$30 M COUNTERSUIT Hakubotan turns the tables against Saresco

Hakubotan Saipan Enterprises has filed a $30 million countersuit against its former business partner, Saresco Inc., for fraud, breach of contract, and unfair competition, among others.

The civil suit filed Friday at the Superior Court alleged that Saresco, a French-owned management service corporation, schemed a “premeditated, predatory plan” to destroy and eventually take over the duty-free store business.

Robert O’Connor, attorney for Hakubotan, charged that Saresco “induced Hakubotan Saipan to enter into an arrangement where it would lose control of its own store, its supplier would be cut off, it would be unable to pay outstanding liabilities and would therefore be forced to either turn over ownership and control of Hakubotan
Store to Saresco France or sell the store to Saresco at a grossly undervalued price.”

Hakubotan, which runs the duty-free shopping center in San Jose, entered into a management service contract with Saresco in October 1997. Saresco was tasked with purchasing of merchandise and supplies for Hakubotan stores.

The business partnership turned sour when the inventory of merchandise, bank accounts and other assets of Hakubotan Saipan and Hakubotan Guam got mixed up.

In November 1998, Saresco Saipan filed a $5 million suit against Hakubotan and its board of directors. Saresco suggested that the confusion in asset ownership was caused by Hakubotan’s failure to disclose that fact that there were two separate entities managing the duty-free stores on Saipan and Guam.

Saresco alleged that Hakubotan “wrongfully” laid claim on the properties, and bank accounts representing proceeds from the sale of the items sold which the plaintiff said belonged to it.

In its countersuit, however, Hakubotan turned the tables against Saresco.

O’Connor said Saresco refused to “allow Hakubotan Saipan to use proceeds from post January 1, 1998 to pay the company’s outstanding debts to suppliers and other creditors.”

“Saresco fraudulently induced Hakubotan into allowing Saresco to manage its business relationship by promising to double sales, increase inventory and renovate the Hakubotan store,: O’Connor said.

However, the countersuit said, Saresco reneged on its commitment and obligations.

“The sales at Hakubotan did not increase under the management of Saresco and the sales in the Hakubotan store have in fat, decreased since January 1, 1998,’ O’Connor said.

A separate complaint was filed by Hakubotan at the Guam Superior Court in connection with Saresco’s “abrupt pullout” from Hakubotan Store on Guam which “caused its immediate shutdown.”

“To make matters worse, Saresco opened its own store Chou-Chou on Guam,” O’Connor said.

He further alleged that Saresco “cleaned up” the store’s bank accounts and sneaked Hakubotan’s inventory out its warehouse and moved it to the Chou-Chou store. (MCM)