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STATEMENT OF JOHANN CHRISTOPH BETTERMANN
I, Johann Christoph Bettermann, will say as
follows:
1. I was born in Alt-Wallmoden on 22 March 1948,
and I reside in Soest, Germany with my wife and family. I am
a German citizen. My wife Francesca is English and a qualified
solicitor. We have a daughter Clara who was born in 1993, and
expect our second child this coming August. I am the Managing
Director of a company near Dortmund which specialises in steel
fabrication and the construction of industrial buildings.
2. I read law at the University of Regensburg,
West Germany where I obtained the first state examination, and
subsequently qualified as the German equivalent of an English
barrister at the High Court in Braunschweig, and as a junior
Judge in Hanover. From 1979 to August 1984 I worked for the Salzgitter
Group, which is a heavy engineering concern in West Germany,
and I was seconded to International Marine Services, a group
company in January 1981 as General Counsel. After holding this
position for nearly a year, I was made Managing Director, and
became President of the company in October 1982. From August
1984 until my resignation in June 1991, I was President of the
company.
3. International Marine Services ("IMS")
was established in Dubai in 1969, and registered in Panama. In
August 1984, it was acquired by Mohamed Al-Fayed, and his group
of companies. Mr Al-Fayed made it a condition of the purchase
and I remain with IMS. In 1984, IMS became a wholly-owned subsidiary
of Dubai Trade and Trust Company Limited ("DTTC"),
which was established in Dubai in 1977. The entire share capital
of DTTC was owned by Mr Al-Fayed and members of his family. From
April 1987 to June 1991, I was Managing Director of DTTC and,
from August 1989 to June 1991, held the position of Director
and Chief Executive Officer of the Dubai Trade Centre Management
Company Ltd, another company owned by the Al-Fayeds.
4. IMS has offices and subsidiary companies
in the Middle and Far East but I was based at the company's headquarters
in Dubai and had overall responsibility for running the company
on behalf of Mr Al-Fayed. The company specialised in providing
services for the oil, gas and petrochemical industries and in
1983, the Dubai office became a forward support base for Wijsmuller,
Salvage BV of the Netherlands. This involved servicing their
equipment and vessels for their salvage operations, and providing
support vessels. We therefore developed a level of expertise
in the salvage and towage business and, in January 1986, formed
our own Salvage and Towage department under the management of
Captain Ian Tew. Captain Tew was previously the salvage manager
of a company in Singapore, Semco, which went into liquidation.
I negotiated with the liquidators of Semco for the purchase of
the company but we did not reach an agreement. I decided it would
be better to form our own salvage department, and recruited Tew
and a number of other Semco staff for this purpose.
5. My responsibilities as President included
all aspects of the day to day running of the business as well
as the strategic and tactical planning. Mr Al-Fayed came to Dubai
only once in all the years I worked for him, but I spoke to him
on the telephone several times a week, and informed him of every
important transaction we were undertaking and discussed all aspects
of the business with him. His method of working was extremely
unusual insofar as he dealt with almost all matters, no matter
how important, verbally. He refused to commit himself to anything
in writing and any request to him that he do so would be met with
"why don't you trust me?" or words to a similar effect.
I soon learned that it was futile to ask. I also learned to brief
him verbally on all matters, clearly and succinctly, as his span
of attention was very short. From time to time, I did feel it
necessary to report to him in writing; for example, I sent him
letters concerning employee bonuses and my own salary/bonus.
However, I am not at all sure that the ever read anything. He
was obliged of course to sign Board Resolutions but even this
he did with reluctance and he omitted his brother, Saleh, who
should have signed as a director of IMS. He always said not to
bother with him. I had no choice but to adopt Mr Al-Fayed's methods
when working with him and this worked perfectly well in the context
of our working relationship, which was based on trust and respect.
6. As far as the Salvage and Towage department
was concerned, Ian Tew ran the department, but I was in overall
charge, and was always a party to major decisions. For example,
like all managers of IMS, Tew was only authorised to approve
expenditure or to make decisions where approximately Dirhams 10,000
was involved. This is equivalent to between £1,500-£2,000.
This limit was deliberately set rather low as I believed in strict
controls over the management. Tew should have reported to the
Manager of the Marine Department, his immediate superior, but
he was reluctant to do so and we agreed that he would report directly
to me instead. This made sense as it enabled him to react quickly
to situations and this was essential in the salvage business.
