceeds Out of the United States to Protect Against the Reach of U.S. Creditors Just as Charter controlled Cape Cape in turn controlled its U.S. subsidiary NAAC In contrast to Cape's sprawling South African operation with thousands of mine workers employed at the asbestos mines NAAC was small NAAC's president described the company as a one- man operation which consisted of myself and four girls This small footprint protected Cape from exposure to U.S. tax liabilities and more importantly allowed for a quick collapse of the company's U.S. presence to escape looming tort liability From the beginning Cape worked to ensure the appearance of separateness between it and NAAC both for tax purposes and liability avoidance Behind this fa^ade Cape fully and 33 See Order Granting Cape Receiver's Motion for Sanctions May 23 2024 20 20 22 Charter dominated and controlled Cape and its subsidiaries including NAAC between 1965 and 1996 including with respect to their financing and capitalization Charter Central Mining seconded employees and other officials to work for Cape or otherwise financed and spent resources for Cape including operational marketing research and development and lobbying activities 34 Ex 15 Deposition of C. Morgan May 20 1975 at Cape_Receiver_0095787-90 Cape_Receiver_00095787-90 Cape_Receiver_00095787-90 see also Ex 16 Answers to Plaintiff's Request for Production Nov. 24 1982 at Cape_Receiver_0127971- Cape_Receiver_00127971- Cape_Receiver_00127971- 72 describing NAAC's lean staffing Ex 17 Letter to J. Morris Dec. 3 1975 at CapeReceiver_00127267 Despite the volume of sales and profits of NAAC our operation is a very small one with only a total of 5 employees 35 See Ex 18 Deposition of M. Meyer Mar. 24 1981 at Cape_Receiver_009840-1 Cape_Receiver_00098400-1 Cape_Receiver_00098400-1 came to the firm and I was a new partner at the time but I was involved in tax work One of the things involved in connection with NAAC was since it was to be the wholly subsidiary of an English company a tax question and to be sure that tax questions were considered and be sure that it wasn't done in a wrong manner make sure that NAAC was independent and that Cape wasn't doing business in this country 18 carefully controlled every facet of NAAC through its U.K. staff including Ronald Dent Richard Gaze and Tony Penna When day decisions required ground monitoring and decision making Cape relied on its Chicago team of lawyers at Lord Bissell led by Max Meyer This U.K. and Lord Bissell team made every necessary decision for NAAC the content of its laws to the makeup of its board the content of board meeting minutes the 36 Ex 19 Letter from M. Meyer to R. Cryor responding to Dent's detailed inquiries into permissible under U.S. law Jan. 19 whether 1954 at Cape_Receiver_01347-8 Cape_Receiver_00133477-8 Cape_Receiver_00133477-8 certain potential laws would be 37 See Ex 20 Letter from R. Dent to R. Cryor Apr. 13 1959 at Cape_Receiver_013219-20 Cape_Receiver_00133219-20 Cape_Receiver_00133219-20 have discussed this with Mr. Newton and we both feel that the best method would be to approach Lord Bissell & Brook and to ask them whether they would be kind enough to nominate one or the other in accordance with their own wishes Mr. Newton I think would like to write to John Lord himself asking him to do this and subject to your reply he will do so accordingly Dent also rejected Cryor's suggestion as to an additional board member suggestion Harper Boyd see also Ex 21 Letter from R. Dent to R. Cryor Dec. 17 1953 at Cape_Receiver_0231839-40Cape_Receiver_00231839-40 Dent noting that he believed that the corporate secretary should be a member of the firm of Lord Bissell & Kadyk or the Accountants 38 Cape sought tight control over the content of the NAAC board meeting requiring not only detailed financial information but strict adherence to a form for the minutes themselves Ex 21 Cape_Receiver_0231839-40Cape_Receiver_00231839-40 19 determination of its commission the process by which it was paid for its work the strategic 39 See Ex 22 Management Report to the Nov. 29 1955 NAAC Board of Directors Meeting Cape_Receiver_00232090-8Cape_Receiver_00232090-8 early in September it became apparent that NAAC could not in the future expect to enjoy the same freedom in establishing profit margins on Amosite as in the past Effective January 1 1956 NAAC will have 2-1 per cent commission on all sales of fiber to established customers and 5 per cent on sales to new users NAAC may not under the terms of new agreement now in negotiation with the Mines resell Amosite or Blue asbestos at prices and profit margins of its own choosing Rather we will be required to operate on a fixed price list established by the Mines see also Ex 23 Letter from R. Gaze to R. Cryor June 6 1969 at Cape_Receiver_00134097 Cape_Receiver_00134097 " feel that in any event I should emphasize that while the overall profit of N.A.A.C. is an important consideration the actual movement of large tonnages of fibres must have priority Ex 24 Letter from R. Cryor to R. Gaze July 8 1969 at CapeReceiver_00134093-4 Whatever the financial arrangements between the Mines and NAAC that you may plan for the future I hope you will keep in mind that we have an increasing burden here in the cost of doing business in increased services and the administration of these services . Naturally I accept your decision in this matter and we can revert to the 2.5 basis whenever you wish to have it become effective although as you point out it is a source of some disappointment and concern to me 40 See Ex 25 Deposition of J. Holtze Nov. 7 1980 at Cape_Receiver_0 097895-6 Cape_Receiver_00097895-6 Cape_Receiver_00097895-6 Cape Asbestos Fibers paid NAAC commissions on a monthly basis that was based on sales - on fiber shipped during a given month 20 practice of underinsurance the setting of dividends and the salaries of its employees Cape's control over NAAC infiltrated every aspect of the company's operations Charles Morgan who joined NAAC in 1970 as company vice president and served as president from 1975 until the company's closure in 1978 described Cape's Richard Gaze and Lord Bissell's Max 41 Officially Cape had a company policy to purchase insurance at minimum cost consistent with adequate cover Ex 26 Memo Oct. 10 1975 at Cape_Receiver_0127206-8 Cape_Receiver_00127206-8 Cape_Receiver_00127206-8 But in reality NAAC felt pressure from its Home Office in London that forced it to seek lower rates and choose carriers and policy terms based solely on short cost See Ex 27 Letter from NAAC to J. Kirk of Talbot Bird & Co. Nov. 17 1959 at Cape_Receiver_0 231434-5Cape_Receiver_00231434-5 Cape_Receiver_00231434-5 see also Ex 28 Letter from Meyer to Gaze June 29 1977 at Cape_Receiver_024712-3 Cape_Receiver_00244712-3 Cape_Receiver_00244712-3 Having explained two quoted options for new coverage Meyer noted bviously the premiums involved would have exceeded the net income of the corporation in some years and would gradually have eaten up the net worth that has accumulated Having failed at an attempted to ask NAAC's prior year insurer to insure NAAC for one more year Meyer noted we appear to be at the end of the rope at the present time See e.g. Ex 29 Letter from R. Dent to C. Morgan dated Apr. 8 1974 at Cape_Receiver_00133126Cape_Receiver_00133126 In view of the situation in the U.K. and having regard to the cash balances in N.A.A.C. we must ask you this year to increase the dividend to the sum of 120,000 Ex 30 Letter from R. Dent to C. Morgan May 1 1974 at Cape_Receiver_013958 Cape_Receiver_00133958 Cape_Receiver_00133958 stating would be grateful if the dividend requested of 120,000 could be declared There is no need for it to be paid immediately and it could be remitted in instalments or in full at any time between now and the end of December 1974 even if it involves an overdraft in NAAC and dismissing Meyer's argument that solely because of a dividend which is some 60,000 - 80,000 in excess of the normal that there should need to be a bank loan more or less permanently on the books amounting to 50,000 - 100,000 Ex 31 Letter from Gaze to Morgan Apr. 15 1975 Cape_Receiver_00133528Cape_Receiver_00133528 So far as the dividend is concerned we should expect this to be not less than two thirds of the after tax profit and a dividend of 150,000 is expected in 1975. The question of payment of the dividend should be delayed in this instance until November 43 While Cape controlled all NAAC employee salaries the story of Cape's decision to reduce NAAC's West Coast agent Jim Polizzi's retainer amount best illustrates this facet of control In a letter to Meyer dated November 16 1972 Dent wrote We have agreed that this should be reduced from the present 10,000 per annum to 5,000 per annum to take effect from 1st January next year Ex 32 Letter from R. Gaze to M. Meyer Nov. 16 1972 at Cape_Receiver_00240205 Not only did Dent make the decision but he also was the one to meet with Polizzi and inform him of the change Dent noted " pointed out of course that this resulted from our need to keep down expenses in the United States and in the light of our reduced activity on the West Coast Id Dent asked Meyer to inform Morgan of this change " hope that you will be satisfied with the outcome of this discussion and if so I should be grateful if you would inform Gerry and make the appropriate arrangements Id 21 Meyer in the context of their interview of him for a position at NAAC Morgan described Max Meyer's many roles at NAAC stating ell he actually held three positions I suppose I should say He was a Director he was the Acting President of North American Asbestos and he was also legal counsel for North American Asbestos Morgan described his second interviewer Dr. Richard Gaze as in charge of NAAC Well it was my understanding that Dr. Gaze was on the Board of Directors and he was I guess theoretically in charge of this North American Asbestos organization and he would be the gentleman that would probably say Yes or No after I talked to him Morgan's impression of Gaze persisted after he began working for NAAC with Gaze having the final say a far as the distribution of fibers The clearest evidence of Gaze's control over NAAC though was his role in NAAC after he resigned from the company's board He held no office in NAAC but continued to communicate with Morgan through written correspondence telex telephone and visits.47 Even after resigning Gaze effectively still ran NAAC Q. It would be fair to say - wouldn't it Mr. Morgan - even after Gaze resigned from the Board of Directors you considered him your superior as it related to the discharge of your duties at North American Asbestos Corporation isn't that correct A. Yes Q. He in fact ran the company didn't he A. It would appear he did Cape's control over NAAC was sweeping and absolute 44 Ex 33 Deposition of C. Morgan Oct. 31 1980 at Cape_Receiver_0096079-81 Cape_Receiver_00096079-81 Cape_Receiver_00096079-81 45 Id at Cape_Receiver_00096219 Cape_Receiver_00096219 Cape_Receiver_00096219 46 Ex 15 Deposition of C. Morgan May 20 1975 at at Cape_Receiver_0095835 Cape_Receiver_00095835 Cape_Receiver_00095835 47 Ex 34 Testimony of C. Morgan Sept. 18 1986 at Cape_Receiver_013416-7 Cape_Receiver_00133416-7 Cape_Receiver_00133416-7 48 Id at Cape_Receiver_013417-8 Cape_Receiver_00133417-8 Cape_Receiver_00133417-8 22 1 Cape Knew of the Hazards of Asbestos but Suppressed Acted Contrary that Knowledge Throughout the era of the Oppenheimer Group System expansion top executives were aware of the devastating health hazards associated with asbestos exposure Indeed over time they were met with stricter and more careful scrutiny in the U.K. where asbestos regulations first developed Cape nevertheless did nothing to protect workers in South Africa or consumers in the United States - it only accelerated South African mining and U.S. sales a Cape Had Every Reason to Be on the Leading Edge of Asbestos Hazard Knowledge In 1953 Cape's amosite asbestos mine achieved an output of 50,000 tons and employed 5,000 African workers Cape's South African mines produced 95 percent of the amosite and 60 percent of the crocidolite in South Africa In addition to its mining operations Cape had five factories in England and others in France Italy and South Africa By 1974 Cape's subsidiaries sold its asbestos in the United States Germany Belgium India Sweden and New Zealand There is no question that Cape's operations were sprawling There is also no question that Cape was aware of the hazards associated with breathing asbestos dust by the early 1930s Dr. Barry Castleman a chemical engineer and researcher specializing in health issues has spent the last several decades working with public interest groups on the control of asbestos and chemical hazards His research into Cape indicates that when the U.K. Factory Inspectorate moved to develop regulations for the asbestos industry following the issuance of the first survey of the prevalence of asbestosis in asbestos factory workers government Ex 35 Expert Report Barry Castleman Nov. 8 2024 Castleman Report at 3 50 Id citing Ex 36 Cape_Receiver_013187 Cape_Receiver_00133187 Cape_Receiver_00133187 51 Id 23 engineers met with representatives of the three largest UK asbestos companies including Cape The U.K. Asbestos Industry Regulations took effect in 1933.5 Cape's participation in these discussions with the government came at the same time as health officials and the popular press reported on employees of the Cape Barking plant in East London who were suffering and dying from asbestosis and lung cancer at rates well above general population levels Cape had the technical know to understand the medical literature with doctors and other medical advisers on staff Through NAAC Cape nevertheless continued mining and selling amosite and crocidolite asbestos to an expanding client list in the United States and elsewhere well into the late 1970s.5 b Cape Had Every Reason to Cover Up the Knowledge of Asbestos Hazards Information demonstrating the hazards associated with asbestos threatened Cape's survival While Cape returned a dividend to its shareholders in excess of twenty per cent per annum in each year from 1950 to 1965 its most bountiful years were the two decades until 1976 i.e. the period after medical research had established conclusively the dangers of exposure to 52 Id at 1 53 Id 54 Id a 55 Id at 3 noting Dr. Wyers who worked for Cape until his death in 1956 published report of his findings in 115 fatal cases He noted that an excess mortality from cancer of the lung and pleura in cases of asbestosis had been reported by the UK Factory Inspectorate 13.2 compared with 1.32 in silicotics and that German authors had written about asbestos causing pulmonary cancer too In his series 17 out of 115 14.8 died from cancers of the lung and pleura Ex 37 Asbestosis Postgrad Med J. Dec. 1949 Cape_Receiver_00193212-9 The rate of pulmonary cancer at autopsy in the general population was about % 56 See Ex 38 NAAC Customer Lists Cape_Receiver_0138265-82 Cape_Receiver_00138265-82 Cape_Receiver_00138265-82 24 crocidolite and amosite Facing the expanding body of medical research demonstrating the dangers of the products it sold Cape determined the best path forward was an extensive cover both in South Africa and in the United States This was carefully executed primarily by two Cape insiders Dr. Walter Smither and Dr. Richard Gaze i Dr. Walter Smither's cover of the Pneumoconiosis Research Unit PRU Investigation Dr. Walter Smither was Cape's senior medical officer beginning in the 1950s He attended almost every major international conference regarding the health hazards of asbestos between 1960 and 1972,58 gaining state of the art knowledge on asbestos and its associated health risks As a result of this knowledge he was the ideal candidate to travel to South Africa on behalf of Cape in June 1962. Just two months earlier the South African PRU published a field study of the North Western Cape and at Penge in the Transvaal which detailed the rates of asbestosis and cancer among asbestos mine workers in the area The report made the following statement based on proven fact an alarmingly high number of cases with mesothelioma of the pleura have been discovered among people who live or who have lived in the North Western Cape area and that there is evidence to suggest that this condition is associated with exposure to asbestos dust inhalation which need not be industrial Dr. Smither visited Prieska site of one of Cape's asbestos where he described the conditions around and about the mill are not good and it was obvious that quite a cloud of 57 Ex 39 Jock McCulloch Women Mining Asbestos in South Africa 1893-1980 29 J. S. AFR STUD 2 Jun 2003 at Cape_Receiver_024845 Cape_Receiver_00248445 Cape_Receiver_00248445 58 Ex 40 Attendance at Conferences Etc. 1959-1972 at Cape_Receiver_013479 Cape_Receiver_00133479 Cape_Receiver_00133479 59 Ex 41 Pneumoconiosis Research Unit Report on the Progress of the Mesothelioma Survey Apr. 30 1962 at Cape_Receiver_024846 Cape_Receiver_00248466 Cape_Receiver_00248466 25 dust was being produced and blown away by a fairly strong wind toward the town After local doctors advised Smither they had 10 active mesothelioma patients Smither insisted that those patients be moved to Johannesburg at Cape's cost According to Smither he advantage from the standpoint of the company is that these cases will be treated as a group will be removed from the area of conflict if one may call it that and taken some hundreds of miles away As Dr. Castleman explains Smither was concerned that discovery or documentation of so