Philips Electronics Fighting $350 Million Investor Claim
Royal Philips Electronics NV (PHIA), the world’s largest lighting company, faced allegations of defrauding an Italian television maker out of 200 million euros ($258 million) plus interest as a trial began today in Delaware Chancery Court.
Carlo Vichi, 89, of Milan, founder of Italian TV maker Mivar di Carlo Vichi SpA, says he unwittingly invested in a Philips venture to make cathode-ray-tube televisions 10 years ago -- as flat-panel TVs were becoming popular.
Vichi contends that because the CRT venture went bankrupt, Amsterdam-based Philips is responsible for returning his note- based loan, which with interest now amounts to $350 million.
“I thought it was as safe as the Bank of Italy,” said Vichi, speaking in Italian through an English interpreter in a video presentation. “I felt I could rely on Philips to pay back the loan. I trusted them completely,” he said.
“If Mr. Vichi had known the true facts,” he wouldn’t have agreed to buy the notes, according to the 2006 complaint filed in Wilmington.
Philips counters that the “salesmen on whose representation plaintiff claims to have relied were never employed by Philips” or “authorized to do anything on its behalf,” and that Philips “cannot be liable for anything done,” according to Philips’s Nov. 30 pretrial brief.
Vichi said his Milan-based company bought TV parts from Philips for almost six decades, often doing business with oral agreements. Vichi acquired the notes of LG.Philips Displays Finance LLC, a Delaware corporation, in 2002, believing he would be repaid, according to the complaint.
The venture’s Dutch parent went bankrupt in January 2006. LG.Philips Displays USA Inc., an affiliate that makes cathode- ray tubes for TVs and computer monitors, sought bankruptcy protection in Delaware two months later.
“I always thought it was a different department” of Philips, Vichi said of the venture. “Philips was written in big letters on the loan, the people talking to me always talked about Philips” and the representatives “had Philips business cards” and stayed at Philips offices while visiting, he said.
Judge Donald Parsons Jr. is presiding over the non-jury trial, scheduled to last a week. He hasn’t said when he’ll make a decision on the case.
Vichi alleges civil fraud, deceit, breach of contract and unjust enrichment under Dutch, Italian and Delaware law.
Price-fixing in the cathode ray tube industry between 1996 and 2006 brought a fine of 313.4 million euros to Philips, the European Commission announced last week.
Agreements among groups of companies were designed to halt slowing sales of the bulky tubes after customers switched to slimmer liquid-crystal and plasma display sets, according to the commission. Philips is appealing the penalty.
The case is Vichi v. Koninklijke Philips Electronics NV, CA2578-N, Delaware Chancery Court (Wilmington).
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