Our working relationship was on the whole quite satisfactory,
although I believe Tew resented being so tightly controlled by
me. Almost all communications between us were verbal. This was
the norm in IMS and internal memorandums were extremely few and
far between.
7. In the late 1980's the oil services business,
which had always been IMS' main business, declined and IMS concentrated
more on salvage work. We obtained a growing share of the salvage
market in the Arabian Gulf. In April 1988, during the Iran/Iraq
war, we were required to provide salvage services for the York
Marine, an oil tanker, which was hit by Iranian gun boats in
the Mubarek oil field off the coast of Sharjah. In or around
November 1987, IMS had entered into a verbal agreement with Smit
Tak, a Dutch salvage company based in Rotterdam, to the effect
that IMS and Smit Tak would co-operate in the performance of marine
salvage work in the Arabian Gulf, and would share all salvage
remuneration on a 50/50 basis for salvage contracts concluded
by both companies, or by either one of them. A written agreement
in these terms was executed on 23 April 1988, and signed respectively
by Klaas Reinigert on behalf of Smit Tak and by Ian Tew on behalf
of IMS (P19). It was stated to have effect as from and including
25 November 1987. Smit Tak agreed with the owners of the vessel
and with Crescent Petroleum as the owners of the cargo to salvage
the vessel and cargo. IMS was therefore brought in as co-salvor
in accordance with the agreement, and both companies expected
to receive 50 per cent of any salvage award. The services provided
by IMS and Smit Tak were not particularly difficult and included
only minor firefighting services and the towing of the vessel
to Sharjah. Experts Minton Treharne & Davies, who were subsequently
appointed by Clifford Chance on behalf of Crescent Petroleum,
concluded that the firefighting services were not actually necessary
as the fire would have extinguished itself without further hazard
to the vessel or crew (P29). The operation was nevertheless dangerous,
firstly, because of the nature of the cargo and, secondly, because
of the possibility of further attacks by the Iranians. Had it
not been so, we could only have expected to receive a nominal
salvage award or settlement for both the vessel and cargo.
8. On or around 19 April 1988, shortly after
the attack on the York Marine, I made what I would call a courtesy
call to Hamid Jafar, the Chairman of Crescent Petroleum, to say
that I was very sorry to hear about the attack but glad that
IMS was being of help. I said that he should please contact me
if I could be of any assistance. I did not know Hamid Jafar particularly
well, but we had met on several social occasions in Dubai and
at meetings of the Young Presidents Organisation of which we were
both members. I also knew that he was a close business, if not
personal, acquaintance of Mohamed Al-Fayed. I cannot recall exactly
when the possibility of a settlement was first discussed between
us. It may have been during this first telephone conversation
or shortly thereafter. It was my experience that a settlement
was always preferable, whenever possible, to avoid all the costs
and delays incurred in arbitration proceedings.
9. On 25 April 1988, Crescent provided a bank
guarantee in the sum of US$1.25 million in favour of Smit Tak
(P20). On 26 April Smit Tak telexed their lawyers in London, Holman
Fenwick & Willan, requesting security of £700,000 for
the cargo (D 88). They then increased this to £950,000 (D
89) and then decreased it to £660,000 (P21). I believe that
they were considering the lesser figure of £660,000 because
of protestations made by Crescent's lawyers, Clifford Chance,
and because they were anxious about the possibility of interest
payments on any over-security. In order to achieve a favourable
settlement, the security placed should be as high as possible
to allow plenty of scope for negotiation. The downside is the
risk of an award for interest against the salvor in the event
that a settlement is not reached and the matter is dealt with
by arbitration.
10. In this case, I felt that we should try
for a higher security, although I did not envisage that the award
or settlement would be anything like as high as the security
sought. I set out the position for Smit Tak in a telex on 27
April (P22) and, by return telex, Smit Tak agreed to security
of £950,000, and agreed that IMS should handle the negotiations
with Crescent on their behalf (P23). We therefore requested security
of £950,000 from Crescent. Crescent wanted the security
in US dollars rather than sterling, so the figure of US $2 million
was agreed (P24).