many cases in the Prieska hospital could further establish the lethality of crocidolite The removal of the 10 Prieska patients was contrary to their best interests They would endure a painful and frightening trip be removed from their families who could not afford to go to Johannesburg and there was no treatment for mesothelioma Dr. Smither ultimately recommended that Cape suspend its support of the PRU Surveys My recommendation would be that the company should not support any future ranging survey of the industry with a view to discovering either asbestosis or mesothelioma The reason for this is that the company is well aware of the problem and has already some idea of its extent Following this recommendation the PRU conducted no further asbestos surveys ii Dr. Richard Gaze's cover of the harm caused by amosite asbestos Dr. Richard Gaze an employee of Cape beginning in 1943 served as Cape's Chief Scientist and was an executive director of Cape beginning in 1961. He also served on NAAC's 60 Ex 42 Visit to South Africa by W.J. Smither Aug. 1962 Smither Report at Cape_Receiver_00248283 Cape_Receiver_00248283 Cape_Receiver_00248283 61 Ex 35 Castleman Report at 5 62 Id 63 Id 64 Ex 42 Smither Report at Cape_Receiver_00248286 Cape_Receiver_00248286 Cape_Receiver_00248286 26 board of directors and was spokesperson for the Asbestosis Research Council which eventually purported to collaborate with the Environmental Services Laboratory of Cape Industries Limited set up by Cape in 1970 on monitoring techniques for asbestos dust As Cape's Chief Scientist Gaze was responsible for educating customers on Cape's products When Dr. Irving Selikoff produced a landmark 1964 study warning that all the construction trades that worked alongside the insulators shared their risk even the supervising architect Gaze worked to distinguish Cape's asbestos fibers from that which already was 65 identified as causative of disease and death By March 1966 Gaze formulated Cape's response to valid concerns generated by Selikoff's report which he characterized as a scare whether or not one accepts all of the clinical and statistical evidence concerning mesothelioma and its association with asbestos it is a fact that not one authenticated case of mesothelioma has been associated with exposure to amosite anywhere in the world In August 1966 the foregoing articulation became the company line to be used by Cape's salespeople There was one problem with Gaze's statement it was false and he knew it Gaze had spent seven years working at the Cape Barking plant in East London along with the plant manager Anthony Mendelle who described Gaze as a very close colleague At a 1984 trial in Pennsylvania Mr. Mendelle testified that in his time at the factory between 1956 and 1968 65 Ex 35 Castleman Report at 7 66 Ex 43 Letter from R. Gaze to R. Cryor Mar. 22 1966 at Cape_Receiver_013402-3 Cape_Receiver_00134022-3 Cape_Receiver_00134022-3 emphasis in original 67 See Ex 44 Confidential Memo Aug. 19 1966 at Cape_Receiver_013400 Cape_Receiver_00134000 Cape_Receiver_00134000 The same careful research to which I have referred has so far revealed not one case of mesothelioma associated with exposure to amosite asbestos 27 Barking factory workers who worked in the amosite department were diagnosed with mesothelioma Q. Mr. Mendelle with respect to the Caposite department where I think you testified amosite was used exclusively were there any mesothelioma cases that came out of that department A. Yes many Cape knew amosite asbestos caused mesothelioma This and other concerns related to asbestos hazards ultimately led to Cape closing the Barking plant in 1968.6 2 Charter Cape and NAAC Perpetrated a Fraud on the U.S. Market Cape knew that asbestos was harmful decades before it established NAAC in the United States in 1953. That knowledge only deepened after it established NAAC even as it experienced record sales of amosite and crocidolite fiber in the United States Cape grew increasingly aware that people working at and living nearby its South African mines were developing and dying from mesothelioma and that workers in the amosite portions of its Barking plant in East London were dying of mesothelioma and other asbestos diseases Despite its longstanding understanding of the serious health hazards associated with asbestos including mesothelioma and death Cape suppressed this information rejected initial consideration of a warning label lobbied government agencies to accept less onerous standards and made misleading public statements 68 Ex 45 Trial Testimony of A. Mendelle Nov. 13 1984 at Cape_Receiver_00116253 Cape_Receiver_00116253 Cape_Receiver_00116253 69 Id at Cape_Receiver_016235-6Cape_Receiver_00116235-6 Cape_Receiver_00116235-6 Q. Mr. Mendelle you said you closed the Barking plant in 1968 is that correct A. Yes Q. Do you know the reasons for that plant being closed A. Yes Q. Did you close it or did you have orders to close it A. I made recommendations to close it Q. Why was the recommendation made A. Because of the high incidence of asbestosis and death in the factory 28 minimizing the risk of asbestos And it continued to sell its products to the U.S. market through its agent NAAC It was only after Cape risked exposure to U.S. litigation that it considered leaving the U.S. market Even when it closed NAAC's doors though Cape could not resist the opportunity to sell asbestos to U.S. companies To avoid tort liability Cape created a new sales company with a Liechtenstein parent company a Cape Engaged in a Purposeful Scheme to Insulate Itself from Liability While Continuing to Take Advantage of the U.S. Market Following the federal Fifth Circuit's landmark 1973 decision in Borel v Fibreboard Paper Products Corp. 493 F.2d 1076 the threat of litigation was looming in the United States The threat was made more real the following year when Cape was sued by William Morris and more than 400 other asbestos workers in what became known as the Tyler Texas Action This U.S. litigation precipitated a flurry of communications between Cape and NAAC regarding the future of NAAC and a concerted effort to insulate Cape from liability June 1975 it is possible that we may wish to do something to change the identity of NAAC in order to avoid exposing the company unnecessarily At the same time I am determined to do everything possible to maintain a successful selling operation in the United States 70 See Ex 46 Haroon Siddique UK Asbestos Maker Withheld Information on Material's Risks Court Papers Show Mar. 20 2022 https://www.theguardian.com/uk-news/2022/mar/20/uk- information show 20clearly 20Cape.father 20have 20their 71 Ex 47 David Burnham Asbestos Workers Illness Their May Change Health Standards N.Y. Times Dec. 20 1977 at Cape_Receiver_0248287-93 Cape_Receiver_00248287-93 Cape_Receiver_00248287-93 72 Ex 48 Letter from Gaze to Morgan June 20 1975 at Cape_Receiver_00133112 Cape_Receiver_00133112 Cape_Receiver_00133112 thought I should send this to your home address so as to avoid unnecessary speculation in the office 29 June 1975 we feel that it may be advisable to change the identity of NAAC in an attempt to limit its and Cape's exposure to future U.S. litigation July 4 1975 to avoid future Cape liability for NAAC Gaze and Higham resigned from the NAAC board Tony Penna has recommended that it would be as well for Mr. Higham and me to resign from these and other boards which could conceivably be involved in future actions You will understand that the reason for this is to dissociate the Parent Company as fully as possible from the operating companies and that it does not imply any change whatever in the method of operation or the present responsibilities of individuals concerned including yourself July 1975 Tony Penna sends Gaze and Higham's resignation letters to Max Meyer noting we feel that it would be a sensible precaution against Cape involvement in any future proceedings for Mr. Higham and Dr. Gaze to resign from the N.A.A.C. Board October 3 1975 Max Meyer writes a detailed strategy letter to Tony Penna opening with The objective under consideration is an attempt to limit NAAC's and Cape's exposure to future United States litigation and going on to discuss the potential liquidation of and replacement for NAAC Indeed in connection with that personal injury action Cape and NAAC ultimately entered into a $ million settlement in litigation with NAAC contributing 100,000 toward settlement But rather than take responsibility for their tortious conduct the Tyler Texas litigation prompted Cape 73 Ex 49 Letter from A. Penna to M. Meyer June 25 1975 at Cape_Receiver_0 13 1 6-7 Cape_Receiver_00133116-7 Cape_Receiver_00133116-7 observing that if Cape Canada were to replace NAAC we would probably change the name and ensure that shareholding was held through another seemingly unconnected subsidiary such as Amosa Ultimately Cape elected not to use Cape Canada but did use a seemingly unconnected subsidiary in Lichtenstein called Associated Mines Company to escape detection and exposure see infra 74 Ex 50 Letter from R. Gaze to C. Morgan July 4 1975 at Cape_Receiver_013328 Cape_Receiver_00133328 Cape_Receiver_00133328 75 Ex 51 Letter from A. Penna M. Meyer July 15 1975 Cape_Receiver_00133347 Cape_Receiver_00133347 Cape_Receiver_00133347 76 Ex 52 Letter from M. Meyer to A. Penna Oct. 3 1975 at Cape_Receiver_013925-30 Cape_Receiver_00133925-30 Cape_Receiver_00133925-30 77 See Ex 52 Deposition of M. Meyer Mar. 24 1981 at Cape_Receiver_0098328 Cape_Receiver_00098328 Cape_Receiver_00098328 In addition to the 100,000 from NAAC Cape contributed 1,000,000 and NAAC's insurers contributed 4,000,000 See Ex 53 Deposition of A. Penna Mar. 14 1988 at Cape_Receiver_00132204 Cape_Receiver_00132204 Cape_Receiver_00132204 Cape admitted that some insurance was still available and that it was in the best interest of Cape companies other than NAAC to not respond to new litigation See Ex 54 Cape_Receiver_00127912Cape_Receiver_00127912 Ex 55 Cape_Receiver_012785Cape_Receiver_00127885 30 to liquidate NAAC create a new disguised U.S. company to continue its U.S. operations and openly refuse to participate in future U.S. litigation A single tort case against Cape was enough to begin the process of extracting Cape from the U.S. market NAAC was liquidated effective January 31 1978.79 Existing commercial debts were paid with any remaining assets transferred upstream to NAAC's direct parent company at the time Cape Industries Overseas Ltd. U.K. entity wholly owned by Cape Industries Ltd. formed in 1975 to create the appearance of separation As part of its overall scheme and in light of Cape's funneling of cash from NAAC to overseas entities over many years NAAC's assets at liquidation were minimal especially when compared to the total wealth of Cape and the broader Oppenheimer empire.81 empire.81 NAAC's liquidation was central to Cape's avoidance strategy based on legal 78 Ex 56 Dec. 23 1975 Correspondence from S. Milwid to A. Penna Dec. 23 1975 at CapeReceiver_00127259-61 A memorandum laid out that a new corporate arrangement is being made concerning entities which will sell asbestos to purchases in the Western Hemisphere and that the purpose of doing so is to eliminate or reduce as much as much exposure as possible See Ex 57 Memo from M. Meyer to A. Sarabia Jan. 23 1978 at Cape 00133618-20 79 See e.g. Ex 58 Letter from J. Holtze to J. Sparkes Apr. 19 1978 at Cape_Receiver_0 134134 Cape_Receiver_00134134 Cape_Receiver_00134134 April 1978 letter noting liquidation and requesting for safety's sake that Cape officials stop sending accounting memoranda to former NAAC officials 80 See Ex 59 Memo from M. Grear to M. Meyer Dec. 30 1980 at noting conveyance of assets Ex 58 Letter from J. Holtze to Cape Receiver 00127204 noting new entity Cape_Receiver_0127960-62 Cape_Receiver_00127960-62 Cape_Receiver_00127960-62 M. House Oct. 7 1975 at 81 See e.g. Ex 54 Letter from A. Penna to M. Meyer Mar. 23 1979 at Cape_Receiver Cape_Receiver 00127912 Cape counsel writing in 1979 with respect to whether the remaining assets in the NAAC liquidating trust should be written off soon after its creation see also Ex 60 Letter from S. Milwid to A. Penna Mar. 7 1979 at Cape_Receiver_0 127909 Cape_Receiver_00127909 Cape_Receiver_00127909 1979 correspondence noting that NAAC's auditor agree that the potential loss of all NAAC's outstanding assets is not material in the Cape Group context capitalization altered Ex 61 Letter from S. Milwid to C. Morgan May 24 1978 at Cape_Receiver_0 1278 2Cape_Receiver_00127882 Cape_Receiver_00127882 1978 correspondence noting judgment non- enforceability and auditor advice to Cape that the loss of NAAC's outstanding assets is not material in the Cape Group context 31 advice that no British or South African court would enforce a judgment against a Cape entity if it never appeared again in the United State8s2 At the same time the Oppenheimer entities fixated on maximizing profits schemed to continue selling Cape asbestos many other Charter products in the United States Their scheme which included establishing a Lichtenstein invoicing company allowed the 82 See e.g. Ex 56 Letter from S. Milwid to A. Penna Dec. 23 1975 at CapeReceiver_00127259-61 1975 legal letter advising Cape on judgment risk Ex 55 Memo S. Milwid to A. Penna May 24 1978 at Cape_Receiver_0 1278 5 Cape_Receiver_00127885 Cape_Receiver_00127885 1978 memorandum agreeing that it would be in the best interests of Cape companies other than NAAC to make no response to litigation Ex 62 Memo S. Milwid to E. Burkholder Nov. 28 1984 at Cape_Receiver_00128026-8Cape_Receiver_00128026-8 summarizing 1984 deposition testimony regarding litigation strategy 83 The decision to liquidate NAAC occurred notwithstanding consistent years of record profits from Cape's sale of asbestos fiber in the United States See e.g. Ex 63 Charter Annual Report 1976 at Cape_Receiver_00075720 Cape_Receiver_00075720 Cape_Receiver_00075720 Cape_Receiver_0075751-52 Cape_Receiver_00075751-52 Cape_Receiver_00075751-52 reporting 10.2 million of operating profit in spite of difficult trading conditions with the greatest increase in improved profit arising in the mining division which raised total tonnage both mined and sold even despite substantial price increases Ex 064 Charter Annual Report 1977 at CapeReceiver_00075769 -75773 reporting another record year from Cape with tax profit of 14.2 million with the mining division again perform exceptionally well 84 Ex 065 J. Clarke Deposition Apr. 21 1983 at Cape_Receiver_010736-7 Cape_Receiver_00100736-7 Cape_Receiver_00100736-7 See Ex 53 Testimony of A. Penna Mar. 14 1988 at Cape_Receiver_00132232 Cape_Receiver_00132232 Cape_Receiver_00132232 discussing Cape board meeting minutes from November 1 1977 Penna testified It is clearly indicated in paragraph 9 that there was to be a reorganization of the selling arrangements following from the liquidation of NAAC 32 Oppenheimers to continue to profit from the lucrative U.S. market while hiding themselves from future U.S. asbestos plaintiffs In short it was profits over people Cape even disguised its scheme from NAAC's president Charles Morgan He testified that he was not made aware of the decision to close NAAC until the decision had been made " remember it well I don't remember the exact date but I remember it well I think it was in late October of 1977. I was called down to Lord Bissell & Brook and a Dr. Gaze who was visiting took me into a private room and gave me the big news It was my very first indication . . . He said that they had elected to discontinue distributing asbestos in this market and that they were liquidating NAAC When Dr. Gaze told Morgan that his employment was being terminated Gaze was not in any executive position nor was he a member of the board of directors of NAAC The news similarly came to Joan Holtze NAAC's corporate secretary as an utter and absolute shock out of the blue 86 Due to the rising threat of civil litigation against Cape for its tortious and fraudulent conduct in hurting U.S. citizens in 1975 Cape and its lawyers had to do something to change the identity of NAAC in order to avoid exposing Cape Industries Ex 48 Letter from R. Gaze to C. Morgan June 20 1975 at Cape_Receiver_00133112 Cape_Receiver_00133112 Cape_Receiver_00133112 See also Ex 53 Testimony of A. Penna Mar. 14 1988 at Cape Receiver_00132249 Receiver_00132249 Q. With respect what Cape wanted was to have the benefits of a presence in the United States of America without it being recognized and hence the camouflage A. That is an inference you could make if you chose to make it . Q. What would be the would enquirer one was trying to disguise it from A. The Would enquirer could potentially be plaintiffs in future U.S. asbestos litigations 87 Indeed NAAC could have purchased additional insurance had the resources doing so was viewed as too expensive See Ex 132 Minutes of Annual Meeting of Directors of North American Asbestos Corporation Apr. 28 1977 at Cape_Receiver_0 13 8 3 Cape_Receiver_00133883 Cape_Receiver_00133883 see also Ex 53 Excerpts of Testimony of A. Penna Mar. 14 1988 at Cape_Receiver_00132233 Cape_Receiver_00132233 Cape_Receiver_00132233 As the shareholder in NAAC Cape certainly did not want to be putting more and more money into NAAC to fight legal claims if the insurers were not handling them and bearing in mind NAAC's revenues which were not large 88 Ex 66 Deposition of C. Morgan Feb. 20 1981 at Cape_Receiver_009596 Cape_Receiver_00095966 Cape_Receiver_00095966 89 Ex 33 Deposition of C. Morgan Oct. 31 1980 at Cape_Receiver_009608 Cape_Receiver_00096088 Cape_Receiver_00096088 90 Ex 25 Deposition