Companies

Data privacy rights test in Rubis, Gulf buyout dispute

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Rubis Gigiri, Nairobi. FILE PHOTO | NMG

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Summary

  • Rubis reportedly activated a price reduction clause in the sale agreement that saved it €10 million (Sh1.2 billion).
  • Before handing over physical assets to Rubis, Gulf Energy erased all data from computers through formatting.
  • But aggressive data recovery methods used by Rubis led the French multinational to conclude that Gulf Energy had overstated the value of the assets.

If you buy somebody’s computer and recover deleted data, do you own that information, and can you use it to make a claim against the seller?

A bitter dispute between Gulf Energy and Rubis Energy has broken out, and is expected to answer that question as well as offer a guide to future cases regarding data privacy.

The French multinational thought it had bagged a steep discount when it paid €129 million (Sh16.4 billion) for key assets owned by Gulf Energy, but an analysis of the goods it bought has left both companies pointing accusing fingers at one another while shouting fraud.

Rubis reportedly activated a price reduction clause in the sale agreement that saved it €10 million (Sh1.2 billion).

Before handing over physical assets to Rubis, Gulf Energy erased all data from computers through formatting.

But aggressive data recovery methods used by Rubis led the French multinational to conclude that Gulf Energy had overstated the value of the assets.

Rubis has used the information it recovered from computers acquired in the asset sale to claim a refund of Sh4.1 billion, with a disclaimer that the demand may rise depending on what further analysis of information obtained reveals.

The French firm also wants Gulf Energy to provide more financial records up to 2019 to enable further analysis.

To wriggle out of the refund claim, Gulf Energy has filed a suit against Rubis, citing privacy violations in the use of the recovered data. It wants the High Court to stop Rubis from using the information to claim any refunds.

Gulf Energy insists that the data recovered was not part of information that was to be exchanged between the two companies during negotiations over the assets acquisition.

In fresh court filings, Rubis has objected to the petition being heard, insisting that the agreements signed by both parties called for arbitration in the event of a dispute.

Rubis says the arbitration proceedings should determine whether Gulf Energy’s move to overstate the value of assets was criminal conduct and commercial fraud.

“The petition does not disclose any infringement or violation of constitutional rights. The matters complained from arise from a commercial transaction to which the following issues have arisen; Did the petitioner fraudulently conceal from the respondent (Rubis) vital information on the business and assets under transaction? Was the concealment by the petitioner lawful at all, or did it amount to commercial fraud?

“Did the petitioner commit criminal offences by withholding what is now alleged to be confidential information? There is an arbitration clause to which the petitioner now seeks to restrain its enforcement. That would be a serious violation of the agreements entered into by the parties,” Rubis says in its objection to the case.

In the purchase deal, Rubis acquired Gulf Energy’s petroleum business, which includes petrol stations, fuel storage facilities and related equipment.

For the transaction, Gulf Energy incorporated a subsidiary and placed all the assets to be sold under the new company. Rubis then acquired the new subsidiary, Gulf Energy Holdings Ltd (GEHL).

“The petitioner (Gulf Energy) transferred all the ICT assets including the formatted employee PCs and laptops that were to be transferred to GEHL under the mutually agreed IT transition plan. Further, and to ensure that only the information relating to the specific business and assets was shared with the respondent (Rubis), the petitioner procured a new server to which it transferred information relating to the specific business and assets,” Gulf Energy says in court papers.

“By notice of warranty claim dated March 3, 2021 the respondent alleged, inter alia, that with the assistance of data recovery specialists and through advanced data mining techniques, it had recovered information from the server and previously formatted PCs and laptops, information relating to the entire business of the petitioner,” Gulf Energy adds.

The data recovered included audited statements, financial records and emails relating to Gulf Energy’s business.

Rubis first bought KenolKobil for $353 (Sh38.3 billion), and then used its new acquisition to buy Gulf Energy.

The two purchases made Rubis the biggest retail oil marketer in Kenya as the French multinational now enjoys a market share of at least 20 percent.