11. Ian Tew estimated an award for IMS of $500,000
for the cargo, and recorded this figure in a handwritten schedule,
which he kept for his own records (P14). He similarly gave an
estimate of $500,000 for the vessel itself. I estimated that
we could expect to receive an award of approximately $600,000
on arbitration, which would then have to be divided equally between
IMS and Smit Tak. This figure was based on the report of Burgoyne
and Partners commissioned by Smit Tak (P31), the report of Minton
Treharne and Davies (P29) which was prepared for Crescent, and
on a telex sent to Crescent by their lawyers, Clifford Chance
on 3 June 1988 (P30), which advised Crescent of a possible award
for the cargo at arbitration of $548,450, with a maximum settlement
figure of $470,100 and an initial figure to be explored of $313,400
or something less.
12. As was normal in salvage cases, the report
prepared for Smit Tak by Burgoyne and Partners supported the
salvors, and concluded that, as far as the York Marine was concerned,
there was a high risk of a major explosion occurring on board,
which risk was lessened by the actions of the salvors. Conversely,
Minton Treharne and Davies concluded on Crescent's behalf that
fire and explosion on the vessel was minor and of short duration
and, had the fire not been fought by the salvors, it would rapidly
have self-extinguished and posed no further risk to ship or cargo.
13. Hamid Jafar showed me the telex from Clifford
Chance and their expert's report, and I realised that I would
need further supporting documentation on behalf of IMS in order
to seek a higher figure. I therefore asked Ian Tew to discuss
the matter with IMS' lawyers, Elborne Mitchell, and asked him
to obtain from them a letter advising IMS of a possible award
and including as high a figure as possible as far as the cargo
was concerned. I suggested a figure of $2 million which was considerably
greater than the figure suggested by Crescent's lawyers. However,
Ian Tew reported back that Elborne Mitchell would not recommend
a figure of $2 million or anything like it. (They subsequently
sent a letter dated 27 January 1989 (P37), which confirmed Ian
Tew's estimate of $500,000 as far as the vessel was concerned).
14. We therefore brought into existence a memorandum
dated 17 July 1988, most of which was written by me from an initial
draft, which Ian Tew prepared, I amended and my secretary typed.
Some of the wording was rather strange, because Elborne Mitchell
had not given us the advice we had sought and it was therefore
necessary to say in the opening paragraph "after discussion
with Elborne Mitchell . . . ". Similarly, we stated in
the final paragraph that Elborne Mitchell advised that "an
award for cargo only of $2 million would not be an impossibility"
as they had not actually said that it would be impossible. We
referred to the conclusions in Burgoyne's report, because they
supported our figure of $2 million and enhanced our position.
Ian Tew wanted to insert a figure of $1.2 million as the minimum
settlement figure, but I took the view that the figure should
be $1.7 million. We therefore inserted the figure of $1.7 million
into the final sentence.
15. We reached a settlement of $900,000, as
verbally agreed between myself and Hamid Jafar, in December 1988.
It was also agreed, at the request of Crescent, that Crescent
should issue a cheque for $1.8 million and that IMS should then
immediately issue a cheque back to Crescent, or to Crescent's
order, for $900,000. I asked Hamid Jafar if the cargo was insured.
He said that it was not, which confirmed that the purpose of the
pay-back arrangement was not to defraud insurers. I did not feel
that there was any reason to enquire further into Crescent's
reason for structuring the deal in this way. I believed that the
settlement was advantageous to IMS in that IMS would receive
approximately $150,000 more this way ($450,000 as opposed to an
award of $300,000). I have now seen a letter sent by Crescent's
insurance brokers, Al-Futtaim Willis Faber, confirming that at
no time did they arrange cargo insurance on the York Marine and
that the crude in storage did not include war risks (P51).
16. Before agreeing to the above settlement,
I sought and obtained the approval of Klaas Reinigert of Smit
Tak and Mohamed Al-Fayed. I spoke to Mohamed Al-Fayed about the
matter on several occasions during the course of the negotiations,
in the context of general discussions about the business of the
company. Towards the end of December 1988, I explained the terms
of the deal to him over the telephone and the fact that $900,000
was to be paid back to Crescent. I also explained that the alternatives
were either to agree to the settlement or to go to arbitration,
and that, if we went to arbitration and the salvors recovered
$1.2 million which we considered to be the maximum possible award,
they would still lose a certain amount in legal costs and interest.