of J. Holtze Nov. 7 1980 at Cape_Receiver_0097943 Cape_Receiver_00097943 Cape_Receiver_00097943 33 Anthony Penna house counsel for Cape with other senior roles in the Oppenheimerrelated companies orchestrated the plan to have Morgan open a new Continental Products Corporation CPC perform the same facilitation services for Cape that NAAC had previously performed with only a difference in form It was plug and play pure and simple CPC's offices were in the same building as NAAC had previously had its offices North American Asbestos was on the 29th floor and Continental Products Corporation took a lease on the 12th floor All of the NAAC filing cabinets that had been on the 29th floor had moved to the 12th floor and all of the NAAC employees Holtze Jean Canzoneri and Sue Purrington with Charles Morgan to CPC.93 CPC also took over the NAAC employees pension plan Joan Holtze testified that she sat at the same physical desk at CPC as she had when she worked for NAAC Even before NAAC closed Morgan reached out to customers to let them know of the formation of CPC thereby ensuring a seamless sales transition between the companies.96 To ensure 91 Ex 53 Testimony of A. Penna Mar. 14 1988 at Cape_Receiver_00132247 Cape_Receiver_00132247 Cape_Receiver_00132247 It was a difference in form and as I have said the Morgan company new company CPC did carry on very much the same role that NAAC had carried on in trading terms id at Cape_Receiver_00132236Cape_Receiver_00132236 Our mining companies wished to continue selling asbestos in the United States yes . There needed to be an organization which could liaise with the customers id at Cape Receiver_00132247 Receiver_00132247 Certainly Howard Tanner the Sales Director of the South African mining companies was extremely keen to ensure that sales to America that is there could be some continuation of sales to American customers 92 Ex 66 Excerpts of Deposition of C. Morgan Feb. 20 1981 at Cape_Receiver_009591 Cape_Receiver_00095991 Cape_Receiver_00095991 93 Id at Cape_Receiver_009592-3 Cape_Receiver_00095992-3 Cape_Receiver_00095992-3 94 Id at Cape_Receiver_00096066 Cape_Receiver_00096066 Cape_Receiver_00096066 95 Ex 67 Deposition of J. Holtze Apr. 12 1979 at Cape_Receiver_0097838-9 Cape_Receiver_00097838-9 Cape_Receiver_00097838-9 96 Ex 66 Deposition of C. Morgan Feb. 20 1981 at Cape_Receiver_0 09602 Cape_Receiver_00096022 Cape_Receiver_00096022 advised them that North American Asbestos was being liquidated it was no longer to be in the position to supply them with fiber I had made a connection where I thought I could supply them with fiber I would 34 the success of the new venture Morgan testified that CPC received a 12,000 check are from North American Asbestos to start the company Once Morgan agreed to establish CPC Cape's lawyers at Lord Bissell drew up the incorporation documents.98 Rather than establishing a direct connection between the newly formed CPC and a named company Penna spearheaded the creation of a Liechtenstein company Associated Minerals Corporation AMC a seemingly unrelated entity which was in truth an Oppenheimer subsidiary As Penna described everyone was concerned whether they were mining companies or Cape Industries or any company that was a party to these sales should not by its actions put either the mining companies or Cape at risk The Lichtenstein company was a separately constituted company but it certainly had no direct employees of its own . . . It was primarily an invoicing company Cape's fingerprints were all over the deal Confronted with evidence Penna was forced to admit Yes it seems to be contemplated that Cape Asbestos Fibres would subscribe the initial capital like their consideration very much ; Ex 66 Deposition of C. Morgan Feb. 20 1981 at Cape Receiver_00096003 Receiver_00096003 Cape_Receiver_0096063-4 Cape_Receiver_00096063-4 Cape_Receiver_00096063-4 Q. When Tony Penna contacted you on behalf of the Lichtenstein corporation you knew did you not in fact he was actually contacting you on behalf of Cape Asbestos A. No Sir I did not know that id at Cape_Receiver_00096064 Cape_Receiver_00096064 Cape_Receiver_00096064 Q. Do you know who owns the Lichtenstein corporation A. No Sir Q. Has anyone ever suggested to you that Cape Asbestos has some ownership in the Lichtenstein corporation Associated Minerals Corp. A. Definitely not Q. has anyone ever suggested to you that any of the principals of Cape Asbestos had some interest in that Liechtenstein corporation A. No Sir 97 Ex 66 Deposition of C. Morgan Feb. 20 1981 at Cape_Receiver_000Cape_ReceiverC_ape_0Rece0iver_00 0 96000 8 Id Cape_Receiver_000Cape_ReceiverC_ape_0Rece0iver_00 0 95988 Q. Who drew the Articles of Incorporation A. Mr. Max Meyer At least I asked him to do this work for me Who actually did the work I couldn't say 99 Ex 53 Excerpts of Testimony of A. Penna Mar. 14 1988 at Cape_Receiver_013246 Cape_Receiver_00132246 Cape_Receiver_00132246 100 Id at Cape Receiver_00132239-40 Receiver_00132239-40 101 Id 35 While Cape averred that Morgan was well aware of the connection to Cape in reality the true scheme was on a know basis and Morgan did not need to know anything He was simply Cape's U.S. puppet Morgan testified that Tony Penna said he was the attorney representing Associated Minerals Corporation Morgan testified that he did not know that Penna was contacting him on behalf of Cape He did not know who owned AMC and no one had suggested to him that there was a relationship between Cape and 105 In this way Cape escaped liability but continued selling asbestos fibers to virtually the same contact list using a shell game and companies in Liechtenstein and South Africa to conceal any connection between it and the United States b Charter Participated in the Fraud Cape of course did not act in a vacuum It was part of the Oppenheimer Group System and was the profit generating center of Charter Charter relied on Cape for dividends and service fees the payment of which were premised on Cape making a profit Importantly Charter was a 102 Id at Cape_Receiver_00132215 Cape_Receiver_00132215 Cape_Receiver_00132215 Q. And also the reason why you did not wish the new arrangements related to Cape's involvement in setting up CPC to become publicly known A. Yes I did I think that it probably omitted one additional reason - that certainly Mr. Morgan in his new entity would not have wanted it to be disclosed that he was dealing with a company that was still related to Cape 103 Ex 66 Deposition of C. Morgan Feb. 20 1981 at Cape_Receiver_009603 Cape_Receiver_00096003 Cape_Receiver_00096003 104 Id at Cape Receiver_00096063-4 Receiver_00096063-4 Q. When Tony Penna contacted you on behalf of the Lichtenstein corporation you knew did you not in fact he was actually contacting you on behalf of Cape Asbestos A. No Sir I did not know that 105 Id at Cape_Receiver_0 096064 Cape_Receiver_00096064 Cape_Receiver_00096064 Q. Do you know who owns the Lichtenstein corporation A. No Sir Q. Has anyone ever suggested to you that Cape Asbestos has some ownership in the Lichtenstein corporation Associated Minerals Corp. A. Definitely not Q. Has anyone ever suggested to you that any of the principals of Cape Asbestos had some interest in that Liechtenstein corporation A. No Sir 36 holding company which conducted virtually all of its business through subsidiaries like Cape and 106 the Charter made money through dividends and the like from such investments Cape's board whose membership included Charter employees was made aware of the progress of the Tyler Texas litigation against Cape and of Cape's decisions related to its continued sale of asbestos in the United States Geoffrey Higham who served as both a Cape board member and a Charter employee as well as a Cape employee and a NAAC board member at various points testified at deposition that he was aware plans were being made to continue to sell asbestos in North America as soon as NAAC closed " mean clearly I would have known generally that it was being done and it was clearly necessary that it should be done He further testified think all of this is entirely consistent with Cape's position that it did not feel liable for damage to people in the United States caused by asbestos which it had supplied through subsidiaries but felt that employers here should be picking up that tab Equally I think Cape felt that the supply of asbestos was not of itself an iniquitous thing to do since if handled properly it is not dangerous At another deposition ten years later Higham testified as follows w didn't like the rules we didn't think that it was a reasonable burden to place upon a supplier of material that he should control how the material was used We thought we still think I feel very strongly that it was a totally ridiculous way of proceeding and so we withdraw We say fine we don't like the rules we don't like that playing field so we won't have any more to do there 106 Ex 68 Deposition of G. Higham Oct. 17 1986 at Cape_Receiver_0096909 Cape_Receiver_00096909 Cape_Receiver_00096909 107 Id at Cape_Receiver_0 096935 Cape_Receiver_00096935 Cape_Receiver_00096935 108 Id at Cape_Receiver_0 096936 Cape_Receiver_00096936 Cape_Receiver_00096936 109 Ex 68 Deposition of G. Higham Oct. 24 1996 at Cape_Receiver_0097120 Cape_Receiver_00097120 Cape_Receiver_00097120 This testimony was consistent across Cape's board of directors See e.g. Ex 10 Deposition of F. Howard Nov. 13 1980 at Cape_Receiver_010178-9Cape_Receiver_00100178-9 Cape_Receiver_00100178-9 think it was something along the lines that there were cases against the company which would eventually exhaust its funds and therefore there was no further purpose in continuing the company's operations Ex 69 Deposition of A. Hepper Oct. 37 Indeed Charter reported on Cape's liability avoidance scheme in its 1982 Annual Report Cape has received legal advice that default judgments in certain of which plaintiffs have been granted damages totalling approximately US million and any other judgments obtained in the United States in such actions against Cape group companies will not be enforceable in the United Kingdom The directors believe in light of legal advice received that the outcome of all the actions against Cape and Charter and the obligations retained by Cape are unlikely to have any material effect on Charter's financial position and accordingly no provision for them has been made C. Cape Pivots to Asbestos Abatement In 1982 Cape purported to cease all manufacturing of asbestos products Cape then made the incredible about into sbestos management and removal leveraging its history of dominance in asbestos manufacturing and distribution It later evolved into a scaffolding company primarily for the oil and gas industry.11 F. Altrad and ESAB Acquire Cape and Charter Respectively Although neither individually was present for the initial decision to perpetrate the liability avoidance scheme that has worked a fraud on the U.S. market both Altrad and ESAB benefitted 6 1986 at Cape_Receiver_0 095 47 Cape_Receiver_00095547 Cape_Receiver_00095547 " don't think the company were in a - the company felt that they were not responsible for other people's employees They were responsible for employees in the United Kingdom and they were adopting a responsible attitude in that regard They were not in a position financially to withstand claims the size that were being mounted in the United States 110 Ex 70 Charter Annual Report 1982 Cape_Receiver_00076050 Cape_Receiver_00076050 Cape_Receiver_00076050 111 Ex 71 Cape_Receiver_024898-9 Cape_Receiver_00244898-9 Cape_Receiver_00244898-9 Cape Website Our History May 17 2013 available at https://web.archive.org/web/20130517130040/http:/www.capeplc.com/about-cape/ourhistory.aspx last visited Nov. 8 2024 112 Ex 72 Cape Receiver_00244891-2 Receiver_00244891-2 Cape Website Our Services Insulation Oct. 20 2012 available at https://web.archive.org/web/20121020173812/http://www.capeplc.com/services- insulation.aspinsulax tion.aspx last visited Nov. 8 2024 113 Ex 71 Cape Receiver_00244898-9 Receiver_00244898-9 Cape Website Our History May 17 2013 available at https://web.archive.org/web/20130517130040/http:/www.capeplc.com/about-cape/ourhistory.aspx history.aspx last visited Nov. 8 2024 38 from and bear responsibility for that decision well as for the litigation avoidance scheme that they actively continue today including in this action 1. The Altrad Owners Acquired 100 ofCape and Are Responsible for Cape Since 2017 Cape has been part of the Altrad Group a described world leader in industrial services with a turnover of 5 billion per year In particular on or around October 9 2017 AIA through Altrad UK Ltd. controlling Cape UK Holdings Newco Ltd. acquired Cape for 332 million and has controlled it since that time AIA the head of the Altrad Group purchased Cape through its wholly owned subsidiary the defaulted Third Defendant Altrad UK Ltd. which ) was incorporated in June 2017 for the purpose of acquiring Cape ii acts as a wholly owned subsidiary of AIA that has been financed by AIA through a current account and iii also proceeded to refinance Cape's debt as part of the acquisition AIA publicly touted the acquisition of Cape as an exceptional opportunity to acquire one of the world's leading providers of services to industry The Altrad Group thus Cape controlled by its President and Founder Mohed Altrad the called Scaffolding King who was convicted of corruption charges in a French 114 Ex 73 Correspondence from Winston & Strawn London LLP to Peter D. Protopapas at 2 Aug. 30 2024 115 Ex 74 Altrad Annual Report 2017 at Cape_Receiver_0 040530 Cape_Receiver_00040530 Cape_Receiver_00040530 The acquisition of Cape PLC shares was carried out through the intermediary holding company Altrad UK a wholly owned subsidiary of AIA and financed by AIA through a current account see id at Cape_Receiver_00040529 Cape_Receiver_00040529 Cape_Receiver_00040529 116 Ex.75 Certificate of Incorporation of a Private Limited Company Altrad UK Limited June 1 2017 at Cape_Receiver_0185738-72 Cape_Receiver_00185738-72 Cape_Receiver_00185738-72 identifying AIA as owner of all shares and Mohed Altrad as sole Individual Person with Significant Control and as Company Director 1 and Chairman Ex 74 Altrad Annual Report 2017 at Cape_Receiver_0040530-1 Cape_Receiver_00040530-1 Cape_Receiver_00040530-1 Reuters Altrad Investment to Buy UK Oil Services Firm Cape for 332.2 Mln Pounds July 7 2017 https://www.reuters.com/article/cape-ma-altrad-investment/altrad-investment-to-buy-uk-oilservices idUSL4N1JY2KG 117 Ex 74 Altrad Annual Report 2017 at Cape_Receiver_00040529 Cape_Receiver_00040529 Cape_Receiver_00040529 39 court in 2022.118 Upon Altrad UK Ltd.'s formation in 2017 for the purpose of the acquisition of Cape and continuing after the acquisition Mr. Altrad was director of Altrad UK Ltd. and later a director of Cape UK Holdings Newco Ltd. and Cape Industrial Services Group Ltd. Indeed in the year the Altrad Group acquired Cape Mr. Altrad ld 77.78 of the Altrad Group's shares Since AIA's acquisition of Cape Mr. Altrad's control has only grown The annual reports of Altrad UK identifies AIA as being controlled by Dr M Altrad Further as of September 30 2023 Mr. Altrad controlled 97.60 of the Altrad Group Altrad purchased Cape fully aware of Cape's asbestos liabilities When Altrad purchased Cape in 2017 it stated its intention to ensure that members of the Cape Group continued 118 See Ex 76 Altrad Annual Report 2022 at Cape_Receiver_00040825 Cape_Receiver_00040825 Cape_Receiver_00040825 see also Ex 77 Gaspard Sebag & Tara Patel Billionaire Scaffolding King Guilty of Bribing Rugby Boss Bloomberg Dec. 13 2022 reporting Mr. Altrad's 2022 conviction of bribery influence peddling and misuse of corporate assets charges punished with an month suspended jail term and 50,000 fine htps:/w.blomberg.com/news/articles/202-12-13/scafolding-bilionaire-https://www.bloomberg.com/news/articles/2022-12-13/scaffolding-billionaire- sponsorship 119 Ex 75 Certificate of Incorporation of Altrad UK Ltd. June 1 2017 at Cape Receiver_00185738 Receiver_00185738 showing creation of company one month prior to media reports of Cape takeover Ex 74 Altrad Annual Report 2017 at Cape_Receiver_00040530 Cape_Receiver_00040530 Cape_Receiver_00040530 The acquisition of Cape PLC shares was caried out through the intermediary holding company Altrad UK a wholly owned subsidiary of AIR and financed by AIA modified from all caps see also Ex 78 Termination of a Director Appointment of Altrad UK Ltd. Nov. 11 2017 CapeReceiver_00185779 Ex 79 Termination of a Director Appointment of Cape UK Holdings Newco Ltd. Oct. 29 2020 Cape_Receiver_00187939 Cape_Receiver_00187939 Cape_Receiver_00187939 Ex 94 Termination of a Director Appointment of Cape Industrial Services Group Ltd. Oct. 29 2020 Cape_Receiver_00187592 Cape_Receiver_00187592 Cape_Receiver_00187592 120 Ex 74 Altrad Annual Report 2017 at Cape_Receiver_00040519 Cape_Receiver_00040519 Cape_Receiver_00040519 121 Ex 80 Altrad UK Ltd. Annual Report 2021 at Cape_Receiver_00185906 Cape_Receiver_00185906 Cape_Receiver_00185906 122 Ex 81 Altrad Annual Report 2023 at Cape_Receiver_00040879 Cape_Receiver_00040879 Cape_Receiver_00040879 123 Altrad's 2017 Annual Report acknowledged Cape's establishment pursuant to a Scheme of Arrangement of a compensation fund in 2006 for its employees who were exposed to asbestos Ex 74 Altrad Annual Report 2017 at Cape_Receiver_0040530 Cape_Receiver_00040530 Cape_Receiver_00040530 see also Ex 82 The Scheme Of Arrangement June 9 2006 Cape_Receiver_0104532-56 Cape_Receiver_00104532-56 Cape_Receiver_00104532-56 40 to fund their commitments