If the salvors together recovered $600,000 or less, which we
thought was much more likely, they would have done less well
than under the proposed settlement as they would only receive
$300,000 each in respect of their 50 per cent share.
17. Mr Al-Fayed agreed that the settlement was
the better alternative and authorised me to proceed with the
deal. He asked why Crescent wanted the deal to be structured this
way, and I replied that I had no idea and suggested that he speak
to Hamid Jafar about it, as I knew they were friendly. Mr Al-Fayed
responded that it would not be necessary to make any further
enquiries and it was left that we would proceed with the deal
as Crescent required. Pay-back arrangements were a common practice
during the Gulf War, and Captain Tew had suggested that we carry
out a similar arrangement in relation to the vessel Charnic, when
the owners asked for a pay-back of 40 per cent I recorded this
in my FT Factmaster (P15), and similarly recorded that, as far
as the York Marine was concerned, the cargo was not insured and
that settlement was possible. My overriding concern was to secure
the best possible deal for IMS and, since there was no fraud on
insurers as far as Crescent's proposed arrangement was concerned,
I was pleased to be able to conclude the deal at a higher figure
than originally expected.
18. On 29 December 1988, I sent a telex
to Klaas Reinigert, with the wording of the proposed settlement
agreement (P34), and asked him to send us authorisation that
we could sign the proposed settlement on Smit Tak's behalf. He
responded by telex the following day (P35) to the effect that
Smit Tak agreed the wording of the proposed settlement and authorised
us to sign on Smit Tak's behalf. He asked us to send a copy of
the signed agreement in due course. Crescent wanted the sum of
$900,000 to be paid back to them through a company called Cornish
Investments S.A. They did not explain anything about this company,
and I saw no reason to enquire about it, or to question Crescent's
instructions. (I subsequently learned that it was owned and controlled
by Crescent Petroleum Company International, under the order of
Hamid Jafar (P50 and P52)). A letter was therefore sent to Amro
Bank in Dubai, requesting that they issue a draft in favour of
Cornish Investments S.A. in the sum of $900,000 (P36) and, on
11 January 1989, our finance director Wilfried Schnieders handed
a draft in the sum of $900,000 to Hosam Raouf (P38), and Hosam
Raouf gave him a cheque from Crescent for $1.8 million (P40).
The settlement was recorded in an agreement dated 11 January 1989,
which was signed by myself on behalf of IMS and Smit Tak, and
by Hosam Raouf on behalf of Crescent (P39), and which stated
that the figure agreed was $1.8 million. Since this was the figure
paid by Crescent, I saw no objection to Crescent's request that
we include this figure, as it was known and fully understood by
the parties to the agreement that $900,000 would be repaid to
Crescent through Cornish Investments and that Smit Tak and IMS
would each receive $450,000 as their share of the salvage award.
On 17 January 1989, Ian Tew remitted the sum of $450,000 to Smit
Tak in respect of their share of the award, and sent a telex to
Smit Tak stating "yr proportion cargo settlement (US$450,000)
remitted value date today 17th" (P44).
19. In June/July 1990 Mohamed Al-Fayed asked
me to go to London to look into a company called Modena Engineering
which specialised in second-hand Ferraris. He said that he had
recently purchased the company and that it was making losses.
I agreed and I looked into the company, together with Price Waterhouse.
Mohamed Al-Fayed then asked me to help him with Harrods because
he did not trust any of his English managers, and to remain in
London on a permanent basis. I was anxious about the Dubai companies
but we agreed that I should commute between Dubai and London
and he appointed me Deputy Chairman and Director of Harrods and
Chairman and Director of Harrods Estates.
20. On 7 September 1990, Mohamed Al-Fayed met
Hamid Jafar for lunch in Harrods, as Mr Al-Fayed was considering
the sale of IMS, DTTC, the Trade Centre Management Company, his
villas in Dubai and the Harrodian Club, and he wanted to enquire
whether Hamid Jafar was interested in buying any of these. I was
not present at the lunch, but Mr Al-Fayed brought Hamid Jafar
to my office afterwards, to discuss salvage of Crescent's off-shore
production platform which was also hit by the Iranians in 1988
when they attacked the York Marine. Mohamed Al-Fayed suggested
to Hamid Jafar that salvage of the platform be dealt with by a
similar arrangement to that entered into to salvage the cargo.