to the Scheme of Arrangement established in 2006 the IDC Scheme to address certain asbestos liabilities Altrad has undertaken to the IDC Scheme Directors and the IDC Scheme Shareholder that whilst it intends to explore collaboratively with the IDC Scheme Directors and the IDC Scheme Shareholder subject always to the appropriate consent of the IDC Scheme Directors and the IDC Scheme Shareholder certain administrative revisions or clarifications to Cape's constitutional documents to facilitate group transactions between members of the Enlarged Group postAcquisition and to assist financial reporting following the Acquisition it intends to procure that each member of the Cape Group honours its obligations under or in connection with the IDC Scheme including with respect to the funding commitments for future liabilities of the IDC Scheme the current IDC Scheme administrative arrangements and all related contractual obligations to which members ofthe Cape Group are subject following completion ofthe Offer In the years since the acquisition Altrad has continued to acknowledge Cape's asbestos liabilities reaffirm its responsibility for them For example in its annual report for the year ended August 31 2022 Altrad Services Ltd. a member of the Altrad Group and another Third- Party Defendant against which default has been entered not only acknowledged Cape's responsibility for harm from asbestos exposure reporting that the Altrad Group had set aside 118 million to address certain non historical claims relating to asbestos exposure but also disclosed AIA's letter of support of it as a going concern That 2022 annual report stated that 124 Ex 83 Recommended Cash Offer for Cape plc Cape_Receiver_0104914-40 Cape_Receiver_00104914-40 Cape_Receiver_00104914-40 emphasis added 125 Ex 84 Altrad Services Limited Annual Report and Financial Statements for the Year Ended 31 August 2022 at Cape_Receiver_0 248438 Cape_Receiver_00248438 Cape_Receiver_00248438 The Group continues to receive claims from both individuals and insurance companies in connection with historical alleged exposure to asbestos Where claims are determined to have merit the costs are provided for and claims are settled in the ordinary course otherwise claims are defended Ex 85 Altrad Services Limited Annual Report and Financial Statements for the Year Ended 31 August 2023 at Cape_Receiver_00248371 Cape_Receiver_00248371 referring to the letter of support from AIA which confirms continuing support for the going concern period until 30 April 2025 41 AIA manages risk at a Group level and further acknowledged that any of AIA's operating environments have associated health and safety risks including Cape The Company Altrad Services Ltd. is maintaining a provision in respect of lodged and future industrial disease claims for which the Board of Directors of Cape plc believes the Group to be liable arising on alleged exposure to previously manufactured asbestos products The Altrad Group thus made a 118.1 million provision of funds to address certain non historical asbestos claims that reportedly captured all expected material industrial disease scheme liabilities for which the Board believes the Group may become liable the Provision of Funds Most recently AIA's 2023 Annual Report acknowledged its asbestos liability and affirmed its commitment to pay a limited number of claims pursuant to a court order When Altrad acquired Cape in 2017 the acquired business had well disclosed outstanding claims related to the manufacture and distribution of asbestos in the mid twentieth century and the resulting damaging health consequences of exposure leading to related industrial diseases including mesothelioma Altrad . is fully committed to settling claims that are determined to have merit pursuant to Cape's court approved mechanism for settling such claims An amount of 118 million has been paid or set aside for the settling of valid claims 126 Ex 84 Altrad Services Limited Annual Report and Financial Statements for the Year Ended 31 August 2022 at Cape_Receiver_0248391 Cape_Receiver_00248391 Cape_Receiver_00248391 127 Id at Cape_Receiver_0248392 Cape_Receiver_00248392 Cape_Receiver_00248392 128 Id at Cape Receiver_00248438 Receiver_00248438 emphasis added see also Joshua Stein Altrad Makes 118m Provision for Asbestos Claims Construction News Apr. 14 2023 Available at htps:/w.constructionews.co.uk/health-and-safety/altrad-makes-18m-provison-for- https://www.constructionnews.co.uk/health-and-safety/altrad-makes-118m-provision-for- https://www.constructionnews.co.uk/health-and-safety/altrad-makes-118m-provision-for- asbestos 20aside 20exposure 20to 20asbestos 129 Ex 81 Altrad Annual Report 2023 at Cape_Receiver_00040862 Cape_Receiver_00040862 Cape_Receiver_00040862 emphasis added This mechanism for payment of claims of course does not account for claims by U.S. plaintiffs it is limited to Cape's former U.K. employees 42 In the years since it acquired Cape AIA also has exercised operational control over Cape on issues ranging from branding reflected by its renaming of Cape entities including defaulted Third Defendant Altrad Services Ltd. k Cape Industrial Services Ltd. risk management As part of its risk management for the Altrad Group AIA has continued Cape's policy of litigation avoidance with Cape refusing to participate in litigation in the United States relating to its historic asbestos sales including in the Park lawsuit and instead accepting default 131 judgments.,, 2 ESAB Is Responsible for Charter The story of Charter is a tortured one of constant reorganizations Despite this history there is no question that ESAB a Delaware company created in 2022 holds the liability for Charter Beginning in 1994 Charter became intertwined with ESAB first with ESAB as a subsidiary of Charter and then ultimately with ESAB as Charter's parent The following is a timeline of critical events in this history 1993 Charter plc New Charter acquires all the interest of Charter Consolidated pursuant to a 1993 Scheme of Arrangemen1t32 1994 New Charter acquires all of the equity interests of ESAB AB 130 Ex 84 Altrad Services Limited Annual Report and Financial Statements for the Year Ended 31 August 2022 at Cape_Receiver_00248391 Cape_Receiver_00248391 Cape_Receiver_00248391 The Board of AIA the ultimate parent company manages risk at a Group level id at Cape00248439 Altrad Services Limited formerly Cape Industrial Services Limited 131 Ex 84 Altrad Services Limited Annual Report and Financial Statements for the Year Ended 31 August 2022 at Cape_Receiver_0 248391 Cape_Receiver_00248391 Cape_Receiver_00248391 AIA manages risk at a Group level including with respect to asbestos claims 132 Ex 86 1993 Scheme of Arrangement Aug. 18 1993 Cape_Receiver_017803-16 Cape_Receiver_00178003-16 Cape_Receiver_00178003-16 133 Ex 87 ESAB Holdings Limited Annual 1994 Report ESAB Holdings Limited was a subsidiary of ESAB AB 43 2008 Charter International Limited PubCo Charter and formerly known as Charter International PLC is formed Pursuant to a 2008 Scheme of Arrangement Pubco Charter acquires all of the equity interest of New Charter 2011 Colfax UK Holdings Ltd. a wholly subsidiary of Colfax Corporation Colfax Parent acquires all of the equity interest of Pubco Charter including Esab pursuant to an Implementation Agreement and effected by a Scheme of !? Arrangement 2021 Colfax Parent forms ESAB Corporation a Delaware corporation.1cor3porat6ion.136 2022 Colfax Parent the ultimate parent of Colfax UK Holdings completes a spin of ESAB Corporation the parent of Colfax UK and indirect parent of PubCo Charter In this spin PubCo Charter which holds the Charter liabilities spun off into ESAB Corporation When Colfax spun off ESAB Corporation as a public entity which was the parent company of Charter it agreed to assume certain liabilities of its subsidiaries and provided certain financial guarantees to its subsidiarie!*s* Indeed separation several Charter subsidiaries reported that ESAB Corporation was their ultimate parent and controlling party and that ESAB Corporation had agreed to meet all liabilities with respect to their ability to operate as going 134 Ex 88 2008 Scheme of Arrangement Cape_Receiver_0182324-31 Cape_Receiver_00182324-31 Cape_Receiver_00182324-31 135 Ex 89 Implementation Agreement dated as of September 12 2011 by and among Colfax Corporation Colfax UK Holdings LTD and = Charter International PLC Cape_Receiver_00102613-95 Cape_Receiver_00102613-95 136 Ex 90 Certificate of Incorporation of ESAB Corporation dated May 19 2021 Cape_Receiver_00185411-3 Cape_Receiver_00185411-3 Cape_Receiver_00185411-3 137 Ex 91 Separation and Distribution Agreement by and between Colfax Corporation and ESAB Corporation hereinafter Separation Agreement April 4 2022 at Cape_Receiver_00183869936. New Charter later transferred the shares of ESAB AB to ESAB Group Limited a newly formed wholly owned subsidiary which itself was later renamed Charter Overseas Holdings Limited and was the parent company of various ESAB entities until 2011 138 Ex 91 Separation Agreement 2.1 at Cape_Receiver_018387Cape_Receiver_00183887 Cape_Receiver_00183887 Transfers of Assets and Assumptions of Liabilities ESAB Assets Enovis Assets emphases added 44 concerns separation ESAB has continued the familiar liability avoidance strategy refusing to acknowledge this Court's jurisdiction over it or to participate in discovery G. Procedural History 1 This Court Appointed the Receiver When Cape Failed to Appear in an Asbestos Personal Injury Action On June 4 2021 Isabella Park filed a lawsuit in Richland County South Carolina asserting personal injury claims arising from asbestos exposure against among others Cape plc individually and as successor in interest to Cape Asbestos Company Ltd. See Compl Park v Armstrong Int'l Inc. et al No. 4002727 June 4 2021 at 1 7. Ms. Park sought relief after being diagnosed with mesothelioma caused by exposure to asbestos dust and fibers unintentionally brought home for years as a result of her husband's work with and around containing products Id at 4 On June 9 2021 less than five months after her diagnosis and within five days of filing her lawsuit Ms. Park passed away On November 17 2021 Ms. Park's son Keith amended the complaint appearing individually and as personal representative to Ms. Park's estate the Park Plaintiffs to assert a wrongful death action See First Amended Compl Park et al v Armstrong Int'l Inc. et al No. CP04002727 Nov. 17 2021 The amended complaint added Cape Intermediate Holdings Limited k Cape Intermediate Holdings PLC as a defendant though both Cape Intermediate Holdings Limited and Cape PLC referred to the same English company originally named Cape Asbestos Company Ltd. and were both identified as the successors in interest to that company Id at 9 see also id at 26-2726-27In December 2021 the Park Plaintiffs 139 See e.g. Ex 92 2022 Charter Consolidated Ltd. Report Oct. 25 2023 CapeReceiver_00172486 Ex 93 2023 Central Mining & Inv Corp. Ltd. Report Mar. 27 2024 Cape_Receiver_00172654 Cape_Receiver_00172654 Cape_Receiver_00172654 45 served the named Cape entity which as has been Cape's practice for decades never answered moved or otherwise responded After Cape failed to answer the Park Complaint Ms. Park moved for the appointment of a Receiver See Mot to Appoint Receiver March 6 2023 40-02727 Richland County On March 17 2023 this Court appointed Peter D. Protopapas as a receiver for an entity identified as Cape PLC as successor in interest to Cape Industries Ltd. k Cape Asbestos Company Ltd. pursuant to S.C. Code 15-65-10 as well as 15-65-10 in the alternative See Order Park et al v Armstrong Int'l Inc. et al No. 4002727 Mar. 17 2023 Appointment Order at 1 2. The Receiver Initiated this Party Action Against Participants to and Beneficiaries of Cape's Liability Avoidance Scheme Following his appointment the Receiver confirmed from court records and other publicly available information that Cape's failure to appear in Park was just one example of a decades liability avoidance scheme described herein Further the Receiver discovered that rather than perpetuate that scheme alone Cape's business practices were directed guided and inured to the benefit of numerous entities associated with Cape over their histories On June 30 2023 the Receiver filed the captioned action against party defendants with responsibility for Cape's fraud on the U.S. market in arising from its Cape's U.S.- based asbestos sales and associated diversion of proceeds outside of the United States and its attendant Cape's liability avoidance scheme including the Charter and Altrad Third Defendants H. The Altrad and Charter Third Party Defendants Ongoing Refusal to Participate in Discovery Results in Adverse Inferences The Altrad and Charter Third Party Defendants refusal to participate in discovery as chronicled below has limited the Receiver's ability to learn key information related to its causes 46 of action other than from publicly available sources After a series of Motions to Compel directed to the Altrad and Charter Third Defendants wholesale refusal to participate in the discovery process this Court entered adverse inferences against the Charter and Altrad Third Defendants To date the Altrad and Charter Party Defendants have made no attempt to rebut those adverse inferences 1 Trial Continued Due to Party Defendants Refusal to Participate Although originally set for a bench trial in the trial block set to commence April 15 2024 the Court was forced to continue the trial during the April 10 2024 trial hearing because of the Altrad and Charter Third Party Defendants refusal to provide any discovery to the Receiver to prepare this case for trial Order Granting Cape Receiver's Mot for Sanctions May 23 2024 see also Order Setting Trial Date June 20 2024 trial continued due to the lack of participation in the discovery process by the Charter and Altrad Third Defendants This matter was ultimately reset for trial on February 3 2025 2 This Court Enters Adverse Inferences After It Grants Two Motions to Compel Two Orders on Motions to Compel further demonstrate the Charter and Altrad Third Defendants discovery recalcitrance First on March 12 2024 this Court directed all Third Defendants " to provide responsive substantive and complete answers to the Receiver's Discovery Requests within 14 days of entry of this Order and ii to begin producing documents 141 in response to the Receiver's Requests for Production the same day among other things The Third Defendants did not meaningfully comply with this Order 140 See generally Order Granting Cape Receiver's Mot for Sanctions May 23 2024 141 Order Granting Receiver's Mot Compel Disc Resps March 12 2014 at 13 47 As result on May 23 2024 this Court granted the Receiver's second Motion to Compel This time the Court found that the only excuses offered by these Third Defendants are frivolous .... They argue that Rule 205 SCACR poses a jurisdictional bar preventing this thirdparty action from continuing because by simply appealing their denied motions to dissolve the receivership they can deprive the trial court ofjurisdiction for an indeterminate time period May 23 2024 Order at 11-12 Citing a string of orders by the South Carolina Court of Appeals and the South Carolina Supreme Court in receivership actions the Court reasoned Thus the Supreme Court and Court of Appeals have made clear categorically denial of motions to dismiss and dissolve a receivership like discovery orders are not immediately appealable Id at 12 The Court found that the Charter and Altrad Third Defendants continued discovery misconduct their refusal to participate in discovery amount to bad faith willful disobedience and gross indifference to the rights of the Receiver and this Court's management of its docket entered a series of adverse inferences against the Charter and Altrad Third Defendants As to Charter adverse inferences included the following " It is part of a single business enterprise . . , ha an amalgamation of corporate interests entities and activities and ha unified integrated and intertwined business operations and resources to achieve and act with a common business purpose Adverse Inference No. 71 It was responsible for efforts to misinform companies persons and the general public about the health hazards associated with asbestos Adverse Inference No. 16 142 Order Granting Cape Receiver's Mot Sanctions May 23 2024 at 15 17 27-31 he Altrad and Charter Third Defendants continue to refuse any effort at compliance with the Court's orders and the discovery rules of this State Despite multiple warnings by this Court and directives to proceed with discovery these Third Party Defendants have continued their misconduct while filing multiple frivolous appeals that based on clearly applicable precedent will inevitably be dismissed emphasis in original 48 It was responsible for operating NAAC in an undercapitalized manner including through the siphoning of funds from NAAC Adverse inference No. 17 Along with Central Mining it owned dominated and controlled Cape and its subsidiaries including NAAC between 1965 and 1996 including with respect to their financing and capitalization Adverse Inference No. 20 It seconded employees and other officials to work for Cape or otherwise financed and spent resources for Cape including for operational marketing research and development and lobbying activities Adverse Inference No. 22 It was aware that Cape asbestos was being sold or ultimately distributed into the State of South Carolina Adverse Inference No. 23 Charter was responsible for i the decision to close and liquidate NAAC and ii designing ways to continue the flow of South African asbestos to US customers and the counterflow of asbestos profits out of the United States after the liquidation of NAAC Adverse Inference Nos 30 and 32 and It was part of a corporate arrangement to eliminate or reduce as much as possible its exposure in the United States to lawsuits brought against them for the sale of asbestos in the United States Adverse Inference No. 143 As to the Altrad Third Defendants the Court drew the adverse inference that each of the Altrad Third Defendants is responsible for or has benefitted unjustly from Cape's avoidance scheme The Court also entered 46 separate adverse inferences including as follows Mr. Altrad is the majority shareholder of the Altrad Group and controls the Altrad Group including AIA Adverse Inference Nos 1 2 42 AIA and Mr. Altrad dominate and control Altrad UK Ltd. Adverse Inference No. 11 AIA and Mr. Altrad were aware of Cape's asbestos liabilities and liability avoidance scheme prior to the acquisition of Cape and acquired Cape with the intent to continue Cape's liability avoidance scheme and refusal to respond to litigation in the United States Adverse Inference Nos 12 and 13 143 See generally Order Granting Cape Receiver's Mot for Sanctions May 23 2024 144 Id at 27 49  Since the acquisition AIA and Mohed Altrad have dominated and controlled Cape including with respect to its financing and capitalization as well as appointment of executive personnel and directors Adverse Inference Nos 14 and 15 and AIA and Mr. Altrad are responsible for Cape's continued failure to respond to litigation against Cape in the United States Adverse Inference Nos 18 32 and 33 As to ESAB the Court drew several adverse inferences including as follows << ESAB obfuscated the relationship between ESAB and its spinoff subsidiaries Charter Consolidated Ltd. and Central Mining also historically with Cape with the purpose of frustrating creditors and avoiding liability Adverse Inference No 55 " ESAB is the successor in interest to Central Mining and Charter Consolidated Ltd Adverse Inference No 56 Charter Consolidated Ltd. is financially dependent upon ESAB Corporation Adverse Inference No 63 and The Charter Third Defendants Cape prior to 1996 subject to the same total dominion and control and ability to be influenced with respect to major business decisions and are mere instrumentalities for the purposes of committing fraud or other violations of statutory or legal namely by ESAB Corporation currently and by Charter Consolidated Ltd. previously Adverse Inference No 69 The Court emphasized that those inferences were rebuttable should these Third Defendants choose to start participating in the litigation and offering a viable defense They have not 3 The Charter and Altrad Party Defendants Persist in Refusal to Participate in Discovery After entry of those adverse inferences the Charter and Altrad Third Defendants 146 continued to pursue their strategy of stonewalling by filing serial improper interlocutory appeals 145 Id at 27-31 146 In an attempt to avoid trial in this matter the Third defendants have filed 16 improper appeals of interlocutory orders Most recently on November 1 2024 the Charter and Altrad ThirdParty Defendants each filed appeals of the Court's October 2 2024 Scheduling Order 50 and then incorrectly claiming that the pendency of those appeals protects them from answering discovery The Altrad Third Defendants also have refused to appear for depositions or provide substantive responses to any other discovery While the Receiver has reported these continued deficiencies to the Court including initially in a June 11 report of the Third Defendants continued compliance the Charter and Altrad Third Defendants continue 149 their compliances while fighting progress of this action in other ways Because the Altrad and Charter Third Defendants ongoing wholesale refusal to participate in discovery they have failed to adduce any evidence to contest their liability much 147 See e.g. Ex 95 Third Def Mohed Altrad's Resps and Objs Receiver's Second Set of Interrogs and Second Set of Reqs for Produc at 3 In addition to the Reservation of Rights stated above the Third Defendant objects to this Interrogatory on the grounds that the Circuit Court lacks jurisdiction and the Receiver is without authority to proceed with this matter at the present time as all issues regarding the purported Receiver's appointment and his purported authority to engage in litigation are presently pending before the South Carolina Court of Appeals 14E8.g. E.g. Ex 96 Correspondence from T. Carroll to L. Seaborn et al Sept. 3 2024 he Altrad Defendants will not be attending these depositions . . I'll be sending ... ... . our objections by separate cover see also e.g. Ex 133 Third Defs Charter's Resps Second Set Interrogs May 31 2024 refusing to provide responses to Second Set of Interrogatories Ex 97 Altrad Owners Third Def Mohed Altrad's Resps and Objs Receiver's Second Set of Interrogs and Second Set of Reqs for Produc May 31 2024 refusing to provide responses to Second Set of Interrogatories and as to Mohed Altrad Second Set of Requests for Production Ex 98 ThirdParty Def Charter's Objs Deps June 3 2024 stating no witnesses to appear on June 5-7 2024 Ex 99 Altrad Owners Third Defs AIA and Mohed Altrad Objs Deps June 9 2024 stating no witnesses to appear on June 10-11 2024 Ex 100 Third Defs Arranco Hawk Bidco and Altrad Sparrows Objs Deps June 10 2024 stating no witnesses to appear for depositions noticed for June 12-14 2024 Ex 101 Charter Third Defs First Obj Letter July 8 2024 refusing to provide responses to Second Set of Requests for Production Ex 102 Charter Third Defs Second Obj Letter July 16 2024 refusing to provide responses to Third Set of Requests for Production Ex 96 Altrad Owners Third Defs Obj Letter Sept. 4 2024 stating no witnesses to appear on September 4 and 5 2024 Ex 103 Arranco Hawk and Sparrows Third Defs Obj Letter at 2 Sept. 4 2024 stating no witnesses to appear on September 6 10 and 11 2024 Ex 104 Charter Third Defs Obj Letter Sept. 4 2024 stating no witnesses to appear on September 9 12 and 13 2024 149 See e.g. Altrad Third Defs Obj to Entry of New Order Setting Nonjury Trial Sept. 26 2024 Charter Third Defs Obj to Entry of New Order Regarding Non Trial Sept. 26 2024 51 less evidence sufficient to create a genuine issue of material fact or otherwise rebut the record evidence or the adverse inferences made by this Court in its May 23 Order III LEGAL STANDARD Summary judgment should be granted when there are no genuine issues of material fact and the moving party is entitled to judgment as a matter of law Bell v Progressive Direct Ins Co. 407 S.C. 565 575 757 S.E.2d 399 404 2014 citing Rule 56 SCRCP The party seeking summary judgment has the burden of clearly establishing the absence of a genuine issue of material fact McNair v Rainsford 330 S.C. 332 342 499 S.E.2d 488 493 Ct App 1998 citing Baughman v American Tel & Tel Co. 306 S.C. 101 401 S.E.2d 537 1991 With respect to any issue upon which the nonmoving party bears the burden of proof this initial responsibility may be discharged by showing the trial court where there is an absence of evidence to support the nonmoving party's case McNair v Rainsford 330 S.C. at 342 499 S.E.2d at 493 When opposing a summary judgment motion the nonmoving party must do more than simply show that there is a metaphysical doubt as to the material facts but must come forward with specific facts showing that there is a genuine issue for trial Dunes W. Golf Club LLC v Town of Mt. Pleasant 401 S.C. 280 293 737 S.E.2d 601 608 2013 citing Russell v Wachovia Bank N.A. 353 S.C. 208 220 578 S.E.2d 329 335 2003 quoting Baughman 306 S.C. at 115 410 S.E.2d at 545 Once the initial burden of showing an absence of evidentiary support for the opponent's case is met the opponent cannot simply rest on mere allegations or denials contained in the pleadings . . . ather the nonmoving party must come forward with specific facts showing there is a genuine issue for trial Miller v Blumenthal Mills Inc. 365 S.C. 204 220 616 S.E.2d 722 730 Ct App 2005 citing Regions Bank v Schmauch 354 S.C. 648 582 S.E.2d 432 Ct App 2003 see also Moody v McLellan 295 S.C. 157 163 367 S.E.2d 449 453 Ct App 1998 52 genuine issues of fact must be supported by admissible . . . evidence and summary judgment should be entered if the opposing party fails to so respond In determining whether a genuine issue of material fact exists the court views the evidence and all reasonable inferences that may be drawn from the evidence in the light most favorable to the moving party Gignilliat v Gignilliat Savitz & Bettis L.L.P. 385 S.C. 452 456 684 S.E.2d 756 758 2009 However when the evidence is susceptible of only one reasonable interpretation summary judgment may be granted Brooks v Northwood Little League Inc. 327 S.C. 400 403 489 S.E.2d 647 648 Ct App 1997 IV ARGUMENT A. The Receiver Is Entitled to Summary Judgment on Liability Under Various Successorship or Veil Piercing Theories Third Cause of Action 1 Charter Is Liable for Cape's Actions and Debts Under an Alter Ego Theory The Receiver is entitled to summary judgment that each of the Charter Third Defendants are the alter egos of Cape which in turn is the alter ego of NAAC The question of whether to pierce the corporate veil via an allegation of alter ego sounds in equity Oskin v Johnson 400 S.C. 390 397 735 S.E.2d 459 463 2012 Toal C.J. see also Drury Dev Corp. v Found Ins Co. 380 S.C. 97 101 668 S.E.2d 798 800 2008 Toal C.J. In general equitable principles govern the piercing remedy and n applying South Carolina's piercing doctrine as all forms of equitable relief the equities of both sides are to be considered and each case must be decided on its own particular facts internal quotation marks and citations omitted Indeed he entire point of the alter doctrine is that a defunct dissolved or undercapitalized entity is responsible for causing injury but because that entity is dominated or controlled by others those others are also liable Hagan v Armstrong Int'l 2020 S.C. C.P. LEXIS 649 at 14 Richland Cnty Ct Com Pl June 29 2020 53 An alter theory requires a showing of 1 total domination and control of one entity by another and 2 inequitable consequences caused thereby Oskin 400 S.C. at 400 735 S.E.2d at 465 citing Colleton Cnty Taxpayers Ass'n v Sch Dist of Colleton Cnty 371 S.C. 224 237 638 S.E.2d 685 692 2006 Toal C.J. This theory does not apply . . . in the absence of fraud injustice or contravention of public policy Oskin 400 S.C. at 400 735 S.E.2d at 465 citing Colleton Cnty 371 S.C. at 237 638 S.E.2d at 692 The alter ego theory nevertheless is meant to be flexible to enable courts to weigh the circumstances of the individual case Ret Plan of UNITE HERE Nat'l Ret Fund v Kombassan Holdings A.S. 629 F.3d 282 288 2d Cir 2010 using flexible alter ego test in ERISA context citation omitted Acknowledging the need for flexibility to achieve justice the majority of jurisdictions addressing this issue allow veil- piercing against nonshareholders Buckley v Abuzir 8 N.E.3d 1166 1172 Ill App 2014 W ith few exceptions those jurisdictions that allow piercing against nonshareholders have not required that the nonshareholder hold other formal roles within the corporation instance as an officer director or employee rather abandon such formalism in favor of an equitable approach focusing on the individual's domination of the corporation Id If veil piercing were solely dependent on a party's ownership interest in an entity unscrupulous parties could avoid personal liability under the doctrine by simply acting in a capacity that does not involve ownership Equity Trust Co. v Cole 766 N.W.2d 334 339 Minn Ct App 2009 Based on the unrebutted record evidence there is no genuine issue of material fact that just as Cape was NAAC's alter ego and Charter was Cape's alter ego a Cape Is NAAC's Alter Ego At the outset there is no genuine issue of material fact that Cape is NAAC's alter ego As set forth at length in Section II.E supra Cape established NAAC in 1953 as a direct subsidiary designed to operate as its wholly controlled instrumentality for the purpose of expediting and 54 facilitating the movement of asbestos from South African mines into the United States including South Carolina Throughout NAAC's existence Cape exercised total dominion and control over NAAC and that dominion and control produced gravely inequitable consequences See Oskin 400 S.C. at 400 735 S.E.2d at 465 i Cape exercised total dominion and control over NAAC NAAC was Cape's sales agent in the United States with exclusive authority to offer Cape products and responsibility for transmitting information about customer needs to Cape mines and ensure that shipments from South African mines made it all the way through to the customer's plant including to locations in South Carolina or through South Carolina ports NAAC effect ... ... ... put the Mines at every U.S. port Indeed Cape's most bountiful years were the two decades until -the period when Cape operated NAAC to provide raw amosite asbestos fiber to customers in the United States By 1970 NAAC was the largest U.S. importer of Amphibole Fibres which were distributed from ... warehouse locations in East Coast Gulf Coast and West Coast Ports 150 See Ex 105 Cape_Receiver_0127365 Cape_Receiver_00127365 Cape_Receiver_00127365 Ex 16 Cape_Receiver_0127971-2Cape_Receiver_00127971-2 Cape_Receiver_00127971-2 1982 court filing describing NAAC's history Ex 106 Cape_Receiver_0 128081Cape_Receiver_00128081 identifying NAAC as the sole based entity of the Cape mining division Ex 107 Cape_Receiver_0 126974Cape_Receiver_00126974 1973 letter describing NAAC as " division of Cape Asbestos Co. Ltd. with corporate offices in London 151 See Ex 108 Cape_Receiver_0 126392-4 Cape_Receiver_00126392-4 Cape_Receiver_00126392-4 describing intended business of NAAC Ex 109 Cape Receiver_00127141 Receiver_00127141 1975 Cape cover letter of NAAC director resignations Ex 110 Cape Receiver_00128071 Receiver_00128071 appointment announcement describing NAAC as specialize in marketing and distribution of Blue and Amosite asbestos in the United States Canada Mexico and the Caribbean Ex 111 Cape_Receiver_00126847-8 1969 NAAC memorandum describing customer services 152 Ex 111 Cape_Receiver_0126847-8 Cape_Receiver_00126847-8 Cape_Receiver_00126847-8 153 Ex 112 Jock McCulloch Asbestos Blues Labour Capital Physicians & the State 68 2002 154 Ex 113 Cape_Receiver_012683-4 Cape_Receiver_00126883-4 Cape_Receiver_00126883-4 55 Cape and NAAC implemented a conscious pattern of product distribution of asbestos particularlamyosite over which Cape had a monopoly See In re Asbestosis Cases Case No. 06-105 Order S.C. Common Pleas Apr. 7 1980 rejecting objection to the exercise of personal jurisdiction over NAAC in South Carolina Despite this conscious pattern of product distribution and NAAC's success in distributing Cape's asbestos in fact it was essentially a man operation consisting of an operational lead supported by four office clerical personnel All key decisions including with respect to the fulfillment of specific purchase orders were closely coordinated with and directed by Cape or made by a board made up of Cape lawyers and executives until Cape executives resigned in 1975 in what they described at 156 the time as a sensible precaution against U.S. litigation As detailed in Section II.E Cape's control over NAAC was vast and complete it controlled company governance issues board make the content of board meeting minutes the determination of its commission the process by which it was paid its strategic underinsurance the establishment of dividends and the salaries of its employees ii | Cape's dominion and control over NAAC caused gravely inequitable consequences Cape exercised this absolute control over NAAC to devastating and plainly inequitable end As set forth in Section II.E.1 Cape actively suppressed its knowledge of the health hazards of asbestos to protect and expand its mining efforts and U.S. sales After the onset of asbestosrelated products liability litigation in the early 1970s Cape undertook numerous actions in a 155 See Ex 16 Cape_Receiver_00127971-2 Cape_Receiver_00127971-2 Cape_Receiver_00127971-2 describing NAAC's lean staffing Ex 17 CapeReceiver_00127267 Despite the volume of sales and profits of NAAC our operation is a very small one with only a total of 5 employees 156 E.g. Ex 114 Cape_Receiver_00127141 Cape_Receiver_00127141 Cape_Receiver_00127141 Ex 115 Cape_Receiver_00127025 Cape_Receiver_00127025 Cape_Receiver_00127025 directors in 1970 listing six 56 157 deliberate effort to limit its own responsibility for the known harm caused by its products While Cape went through tortured machinations to make it appear it was reducing oversight over NAAC 158 in reality NAAC continued to operate as a controlled instrumentality under Cape's domination Indeed these changes were the result of careful assessments by Cape officials the help of its lawyers and other regarding how to minimize the liability exposure of Cape and others in the Group system Cape's records confirm its implementation of a avoidance scheme that involved among other things ) taking steps to make it falsely Cape was reducing oversight of NAAC ii disclaiming any moral responsibility to respond to products liability lawsuits in the United States iii strategically declining to reserve funds in the United States to address those liabilities and iv refusing to accept process or appear in any U.S. judicial proceedings including 157 See e.g. Ex 116 Cape_Receiver_0127185-90 