By "similar arrangement", he was suggesting a pay-back
to Crescent from monies paid. Hamid Jafar said that he did not
consider a similar arrangement to be necessary, but that he would
discuss the matter with me when I returned to Dubai. Hamid Jafar
expressed an interest in the Harrodian Club, and Mohamed Al-Fayed
asked me to take documentation to him concerning the Club when
I returned to Dubai.
21. I subsequently met with Mr Jafar on
two occasions to discuss the Club, as requested by Mohamed Al-Fayed.
The second meeting took place in February/March 1991, during the
course of which Mr Jafar asked me generally how I was and how
I was getting on in London and Dubai. I said that it was very
exhausting working for IMS in Dubai and Harrods in London, and
that I would not be able to continue for very much longer with
all the travelling back and forth. He then asked whether I had
ever thought of working for Crescent and I said that, whilst
I did not want to insult him. I did not think it would be very
challenging working for a small oil company in Sharjah particularly
when compared with my present activities. Hamid Jafar said that,
on the contrary, there was plenty to do and that Crescent had
a number of diverse new projects which would require additional
management. He suggested that I undertake a series of psychological
tests with Dr Mortimer Feinberg, an industrial psychologist.
I had previously met Dr Feinberg in 1989 at a conference of the
Young Presidents Organisation, of which I was then Education
Chairman. We had spoken briefly, and he had told me about his
organisation BFS Psychological Associates. I was therefore familiar
with the nature of his work and, when Mr Jafar asked whether
I would be interested in meeting him when he was next in London,
I said yes. I was curious about the tests, and thought that they
might be useful to me generally.
22. In March 1991, Hamid Jafar telephoned to
ask whether I was still interested in meeting Mortimer Feinberg,
as he was coming to London in April. I said that I was, and subsequently
had dinner with Dr Feinberg at the Connaught Hotel. We discussed
both his work and mine and the possibilities that he believed
Crescent could offer me. I told Mohamed Al-Fayed that Hamid Jafar
used Mortimer Feinberg to train and test his executive staff,
and Mr Al-Fayed expressed an interest, and arranged for Dr Feinberg
to interview some of Harrod's executives and then report back
to him. Mohamed Al-Fayed and Dr Feinberg appeared to get on well
together and Mohamed Al-Fayed asked Dr Feinberg to find him a
Director of Personnel which Dr Feinberg agreed to do. Harrods
had an extremely high turnover of staff, particularly among the
more senior management and directors, and it was this problem
that I was hoping Dr Feinberg might tactfully be able to tackle
with Mohamed Al-Fayed. He was apparently not successful.
23. It was towards the end of April/beginning
of May 1991, shortly after Dr Feinberg's visit to London, that
my relationship with Mohamed Al-Fayed began to deteriorate. At
the beginning of May I had a lengthy discussion with Mohamed
Al-Fayed about my future. This was instigated by Mohamed Al-Fayed
who said he had heard from the Ruler's office in Sharjah that
I was planning to join Crescent. I was extremely surprised to
say the least, firstly, because I had not even tentatively agreed
to work for Crescent and, secondly, because I could not imagine
what the Ruler's office had to do with any of this. I told him
about my conversation with Hamid Jafar in Dubai and the role
of Dr Feinberg. He asked if I wanted to leave him and I said no,
but I also went on to say that the current arrangements with
my responsibilities in London and Dubai could not continue for
much longer. It would not be good for him or me.
24. It was then agreed between us that I
should return to Dubai and concentrate fully on the Dubai companies
with a view to selling them. I said that I would like then to
find my own business in Germany. He said no I should return to
London to help him with his companies and that I should become
immediately a director of Al-Fayed Investments, the ultimate
Fayed holding company with a salary of US $500,000 per annum.
I asked him if he would put this in writing but received the
normal response of "What, don't you trust me?!" I said
again that I would like to have my own business one day and he
said that in that case he would help me with the financing and/or
become a partner in the business with me. So I resigned from Harrods
and Harrods Estates and returned to Dubai on or about 12 May
1991. Shortly before my departure I recall that a memorandum was
circulated amongst the management of Harrods in which Mohamed
Al-Fayed announced that I was returning to Dubai to concentrate
on the companies there but that I was to be, or had been, appointed
a director of Al-Fayed Investments and he thanked me for the
work I had done at Harrods. The appointment with Al-Fayed Investments
did not materialise.
25. Just before returning to Dubai, I received
a telephone call from Mr Schnieders concerning John Hadjianou's
impending visit to Dubai to carry out a management audit at IMS.
I told Mr Schnieders that I knew nothing about it and, when I
asked Mohamed Al-Fayed about it, he said he had forgotten to tell
me. I did not believe him for a minute. Mohamed Al-Fayed had
only twice, I believe, commissioned management audits of IMS,
once in 1984 shortly after he purchased the company and on one
other occasion, and in both cases the audits were carried out,
as one would expect, by external auditors, Price Waterhouse. I
suspected that John Hadjianou was only really interested in checking
up on me and it seems that this was indeed the case as both of
John Hadjianou's reports to Mohamed Al-Fayed of 15 May 1991 (D146
and 147) dealt with nothing except my salary and bonus. I had
not seen these reports until copies were produced on behalf of
Mr Al-Fayed in these proceedings. I cannot understand why it
is stated in his document 146 that "Christoph Bettermann
is now resident in Sharjah and is an employee of Crescent Petroleum
. . . " On 15 May I was working at IMS and resident in
one of the IMS villas in Dubai.
26. On 28 May 1991 upon my return from a business
trip to Yemen, I was very surprised to receive a letter from
Mohamed Al-Fayed dated 24 May 1991 alleging that I had over-calculated
my bonus in 1990; surprised because my bonus had been calculated
in the same way in 1990, as every other year since 1984, as a
percentage of the profit of the company. This was as agreed between
us and confirmed in my letter to Mr Al-Fayed dated 12 October
1984 (D2) and Mr Ali Fayed's letter in response dated 8 November
1984 (D3).
27. I wrote back to Mr Al-Fayed on 1 June 1991
explaining the above (P58) and enclosing copies of the letters
of 12 October 1984 (D2) and 8 November 1984 (D3) plus other relevant
correspondence; a letter dated 18 March 1986 confirming that
my fixed bonus should be paid monthly rather than annually (D139);
a letter dated 8 February 1989 confirming that my bonus had been
increased to "4 per cent on profits" (D137); a letter
dated 5 April 1990 confirming an increase in my bonus to "5
per cent on the profit" (D141) and a letter dated 21 March
1991 confirming that I had drawn my bonus of "5 per cent
on the profit" for 1990 (D143).
28. I was extremely disappointed and angry
with the contents of Mohammed Al-Fayed's letter of 24 May and
it was then for the first time that I seriously considered resigning
from the Fayed Group. I was certainly not prepared to accept
any deviation to my detriment in my salary. It did not make sense.
Since the Fayeds purchased the company in 1984 I had completely
turned the company around. They purchased the company in 1984
for US £1 and the company had bank liabilities of US $10.4
million. Over the years, I transferred approximately US $21.8
million to the Fayeds in London and I estimated that IMS had,
as at June 1991 a net asset value of approximately US $27.9 million.
I pointed all this out to him, and heard nothing further until
our meeting on 24 June 1991 when he confirmed that he was happy
with my bonus payments and that he no longer wished to make any
changes.
29. On 30 May 1991, Mohamed Al-Fayed wrote to
me requesting that Adnan Al Karim be given signatory powers in
place of Wilfried Schnieders and Ian Luxton (Managing Director
of the Dubai World Trade Centre). I disagreed and suggested in
my letter of 1 June that he be given powers in addition to, but
not in place of, Mr Schnieders and Mr Luxton. Adnan was a Dubai
national and my assistant at IMS. He had no academic or professional
qualifications whatsoever, having spent only a few years at school.
I did not believe therefore that he should replace two qualified
senior accountants. The matter was not pursued any further.
30. However, I was by now very despondent and,
at the end of May or beginning of June 1991, prepared a letter
of resignation which was typed by my secretary, Judith Stafford
(P65). I also decided to undergo Dr Feinberg's industrial tests,
although I did not find time to go to New York to do the tests
until 23 June.