Cape_Receiver_00127185-90 Cape_Receiver_00127185-90 1975 lawyer letter referring to attempt to limit NAAC's and Cape's exposure to future United States litigation see also Borel v Fibreboard Paper Prods Corp. 493 F.2d 1076 5th Cir 1973 successful suit by insulation worker widely acknowledged to have precipitated a wave of asbestos litigation in the 1970s 158 See Ex 117 Cape_Receiver_00127808 Cape_Receiver_00127808 Cape_Receiver_00127808 NAAC discouraging Cape visits to the U.S. in 1978 or else negate maneuvers related to continued problems with product liability litigation Ex 118 Cape_Receiver_00127138 Cape_Receiver_00127138 Cape_Receiver_00127138 1975 letter suggesting to disassociate the Parent Company as fully as possible from the operating companies Ex 119 Cape_Receiver_0 127140Cape_Receiver_00127140 1975 letter raising whether to do something to change the identity of NAAC in order to avoid exposing the company unnecessarily while doing everything possible to maintain a successful selling operation in the United States Ex 120 Cape_Receiver_00127008-9 Cape_Receiver_00127008-9 1974 NAAC letter suggesting that no one from Cape be an officer of NAAC since we want it to be as independent as possible in order to avoid any contention that it is the alter ego of Cape and that Cape is doing business in the United States Ex 114 Cape_Receiver_0 127141 Cape_Receiver_00127141 Cape_Receiver_00127141 1975 Cape Asbestos letter stating that it would be a sensible precaution against Cape's involvement in any future proceedings for Cape personnel to resign from the N.A.A.C. Board and enclosing resignation letters 159 See Ex.56 Cape_Receiver_0127259-61 Cape_Receiver_00127259-61 Cape_Receiver_00127259-61 NAAC counsel advising Cape on risk ofjudgments attaching to Charter assets 57 in the Park lawsuit pending here Cape's communications with its former counsel reveal a focus on avoiding exposure to U.S. litigation or assets that could be garnished in the United States in light of the strategy of accepting default judgments If Cape in the future should set up or acquire any U.S. Company or business then such Company or business would be deemed to be an asset of Cape even though acquired after entry of any default judgments Such new Company or business would be considered an asset of Cape in the U.S. and subject to garnishment to satisfy the default judgments Put simply NAAC existed only to do the bidding of Cape and the entities that controlled Cape i.e. to serve as mechanism to both extract profits from the sale and distribution of deadly asbestos in the U.S. market and to insulate Cape from suit in the United States The unrebutted evidence makes clear that Cape was NAAC's wholly controlled agent and further that Cape exercised that control for fraudulent purposes i.e. using NAAC to make sales of its asbestos in the lucrative U.S. market siphon those profits outside of the United States and avoid answering to the U.S. legal system for the resulting harms b Charter Is Cape's and in Turn NAAC's Alter Egos There is likewise no genuine issue of material fact with respect to Charter's status as alter egos of Cape Just as NAAC operated as an instrumentality for Cape Cape was an instrumentality for the Oppenheimer Group System including Charter That is how the Group System was designed to operate and it functioned perfectly here 160 Ex 1 July 4 1977 Letter from A. J. Penna Esq Group Solicitor Cape Industries Limited Cape_Receiver_00133865Cape_Receiver_00133865 We here having heard more disturbing information recently about the value of Texas awards are rapidly coming to the conclusion that Cape and Cape Fibers should take a risk on the UK enforceability and withdraw as in practice we cannot foresee any court or government here enforcing a judgement which would have enormous financial and employment repercussions when we really cannot be said to have a moral responsibility and are simply victims of the US product liability cult emphasis added 161 Ex 56 Cape_Receiver_0 127259-61 Cape_Receiver_00127259-61 Cape_Receiver_00127259-61 see also Order Granting Cape Receiver's Mot for Sanctions May 23 2024 58 (i) Charter exercised total dominion and control over Cape and in turn over NAAC Cape had no true control over its own operations was part of a Group System in which power was concentrated in the hands of the Oppenheimer family and their trusted advisors The bottom control exercised in the Group System governed every aspect of a Group subsidiary's operations made possible by control at the board level and operational control through immediate parent entities For Cape its immediate parent Charter Within the Group System Charter was designed to exert full dominion and control over Cape Cape became part of the Oppenheimer Group by the late 1950s as part of the Oppenheimer Group's plan to dominate the global mining industry As Dr. Press explains after Ernest Oppenheimer poached the Corner House's diamond business as run by De Beers in the 1920s Harry Oppenheimer would swallow and rearrange the various parts of the Corner House starting in the late 1950s.162 By 1960 the former Corner House interests including Cape were fused with an Anglo 163 American subsidiary Rand Selection Then as part of a broader reorganization Harry Oppenheimer created Charter in 1965 as a pet project designed to diversify the Oppenheimer business operations As a holding company Charter conducted virtually all of its business through subsidiaries like Cape such that it made money through dividends and other diverted funds payments or 162 Ex 8 Press Report at 56 163 First Harry Oppenheimer relied on his American business partner Charles Engelhard to take over the Corner House through Rand American Investments Second in 1960 Rand American Investments merged into an Anglo American entity Rand Selection See Ex 8 Press Report at 54- 58 164 Ex 8 Press Report at 54-58 59 returns from such investments As detailed in Section II.D Cape was Charter's profit- generating center and Charter relied on Cape to operate NAAC in an undercapitalized manner such that dividends and service fees could be siphoned from NAAC and diverted first to Cape and then to Charter Charter owned dominated and controlled Cape and its subsidiaries including NAAC between 1965 and 1996 including with respect to their financing and capitalization by exercising influence in Apartheid South Africa thereby allowing Cape to profitably mine and export asbestos to the United States and distribute it throughout the nation including in South Carolina and by its presence on Cape's board and operational team including through seconded lobbying.,, employees and expenditures to support Cape's operations marketing research and lobbying.,, ii Charter exercised its control over Cape and NAAC to produce inequitable results Charter used its control over Cape and NAAC to effect a fraud on the U.S. market that remains unaddressed decades later As set forth in Sections II.E. and II.E.2 Charter knew of the health risks of asbestos including death throughout Cape's efforts to expand distribution of its asbestos in the United States It directed and financed efforts to conceal these risks and provide false information about the health hazards of asbestos to the general public It was responsible for operating NAAC in an undercapitalized manner including by siphoning off funds from NAAC and diverting them outside of the United States and for NAAC's inadequate risk management and strategic underinsurance decisions When the risk of litigation loomed Charter was responsible for the decisions to create the appearance of separation between NAAC and Cape to deplete 165 Ex 68 Deposition of G. Higham Oct. 17 1986 at Cape_Receiver_0096909 Cape_Receiver_00096909 Cape_Receiver_00096909 166 See Section II.D see also Order Granting Cape Receiver's Mot for Sanctions May 23 2024 at 1817 1817 167 See Section II.D see also Order Granting Cape Receiver's Mot for Sanctions May 23 2024 at 19 20-2320-23 60 NAAC of assets that would be available to claimants and to implement Cape's litigation avoidance strategy Charter also was responsible for the decision to close and liquidate NAAC to permit default judgments to be entered against Cape and its subsidiaries and to design new ways to 169 continue the flow of South African asbestos to the United States after NAAC's liquidation 2 Charter Is Liable for Unaddressed Harm Caused by Cape's Asbestos Under a Veil Piercing Theory Charter is likewise responsible for the harm caused by Cape and NAAC through a traditional veil piercing theory Although it overlaps to some extent with alter ego analysis courts in South Carolina considering whether to pierce the corporate veil undertake a separate inquiry based on the South Carolina Court of Appeals decision in Sturkie v Sifly 280 S.C. 453 313 S.E.2d 316 Ct App 1984 A prong test is used to determine whether the corporate entity should be disregarded The first part of the test is an factor analysis that looks to observance of the corporate formalities by the dominant shareholders The second part of the test requires that there be an element of injustice or fundamental unfairness if the veil were not pierced Sturkie 280 S.C. at 458-59 In determining whether the corporate formalities were observed under the first prong of the Sturkie test courts consider the following eight factors 1 whether the corporation was grossly undercapitalized 168 Ex 70 Charter Annual Report 1982 at Cape_Receiver_0 076050 Cape_Receiver_00076050 Cape_Receiver_00076050 Cape has received legal advice that default judgments in certain of which plaintiffs have been granted damages totalling approximately US million and any other judgments obtained in the United States in such actions against Cape group companies will not be enforceable in the United Kingdom The directors believe in light of legal advice received that the outcome of all the actions against Cape and Charter and the obligations retained by Cape are unlikely to have any material effect on Charter's financial position and accordingly no provision for them has been made 169 See Section II.E.2 Ex 68 Deposition of G. Higham Oct. 17 1986 at Cape Receiver_00096935-6 Receiver_00096935-6 see also Order Granting Cape Receiver's Mot for Sanctions May 23 2024 at 19 20-23 61 2 failure to observe corporate formalities 3 payment of dividends 4 insolvency of the debtor corporation at the time 5 siphoning of funds of the corporation by the dominant stockholder 6 functioning of other officers or directors 7 absence of corporate records and 8 the fact that the corporation was merely a facade for the operations of the dominant stockholder Hunting v Elders 359 S.C. 217 224 597 S.E.2d 803 807 Ct App 2004 The conclusion to disregard the corporate entity must involve a number of the eight factors but need not involve them all Id While the eight Sturkie factors may not perfectly fit the facts of any given case the record evidence makes clear that at least half of the factors are satisfied with respect to Charter's control of Cape and in turn NAAC e Factor 1 At Charter's direction Cape ensured that its U.S. subsidiary was grossly undercapitalized with funds regularly siphoned out of the United purportedly out of the reach of U.S. creditors and into the hands of NAAC's ultimate owners e Factor 5 Charter siphoned funds from Cape and NAAC for its own benefit stripping NAAC of funds to answer U.S. claimant harmed by Cape's asbestos e Factor 6 Cape and NAAC's employees were directed by Charter leadership e Factor 8 Cape and NAAC were mere instrumentalities for Charter and the broader Oppenheimer Group System to profit from the sale of a deadly product in the U.S. market for asbestos while avoiding the attendant liability 170 See Rochester Gas & Elec Corp. v GPU Inc. 355 F. App'x 547 550 2nd Cir 2009 observing that application of piercing factors to the infinite variety of situations that might warrant disregarding the corporate form is not an easy task because disregarding corporate separateness is a remedy that differs with the circumstances of each case quoting Wm Passalacqua Builders Inc. v Resnick Developers S. Inc. 933 F.2d 131 139 2d Cir 1991 internal quotation marks omitted 171 See Sections II.D and E. 62 Neither NAAC nor Cape was permitted to act contrary to its Group Parents interests The Group Charter for Cape and Cape for NAAC in a serving manner by prioritizing their own profits in the form of subsidiary dividends over those of their subsidiaries and more importantly over the health and safety of U.S. consumers Cape Charter and the Oppenheimer Group knew that asbestos could cause lung disease including mesothelioma To protect the profitability of Charter's primary profit generator in the 1960s and 1970s Charter and the Oppenheimer Group actively concealed their knowledge of the dangers associated with the high volume of asbestos fibers they sold in the U.S. market Moreover when it became clear that NAAC Cape and Charter could face liability in U.S. litigation for its asbestos sales Cape and Charter worked a fraud on the U.S. market by ) shuttering NAAC to cut clear ties from the U.S. to the Oppenheimer Group and ii concocting a scheme to continue selling Cape raw asbestos fiber to the U.S. market through a new company nearly identical to NAAC CPC It would be fundamentally unfair to allow Cape and Charter to benefit from this fraud Charter and Cape's activity thus satisfies the second Sturkie element Under the second prong of the Sturkie test the party seeking to pierce the corporate veil must prove an element of injustice or fundamental unfairness if the corporate veil is not pierced To demonstrate fundamental unfairness the plaintiff must show that " the defendant was aware of the plaintiff's claims against the corporation and 2 thereafter the defendant acted in a serving manner with 172 See Section II.F.1 173 See Section II.F.1 63 regard to the property of the corporation and in disregard of the plaintiff's claim in the property Dumas 463 S.E.2d at 644. The Supreme Court of South Carolina has held that awareness of the claims against the corporation need not be actual awareness Multimedia Publishing of S.C. Inc. v Mullins 314 S.C. 551 431 S.E.2d 569 1993 A corporate director is chargeable with all matters pertaining to the corporate affairs of which he has or should have knowledge in the exercise of the duties required of him as a director . We find that knowledge of the Multimedia account gained by defendant in his capacity as the director of FSG was sufficient to put him on inquiry which if pursued with reasonable diligence would have lead sic to knowledge that the account was unpaid The Oppenheimers perfected a system of control in which they acted in a capacity that did not involve full ownership relied on others to spread risk They were proud of the minimum investment maximum control system they created No entity should be permitted to profit from a corporate structure specifically designed to avoid liability in this way See Drury Dev Corp. 380 S.C. at 101 668 S.E.2d at 800 3 Cape and Charter Shared an Amalgamation ofInterests and Were Part ofa Single Business Enterprise South Carolina courts recognize another method from traditional alter ego and veil piercing doctrines hold separate entities responsible for harm caused by another business i.e. the amalgamation of interests theory or the single business enterprise theory This theory provides another framework by which this Court should find Charter liable for the harm caused by Cape's distribution of deadly asbestos throughout the United States 174 See Section II.C. 175 Ex 6 Anglo American Corp. Forbes June 15 1973 at 49 Ex 7 A.J. Limebeer The Group System of Administration in the Gold Mining Industry I Optima 26 26-30 1951 see also Ex 8 Press Report at 10 34 and 75 64 Under this theory where affiliated entities function as a single enterprise South Carolina 176 law requires the enterprise as a whole to answer for the debts and liabilities of its members See Las Palmas Assocs v Las Palmas Ctr Assocs 235 Cal App 3d 1220 1249 510 Cal Rptr 2d 301 318 1991 In effect what happens is that the court for sufficient reason has determined that though there are two or more personalities there is but one enterprise and that this enterprise has been so handled that it should respond as a whole for the debts of certain component elements of it quotations and citation omitted cited by Pertuis v Front Roe Rests Inc. 423 S.C. 640 817 S.E.2d 273 279 n.5 2018 In 2018 the South Carolina Supreme Court formally recognized and named the theory the single business enterprise theory describing it as follows here multiple corporations have unified their business operations and resources to achieve a common business purpose and where adherence to the fiction of separate corporate identities would defeat justice courts have refused to recognize the corporations separateness instead regarding them as a single enterprise to the extent the specific facts of a particular situation warrant Pertuis 817 S.E.2d at 279 see also id at 281. In doing so the Court in Pertuis made clear that to combine different corporate entities into a single business enterprise there must also be a showing 176 This concept was first recognized in South Carolina by the court of appeals in Kincaid v Landing Development Corp. 289 S.C. 89 344 S.E.2d 869 Ct App 1986 and initially described as the amalgamation of interests theory The Court of Appeals in Kincaid affirmed the trial court's finding that three related corporations a development corporation a management corporation and a construction corporation sued for negligent construction and breach of warranty were properly regarded as a single entity because the evidence showed an amalgamation of corporate interests entities and activities so as to blur the legal distinction between the corporations and their activities Kincaid 344 S.E.2d at 874. Thereafter the South Carolina Supreme Court recognized the theory in Kennedy v Columbia Lumber & Manufacturing Co. Inc. finding a lender could be liable if it is so amalgamated with the developer or builder so as to blur its legal distinction 299 S.C. 335 384 S.E.2d 730 734 1989 concluding amalgamation was not appropriate at liability stage and affirming trial court The theory also was considered in a series of cases involving construction defects Magnolia N. Prop Owners Association v Heritage Communities Inc. 397 S.C. 348 725 S.E.2d 112 Ct App 2012 Pope v Heritage Communities Inc. 395 S.C. 404 717 S.E.2d 765 Ct App 2011 65 of bad faith abuse fraud wrongdoing or injustice resulting from the blurring of the entities legal distinctions Id at 281. In other words when corporations are not operated as separate entities but rather integrate their resources to achieve a common business purpose each constituent corporation may be held liable for debts incurred in pursuit of that business purposes Id at 279 n.5 Factors to be considered in determining whether the constituent corporations have not been maintained as separate entities include but are not limited to the following common employees common offices centralized accounting payment of wages by one corporation to another corporation's employees common business name services rendered by the employees of one corporation on behalf of another corporation undocumented transfers of funds between corporations and unclear allocation of profits and losses between corporations Despite the Charter Third Defendants refusal to participate in the discovery process the record is replete with evidence that Cape and Charter unified their business operations and resources to achieve a common business namelpryomoting both the sale and distribution of hazardous asbestos from South African mines into the United States and the flow of resulting funds out of the United States including for the purpose of stripping their based instrumentality NAAC of funds that could otherwise be available to U.S. creditors Moreover there is no legitimate dispute that the adherence to the fiction of separate corporate entities would defeat justice and deny U.S. citizens harmed by Cape's asbestos any recourse for that harm See Walbeck v I'on Co. LLC 439 S.C. 568 889 S.E.2d 537 2023 While it is true that courts should be hesitant to invade the corporate form here there is more than enough evidence that the creation of various entities furthered Developers abilities to refrain from doing that which they repeatedly 177 See Sections II.D and II.E see also Order Granting Cape Receiver's Mot for Sanctions May 23 2024 at 16-21 25-26 66 told the HOA and the residents they would do . . he corporate structure should not shield- fraud evasion of existing obligations circumvention of statutes monopolization criminal conduct and the like emphasis in original 4 AIA Is Liable for Cape's Asbestos Liabilities as the Successor to Cape Based on Its Express Assumption of Responsibility or in the Alternative as Cape's Alter Ego with Respect to Its Continuing Litigation Avoidance a AIA _ Expressly Assumed Responsibility for Cape's Asbestos- Related Liabilities In connection with its 2017 acquisition of Cape AIA expressly affirmed the assumption of responsibility for Cape's historical asbestos liability and it has continued to affirm that responsibility over the intervening years As a result of this express assumption of responsibility AIA is liable as a successor for Cape's asbestos liabilities AIA formed Altrad UK Ltd. or Altrad Bidco in June 2017 for the purpose of acquiring Cape At the time of its purchase of Cape AIA expressly acknowledged the asbestos liabilities of Cape More significantly as part of its recommended tender offer for Cape AIA stated its commitment to ensuring that Cape's asbestos liabilities be honored affirming its inten to procure that each member of the Cape Group honours its obligations under or in 178 Ex 75 Certificate of Incorporation of a Private Limited Company Altrad UK Limited June 1 2017 Cape_Receiver_0185738-72Cape_Receiver_00185738-72 identifying AIA as owner of all shares and Mohed Altrad as sole Individual Person with Significant Control and as Company Director 1 and Chairman Ex 74 Altrad Annual Report 2017 at Cape_Receiver_00040530 Cape_Receiver_00040530 Cape_Receiver_00040530 The acquisition of Cape PLC shares was carried out through the intermediary holding company Altrad UK a wholly owned subsidiary of AIA and financed by AIA through a current account see id at Cape Receiver 00040529 179 Altrad's 2017 Annual Report acknowledged Cape's establishment pursuant to a Scheme of Arrangement of a compensation fund in 2006 for its employees who were exposed to asbestos Ex 74 Altrad 2017 Annual Report at Cape_Receiver_0 040530 Cape_Receiver_00040530 Cape_Receiver_00040530 see also Ex 82 The Scheme Of Arrangement In the High Court of Justice Chancery Division June 2006 at Cape_Receiver_00104532-56 Cape_Receiver_00104532-56 67 connection with the IDC Scheme including with respect to the funding commitments for future liabilities of the IDC Scheme the current IDC Scheme administrative arrangements and all related contractual obligations to which members of the Cape Group are subject following completion of the Offer In the years since the acquisition AIA has continued to acknowledge Cape's asbestos liabilities and reaffirm its responsibility for them For example in its annual report for the year ended August 31 2022 defaulted Third Defendant Altrad Services Ltd. k Cape Industrial Services Ltd. acknowledged Cape's responsibility for harm from asbestos exposure and reported the Altrad Group had set aside 118 million in a Provision of Funds to address certain non historical claims relating to asbestos exposure for which the Board believes the Group may become liable That 2022 annual report further explained that that he Company Altrad Services Ltd. is maintaining a provision in respect of lodged and future industrial disease claims for which the Board of Directors of Cape plc believes the Group to be liable arising on alleged exposure to previously manufactured asbestos products That annual report further stated that he Group continues to receive claims from both individuals and insurance companies in connection with historical alleged exposure to asbestos Where claims are 180 Ex 83 Recommended Cash Offer for Cape plc at Cape_Receiver_0104914-40 Cape_Receiver_00104914-40 Cape_Receiver_00104914-40 touting the acquisition as an opportunity to deliver attractive near and longer term benefit for the Cape Group and the Altrad Group and their respective stakeholders including the IDC Scheme emphasis added 181 Ex 84 Altrad Servs Ltd. Annual Report and Financial Statements for the Year Ended 31 August 2022 at Cape_Receiver_0248438-41 Cape_Receiver_00248438-441 Cape_Receiver_00248438-441 Corporate documents define Altrad Group to mean AIA Ex 83 Recommended Cash Offer at Cape_Receiver Cape_Receiver 00104914 182 Ex 84 Altrad Servs Ltd. Annual Report and Financial Statements for the Year Ended 31 August 2022 at Cape_Receiver_0248438-41 Cape_Receiver_00248438-441 Cape_Receiver_00248438-441 68 determined to have merit the costs areprovidedfor and claims are settled in the ordinary course 183 otherwise claims are defended AIA's 2023 annual report likewise acknowledged its responsibility for Cape's asbestos- related liabilities and stated Altrad . . is fully committed to settling claims that are determined to have merit pursuant to Cape's court approved mechanism for settling such claims An amount of 118 million has been paid or set aside for the settling of valid claims Of course a purchaser like AIA can assume the liabilities of an acquired entity if it does so expressly Cf. Portfolio Fin Servicing Co. ex rel Jacom Computer Servs v Sharemax.com Inc. 334 F. Supp 2d 620 625 D.N.J. 2004 quoting Arch v Am Tobacco Co. 984 F. Supp 830 841 E.D. Pa 1997 where a corporation acquires the stock of another corporation and the target corporation continues to operate as a separate corporate entity the purchaser corporation does not thereby assume the liabilities of the acquired corporation unless it does so expressly emphasis added 183 Ex 84 Altrad Servs Ltd. Annual Report and Financial Statements for the Year Ended 31 August 2022 at Cape_Receiver_0248438 Cape_Receiver_00248438 Cape_Receiver_00248438 n.23 id at Cape_Receiver_0248392 Cape_Receiver_00248392 Cape_Receiver_00248392 reporting that any of AIA's operating environments have associated health and safety risks including Cape The Company Altrad Services Ltd. is maintaining a provision in respect of lodged and future industrial disease claims for which the Board of Directors of Cape plc believes the Group to be liable arising on alleged exposure to previously manufactured asbestos products 184 Ex 81 Altrad 2023 Annual Report at Cape_Receiver_0 040862 Cape_Receiver_00040862 Cape_Receiver_00040862 This mechanism for paying claims does not account for U.S. plaintiffs but is limited to Cape's former U.K. employees 185 It is likewise the case that a purchaser can agree to assume liabilities in the context of an asset purchase In the context of an asset purchase rather than a stock purchase and in the absence of a statute a successor corporation is not ordinarily liable for the obligations of the predecessor unless i there was an agreement to assume those obligations ii the circumstances surrounding the transaction amount to a consolidation or merger of the two corporations iii the successor company was a mere continuation of the predecessor or iv the transaction was entered into fraudulently for the purpose of wrongfully defeating creditors claims Nationwide Mut Ins Co. v Eagle Window & Door Inc. 424 S.C. 256 818 S.E. 2d 447 2018 citing Brown v American Ry Express Co. 128 S.C. 428 123 S.E. 97 1924 69 b Even If AIA Had Not Assumed Cape's Asbestos Liabilities It Is Cape's Alter Ego With Respect to Its Ongoing Litigation Avoidance Even if AIA were deemed not to have assumed Cape's asbestos liabilities despite its repeated public statements to the contrary AIA would be liable for Cape's ongoing efforts to avoid responsibility as the alter ego of the acquired Cape entities including Altrad UK Ltd and Altrad Services Ltd. for continuing the running litigation avoidance scheme Oskin 400 S.C. at 400 735 S.E.2d at 465 An alter theory requires a showing of 1 total domination and control of one entity by another and 2 inequitable consequences caused thereby i AIA dominates and controls its wholly owned subsidiaries through which it purchased Cape and that have provided for funds to resolve U.S asbestos claims As set forth in Section II.F.1 AIA dominates and controls its wholly owned subsidiaries that acquired Cape Altrad UK Ltd. and that have made provisions of funds to address non claims stemming from Cape's asbestos liabilities Altrad Services Ltd. Altrad UK Ltd. was created by AIA for the sole purpose of effectuating the acquisition of Cape for AIA and AIA remains its immediate and ultimate parent undertakin1g86 In connection with the acquisition of Cape itself AIA asserted its control making clear it would ensure that members of the Cape Group continued to fund their existing commitments to the IDC Scheme stating it intends to procure that each member of the Cape Group honours its obligations under or in connection with the IDC Scheme including with respect to the funding 186 Ex 121 Altrad UK Ltd. Annual Report for the Year Ended 31 August 2022 at Cape_Receiver_00185943 Cape_Receiver_00185943 Cape_Receiver_00185943 14 Controlling party The company's immediate and ultimate parent undertaking is Altrad Investment Authority S.A.S. a company controlled by M Altrad Ex 122 Altrad UK Ltd. Annual Report for the Year Ended 31 August 2023 at Cape_Receiver_00185987Cape_Receiver_00185987 14 Controlling party The company's immediate and ultimate parent undertaking is AI a company incorporated in France AIA which is controlled by Dr. M Altrad 70 commitments for future liabilities of the IDC Scheme the current IDC Scheme administrative arrangements and all related contractual obligations to which members of the Cape Group are subject Moreover since its acquisition AIA has controlled Cape financially and with respect to risk management including the management of asbestos liabilities Altrad Services financial statements state that AIA manages risk at a Group level including the health and safety risks present in any of AIA's operating environments AIA also provideda letter of support for Altrad Services Ltd. the entity that made the 118.1 million Provision of Funds to address certain non historical claims relating to asbestos exposure as a going concern in connection with that entity's financial statements Altrad UK Ltd. is substantially indebted to AIA including 187 Ex 83 Recommended Cash Offer for Cape plc at Cape_Receiver_0104914-40 Cape_Receiver_00104914-40 Cape_Receiver_00104914-40 emphasis added 188 Ex 84 Altrad Services Limited Annual Report and Financial Statements for the Year Ended 31 August 2022 at Cape_Receiver_00248391 Cape_Receiver_00248391 Cape_Receiver_00248391 The Board of AIA the ultimate parent company manages risk at a Group level 189 Ex 85 Altrad Services Limited Annual Report and Financial Statements for the Year Ended 31 August 2023 at 3 4 see also Ex 84 Altrad Services Limited Annual Report and Financial Statements for the Year Ended 31 August 2022 at Cape_Receiver_0 248391 Cape_Receiver_00248391 Cape_Receiver_00248391 190 Ex 85 Altrad Services Limited Annual Report and Financial Statements for the Year Ended 31 August 2023 at Cape_Receiver_0248371 Cape_Receiver_00248371 Cape_Receiver_00248371 referring to the letter of support from AIA which confirms continuing support for the going concern period until 30 April 2025 Ex 84 Altrad Services Limited Annual Report and Financial Statements for the Year Ended 31 August 2022 at Cape Receiver_00248399 Receiver_00248399 Ex 84 Altrad Services Limited Annual Report and Financial Statements for the Year Ended 31 August 2022. at Cape Receiver 00248412 Cape_Receiver_00248438 Cape_Receiver_00248438 Cape_Receiver_00248438 n.23 see also Joshua Stein Altrad Makes 118m Provision for Asbestos Claims Construction News Apr. 14. 2023 available at https://www.constructionnews.co.uk/health-and-safety/altrad-makes-118m-provision-for- htps:/w.construcionews.couk/healt-ndsafety/lrad-mkes18m-provisn-for https://www.constructionnews.co.uk/health-and-safety/altrad-makes-118m-provision-for- asbestos 14-04- 20aside 20exposure 20asbestos 71 448,304,150 in 2018 growing to 996,570,000 in 2023 but AIA has confirmed no repayment will be sought until such time as Altrad UK Ltd. has sufficient funds to repay it ii AIA has exercised its dominion and control to produce inequitable results Despite its stated commit to supporting victims of asbestos and its avowed ability to procure that each member of the Cape Group honor its obligations AIA has exercised its control to perpetuate Cape's wrongful litigation avoidance scheme at least with respect to U.S. claimants The continuation of this scheme is evidenced not only by Cape's lack of appearance in the Park lawsuit even after the appointment of a Receiver but also by the appearance of seven Altrad entities named as Third Defendants in this action including ) Altrad UK Ltd. 193 which is represented by the same counsel as AIA and ii Altrad Services Ltd. This unrebutted evidence is consistent with the adverse inferences previously drawn by this Court Application of alter ego theory requires fraud injustice or contravention of public policy and each are manifest here See Oskin 400 S.C. at 400 735 S.E.2d at 465 citing Colleton Cnty 371 S.C. at 237 638 S.E.2d at 692 AIA publicly purports to be fully committed to settling asbestos claims that are determined to have merit but directs its wholly owned subsidiaries to continue perpetuating Cape's decades scheme to avoid answering to U.S. 191 Ex 123 2019 Altrad UK Ltd. Annual Report at Cape_Receiver_0018526 Cape_Receiver_0018526 Cape_Receiver_0018526 Ex 122 2023 Altrad UK Ltd. Annual Report at Cape_Receiver_0185980 Cape_Receiver_00185980 Cape_Receiver_00185980 192 Ex 81 Altrad Annual Report 2023 at Cape_Receiver_00040862 Cape_Receiver_00040862 Cape_Receiver_00040862 Altrad takes these commitments seriously . . Looking forward the company is actively looking for opportunities to support victims of mesothelioma . . 193 Order Entering Default Dec. 6 2023 see also Ex 124 Correspondence Between L. Joyner J. T. Lay and T. Carroll dated August 18-20 2023 at Cape_Receiver_001982 Cape_Receiver_00001982 Cape_Receiver_00001982 194 Order Granting Cape Receiver's Mot for Sanctions May 23 2024 18 33 34 36 44-46 AIA and Mohed Altrad are responsible for Cape's and other responding Altrad Third Defendants failure to respond to litigation involving Cape it the United States . . " 72 citizens harmed or killed by its asbestos That is precisely the inequitable outcome the doctrine is meant to prevent 5 Mr. Altrad Is Liablefor Cape's Historic Asbestos Liabilities Based on AIA's Assumption of Liability or in the Alternative Is Liable for Cape's Continuing Litigation Avoidance as an Alter Ego Mohed Altrad the founder and President of the Altrad Group is the alter ego of AIA and its related subsidiaries and is liable for Cape's asbestos liabilities and ongoing litigation avoidance scheme to the same extent as AIA a Mr. Altrad Dominates and Controls AIA and the Wholly Owned Subsidiaries Through Which AIA Purchased Cape and That Have Provided for Funds to Resolve Non Asbestos Claims There is no legitimate dispute that Mr. Altrad is the alter ego of AIA and the various subsidiaries that bear his name Mr. Altrad owns nearly all of the Altrad Group including Cape As of 2017 the year AIA acquired Cape Mr. Altrad ld 77.78 of the Altrad Group's shares By September 30 2022 Mr. Altrad held 97.60 of the company's shares As of September 30 2023 Mr. Altrad maintained that total ownership level owning 97.60 of the 195 Ex 81 Altrad 2023 Annual Report at Cape_Receiver_0040862 Cape_Receiver_00040862 Cape_Receiver_00040862 196 See Ex 76 Altrad 2022 Annual Report at Cape_Receiver_0040825 Cape_Receiver_00040825 Cape_Receiver_00040825 see also Ex 77 Gaspard Sebag & Tara Patel Billionaire Scaffolding King Guilty ofBribing Rugby Boss Bloomberg Dec. 13 2022 reporting Mr. Altrad's recent corruption conviction punished with an month suspended jail term and 50,000 fine Available at htps:/w .blomberg.com/news/articles/202-12-13/scafolding-bilionaire-convicted-of- https://www.bloomberg.com/news/articles/2022-12-13/scaffolding-billionaire-convicted-of- sponsorship 197 Ex 74 Altrad Annual Report 2017 at Cape_Receiver_00040519 Cape_Receiver_00040519 Cape_Receiver_00040519 198 Ex 76 Altrad Annual Report 2022 at Cape_Receiver_0040825 Cape_Receiver_00040825 Cape_Receiver_00040825 depicting new shareholder structure as of September 30 2022 as 97.60 owned by Mohed Altrad and 2.40 owned by Others 73 Altrad Group As the overwhelmingly dominant owner of all of the Altrad Group all of its including AIA and Cape financially dependent on Mr. Altrad and under his control Moreover just as AIA controls Cape's operational policies including relating to risk management relating to asbestos claims as detailed above Mr. Altrad its founder President dominant majority shareholder avowed leader and namesake AIA Indeed it acknowledged as much in its Recommended Cash Offer for Cape plc in which it stated Altrad defined as AIA is a private company which is controlled by Mr. Mohed Altrad As the Altrad Group's website currently states Mr. Altrad still ads the Altrad Group of 202 companies The Governance section of the Altrad Group's website states that General Management defines the strategy for the Altrad Group It is headed by Mohed Altrad founder and President of the group and by Jan Vanderstraeten and Ran Oren Chief Executive Officers In addition to his controlling ownership and leadership of the AIA Mr. Altrad was identified as the individual person with significant control over Altrad UK Ltd. upon its 199 Ex 81 Altrad Annual Report 2023 Cape_Receiver_00040879 Cape_Receiver_00040879 Cape_Receiver_00040879 200 Ex 125 Affidavit of M. Altrad 32 Ex 84 Altrad Services Limited Annual Report and Financial Statements for the Year Ended 31 August 2022 Cape_Receiver_00248388 Cape_Receiver_00248388 Cape_Receiver_00248388 201 Ex 83 Recommended Cash Offer for Cape plc at Cape_Receiver_01049147Cape_Receiver_001049147Cape_Receiver_001049147 Cape_Rceivr_014917 Cape_Reciver_01049147 Information on the Altrad Group emphasis added 202 Ex 126 Altrad Website Our HistoryHistory https://www.altrad.com/en/our-history.htphs:/w .alttrad.com/men/our-hilstory.html Cape_Receiver_00002425-6 Cape_Receiver_00002425-6 Today the group is still led by its founder Mohed Altrad last visited November 3 2024 203 Ex 127 Altrad Website https://www.altrad.com/en/governance.html#:~:text=It%20is%20headed%20by Governance % 20Mohed 20Mohed20conception Cape Receiver 00002423-4 last visited November 3 2024 74 204 formation Mr. Altrad also was a director of Altrad UK Ltd. at its formation and subsequently became a director of defaulting Third Defendants Cape UK Holdings Newco Ltd. and Cape Industrial Services Group Ltd.2 Further in Altrad UK Ltd.'s most recent annual report Mr. Altrad is identified as the ultimate controlling party The company's immediate and ultimate 206 parent undertaking is AIA which in turn is controlled by Dr M Altrad b Mr. Altrad has exercised his dominion and control to produce inequitable results Like AIA and as set forth in Section II.F.1 Mr. Altrad has exercised his control for fraudulent and inequitable purposes i.e. to reaffirm AIA's commitment to accept responsibility for Cape's asbestos liabilities while continuing to evade those liabilities in the United States and to perpetuate Cape's wrongful litigation avoidance scheme even today For the reasons set forth in Sections II.F.1 and IV.A.4 equity requires that he be recognized as the alter ego of AIA and its related subsidiaries Oskin 400 S.C. at 400 735 S.E.2d at 465. This 204 Ex 75 Certificate of Incorporation of a Private Limited Company Altrad UK Limited June 1 2017 Cape_Receiver_0185738-72 Cape_Receiver_00185738-72 Cape_Receiver_00185738-72 identifying Mohed Altrad as sole Individual Person with Significant Control and as Company Director 1 and Chairman Ex 74 Altrad Annual Report 2017 at Cape_Receiver_0040529-30 Cape_Receiver_00040529-30 Cape_Receiver_00040529-30 Altrad Investment to Buy UK Oil Services Firm Cape for 332.2 mln Pounds REUTERS July 7 2017 https://www.reuters.com/article/cape-ma-altrad- investment idUSL4N1JY2KG 205 Ex 75 Certificate of Incorporation of Altrad UK Ltd. June 1 2017 Ex 79 CapeReceiver_00187939 Termination of a Director Appointment of Cape UK Holdings Newco Ltd. dated October 29 2020 Ex 94 Cape_Receiver_00187592 Cape_Receiver_00187592 Cape_Receiver_00187592 Termination of a Director Appointment of Cape Industrial Services Group Ltd. dated October 29 2020 206 Ex 122 Altrad UK Annual Report for the Year Ended 31 August 2023 at Cape_Receiver_00248387Cape_Receiver_00248387 Controlling party 207 Ex 81 Altrad Annual Report 2023 at Cape_Receiver_00040862 Cape_Receiver_00040862 Cape_Receiver_00040862 Altrad takes these commitments seriously . . Looking forward the company is actively looking for opportunities to support victims of mesothelioma . " 75 evidence is unrebutted and consistent with consistent with the adverse inferences previously drawn by this Court 6 ESAB Corp. Controls Charter Today and Should Be Held Responsible for Its Wrongful Litigation Avoidance ESAB is the corporate successor to Charter and has assumed the historical liability associated with their asbestos activities In August 1993 Charter plc New Charter acquired all of the interests of Charter Consolidated plc k Charter Consolidated Limited under a approved Scheme of Arrangement via a share exchange with Charter Consolidated plc becoming New Charter's subsidiaries In 2008 Charter International Limited PubCo Charter and formerly known as Charter International PLC acquired all of the interests 210 of New Charter under a approved Scheme of Arrangement also via a share exchange These were not length transactions with unrelated parties instead they were internal reorganizations in which the liabilities of Charter remained Charter's whether it was called New Charter PubCo Charter or some other variant Stated another way this was an extension of the Group System and Charter's control over Cape from prior decades See Ed Peters Jewelry Co. v & J Jewelry Co. 124 F.3d 252 268 1st Cir 1997 equity is loath to elevate the form of the transfer over its substance and deigns to inquire into its true nature Kaiser Found Health Plan of Mid States v Clary & Moore P.C. 123 F.3d 201 205 4th Cir 1997 208 Order Granting Cape Receiver's Mot for Sanctions May 23 2024 at 27-31 1 8 33 34 36 41 42 44 4M6 ohed Altrad controls decision making within the Altrad Group including for Cape AIA and Mohed Altrad are responsible for Cape's and other responding Altrad Third Defendants failure to respond to litigation involving Cape it the United States . . " 209 Ex 86 1993 Scheme of Arrangement Cape_Receiver_017803-16 Cape_Receiver_00178003-16 Cape_Receiver_00178003-16 210 Ex 128 2008 Scheme of Arrangement Cape_Receiver_0182324-31 Cape_Receiver_00182324-31 Cape_Receiver_00182324-31 76 Meanwhile in 1994 New Charter had acquired all of the equity interests of ESAB AB including its South Carolina subsidiary and operations with the ESAB conglomerate also becoming a subsidiary New Charter Once PubCo Charter acquired New Charter's interests and the Charter liabilities it also acquired the ESAB conglomerate's interests In 2011 Colfax UK Holdings Ltd. a wholly owned subsidiary of Colfax Corporation Colfax Parent acquired all of the equity interest of Pubco Charter including the ESAB conglomerate pursuant to an Implementation Agreement with Pubco becoming a wholly owned subsidiary of Colfax UK Holdings Ltd. In 2021 Colfax Parent formed ESAB Corporation a Delaware corporation and the next year Colfax Parent the ultimate parent of Colfax UK Holdings completed a spin of the new ESAB Corporation which became the parent of Colfax UK and indirect parent of PubCo Charter As a result of this spin Charter became part of ESAB Corporation In its prospectus Colfax stated that subsidiaries to be contributed by Colfax to the newly spun off ESAB Corp. were each one of many defendants in a large number of lawsuits that claim personal injury as a result of exposure to asbestos including for products that were provided to meet specifications of the subsidiaries customers including the U.S. Navy referencing Cape's monopoly over 211 Ex 90 Certificate of Incorporation of ESAB Corporation May 19 2021 at Cape_Receiver_00185411Cape_Receiver_00185411 ESAB Holdings Limited was a subsidiary of ESAB AB 212 Ex 89 Implementation Agreement dated as of September 12 2011 by and among Colfax Corporation Colfax UK Holdings LTD and = Charter International PLC Cape_Receiver_00102613-95 Cape_Receiver_00102613-95 213 Ex 90 Certificate of Incorporation of ESAB Corporation dated May 19 2021 Cape_Receiver_00185411-3 Cape_Receiver_00185411-3 Cape_Receiver_00185411-3 214 Ex 91 Separation Agreement at Cape_Receiver_0183869 Cape_Receiver_00183869 Cape_Receiver_00183869 77 amosite The contributed subsidiaries included Charter As part of the spin Colfax and ESAB Corp. executed a 2022 Separation Agreement that addressed the transfer of assets and liabilities to ESAB and memorialized ESAB's assumption of liabilities and provision of financial guarantees to its new Charter subsidiaries In order to effect the Separation the Parties shall to the extent necessary cause and shall to the extent necessary cause the members of their respective Groups to cause ) the ESAB Group to own to the extent it does not already own all of the ESAB Assets and none of the Enovis Assets and ii the ESAB Group to be liablefor to the extent it is not already liable for all ofthe ESAB Liabilities ESAB Group was defined to include not only ESAB Corp. but also each Subsidiary of ESAB which included Charter ESAB Liabilities was defined broadly and included any and all Liabilities relating to arising out of or resulting from the actions inactions events omissions conditions facts or circumstances occurring or existing prior to at or after the Effective Time whether or not such Liabilities cease being contingent mature become known are asserted or foreseen or accrue in each case before at or after the Effective Time in each case to the extent that such Liabilities relate to arise out of or result from an ESAB Asset , including ) all Liabilities included or reflected as liabilities or obligations of ESAB or the members of the ESAB ESAB Group on the ESAB Balance Sheet subject to any discharge of such Liabilities subsequent to the date of the ESAB Balance Sheet . . . or iv any and all Liabilities that are expressly provided by this Agreement or any Ancillary Agreement as Liabilities to be assumed by ESAB or any other member of the ESAB Group and all agreements obligations and Liabilities of any member of the ESAB Group under this Agreement or any of the Ancillary Agreements . . 219 215 Ex 129 Information Statement of Colfax Corp. at Cape_Receiver_00184395 Cape_Receiver_00184395 Cape_Receiver_00184395 CapeReceiver_00184400-1 Mar. 17 2022 216 ESAB Corp.'s subsidiaries include Charter Consolidated Limited Charter Overseas Holdings Limited Charter International Limited among other related entities 217 Ex 91 Separation Agreement 2.1 Transfers of Assets and Assumptions of Liabilities ESAB Assets Enovis Assets at Cape_Receiver_0 1838 7Cape_Receiver_00183887 emphases added 218 Ex 91 Separation Agreement 1.1 Definitions at Cape_Receiver_0183874 Cape_Receiver_00183874 Cape_Receiver_00183874 219 Ex 91 Separation Agreement 2.1 iv Transfers of Assets and Assumptions of Liabilities ESAB Assets Enovis Assets at Cape_Receiver_00183889-90 78 Finally not only was ESAB Corp. the ultimate parent for the Charter entities spinoff in their annual reports Charter describes ESAB ESAB Corp. as the controlling party Several Charter entities also reported separation that ESAB Corporation will support the company to meet all liabilities for a period to 31 December 2024 which is consistent with the company's going concern assessment period Several of these Charter entities appear to have neither operational revenue nor employees.2 By their very own admissions Charter no longer operate have employees or generate revenue but instead are shells of what they once were and are controlled by their new American parent corporation ESAB Corp. As with AIA's control over Cape ESAB's control over Charter has been exercised to result in inequitable results i.e. the continuation of a litigation avoidance scheme to deny U.S. claimants redress including as reflected in the wholesale failure of ESAB and Charter to participate in discovery in this case This evidence much of which is a matter of public record is unrebutted and is consistent with the adverse inferences previously drawn by this Court Indeed ESAB 220 See e.g. Ex 92 Charter Consolidated Ltd. Report 2022 at Cape_Receiver_00177649 Cape_Receiver_00177649 Cape_Receiver_00177649 reporting 664,288,000 in net assets in 2022 with the company's shares ... held by Charter limited its immediate parent and controlling party while it regards ESAB ESAB Corporation . . . as the Company's ultimate parent company and controlling party emphasis added Ex 93 Central Mining & Inv Corp. Ltd. Report 2023 Cape_Receiver_0172654-57 Cape_Receiver_00172654-57 Cape_Receiver_00172654-57 also reporting ESAB Corporation as ultimate parent company and controlling party and net assets of 78,857,000 emphasis added 221 Ex 92 Charter Consolidated Limited Audited Financial Statements for the Year Ended 31 December 2022 at Cape_Receiver_00177636 Cape_Receiver_00177636 Cape_Receiver_00177636 Ex 131 CAST Limited Audited Financial Statements for the Year Ended 31 December 2022 at 3 222 Ex 130 Central Mining Annual Report for the Period Ended 31 December 2022 at Cape Receiver_00175381 The Company has not prepared a profit and loss account as there was no revenue during the period ended 31 December 2022 Ex 92 Charter Consolidated Limited Audited Financial Statements for the Year Ended 31 December 2022 at Cape_Receiver_0 17 646Cape_Receiver_00177646 Cape_Receiver_00177646 no income or employees Ex 131 CAST Limited Audited Financial Statements for the Year Ended 31 December 2022 at 13 no employees 223 Order Granting Cape Receiver's Mot for Sanctions May 23 2024 at 21-26 54-66 69-71 79 has not produced a shred of evidence in this action much less evidence that would relieve it of responsibility for the unaddressed harm of its controlled subsidiary Charter For decades Charter has escaped liability by dissolving NAAC and retreating from U.S. shores Now that they are controlled by ESAB Corp. a U.S. corporation equity demands that this Court hold ESAB responsible for the reprehensible acts of Charter Oskin 400 S.C. 390 397 V. CONCLUSION For the foregoing reasons the Receiver respectfully requests entry of summary judgment in his favor and against the Charter and Altrad Third Defendants on the issue of their successor liability and alter veil piercing liability for the harm caused by and the continuing litigation avoidance scheme of Cape and NAAC GALLIVAN WHITE & BOYD P.A. By s John T. Lay Jr. John T. Lay Jr. SC Bar No. 64526 Gray T. Culbreath SC Bar No. 11907 Lindsay A. Joyner SC Bar No. 77437 Eleanor L. Jones SC Bar No. 104678 1201 Main Street Suite 1200 PO Box 7368 29202 Columbia SC 29201 jlay@gwblawfirm.com gculbreath@gwblawfirm.com gculbreath@gwblawfirm.com ljoyner@gwblawfirm.com ljoyner@gwblawfirm.com ejones@gwblawfirm.com 803 779-1833 Jonathan M. Robinson Shanon N. Peake SMITH | ROBINSON LLC 2530 Devine Street Third Floor Columbia SC 29205 jon@smithrobinsonlaw.com shanonp@smithrobinsonlaw.com 80 November 8 2024 Columbia South Carolina 803 254-5445 G. Murrell Smith Jr. SMITH | ROBINSON LLC PO Box 580 Sumter SC 29151-0580 murrell@smithrobinsonlaw.com 803 778-2471 Troy S. Brown Admitted pro hac vice Dana E. Becker Admitted pro hac vice Su Jin Kim Admitted pro hac vice MORGAN LEWIS & BOCKIUS LLP 2222 Market Street Philadelphia PA 19103 troy.brown@morganlewis.com troy.brown@morganlewis.com dana.becker@morganlewis.com su.kim@morganlewis.com 215 963-5000 Brady Edwards pro hac vice forthcoming Robert W. Jacques Admitted pro hac vice MORGAN LEWIS & BOCKIUS LLP 1111 Pennsylvania Avenue NW Washington DC 20004 brady.edwards@morganlewis.com robert.jacques@morganlewis.com robert.jacques@morganlewis.com 202 739-3000 Paul A. Scrudato Admitted pro MORGAN LEWIS & BOCKIUS LLP 101 Park Avenue hac vice New York NY 10178 paul.scrudato@morganlewis.com paul.scrudato@morganlewis.com 212 309-6000 Attorneys for Party Plaintiff 81