31. At the beginning of June, auditors from
Ernst and Young came to IMS. I co-operated with them, and David
Sherwin of Ernst and Young told me at the end of his visit that
there were absolutely no problems and that he would report to
Mohamed Al-Fayed accordingly. I did not see a copy of the Draft
Report of Ernst and Young dated 24 June 1991 (D149).
32. Mohamed Al-Fayed then asked me to meet him
in London on 24 June 1991 and I took my resignation letter dated
21 June 1991 (which is when I flew from Dubai) with me to London
(P66) after my trip to New York. I did not, however, take it
with me to the meeting as my then fiancee, Francesca, who was
the in-house lawyer at Harrods, suggested that I should give
him an opportunity to explain himself before taking such a big
step.
33. Mohamed Al-Fayed confronted me with a transcript
of a telephone conversation between myself and Dr Feinberg in
April 1991. The call was placed by Dr Feinberg to me in the flat
which I occupied in 60 Park Lane. This was the last straw. I
knew that he routinely bugged the phones of staff at Harrods.
I was told this by John MacNamara (head of security at House
of Fraser) and Bob Loftus (head of security at Harrods) whilst
working at Harrods. I remember one particular conversation when
they assured me that it was legal to do so. Knowing this and
knowing Mohamed Al-Fayed as well as I did, I was still surprised
that he would stoop so low as to bug my private home telephone.
34. We had a brief discussion about the
contents of the transcript, because I could not understand why
he should be so upset about it. I asked him if he had actually
read it and I read parts out to him. I had not indicated any
intention to go and work for Crescent. All I had said were words
to the effect that, if Hamid Jafar wanted me to work for him,
he should give me a clear job description which I could then compare
with my present situation. Mohamed Al-Fayed said that in speaking
to Hamid Jafar and Dr Feinberg I had broken his trust. I said
that no, he had broken the trust by bugging my phone and that
it was not my fault if people approached me to work for them.
I had been approached by other people in the past. I said that
I was resigning. Mohamed Al-Fayed said no, it was all OK, he
did trust me and I should go back to Dubai. I said no, I have
resigned. He then accused me of being arrogant and stubborn and
various other things and told me not to return to Dubai. I said
that I had to return to Dubai at the very least in order to pack
up all my belongings. He repeated that I should not do so and
that, if I did, he would make it very embarrassing for me and
would destroy me, Hamid Jafar and Dr Feinberg.
35. After the meeting I went to Francesca's
house and telephoned Wilfried Schnieders and Adnan in Dubai to
tell them what had happened. I flew back to Dubai the next day,
but when I arrived at the airport, my car and driver were not
there. I telephoned Adnan first thing in the morning and asked
for my car and my mobile phone. He said that he needed the car
to pick up John Hadjianou from the airport. He gave me the car
later on that day. Adnan said that I was to stay away from IMS
and I never set foot again in the office, save for approximately
two occasions when I met with John Hadjianou and Mohamed Al-Fayed's
lawyers, Allen and Overy, to discuss the terms of my settlement
agreement. I was given no opportunity to explain my departure
to any staff, suppliers or customers. Obviously, the manner of
my departure, as engineered by Mohamed Al-Fayed caused great
speculation and interest amongst the Dubai community. Dubai is
a small city with a very close tightly knit expatriate community.
36. It was also widely rumoured that Mr Schnieders
and I had been placed under house arrest. On one occasion that
I recall Cromar Collie, manager at the National Bank of Fujairah,
tried to visit us. We both resided in IMS villas and entrance
to the compound was protected by a security guard. Mr Collie was
not permitted by the security guard to enter and he was told
that we were under house arrest.
37. Before catching the plane to Dubai I telephoned
my lawyer, Fuad Barahim and he advised me not to send my resignation
letter until he had checked it first. He wanted to ensure that
I did not say anything in the letter that could prejudice my
right to an end of service indemnity under Dubai law. In fact,
no changes were made to the letter and I dispatched it by fax
and by post from Fuad's office early in the morning of 26 June
1991 (P67).
38. Following my letter of resignation,
I sent a further letter, giving the breakdown of my entitlements
and, on 6 July 1991, entered into a written settlement agreement
with IMS, under the terms of which the company agreed to pay
me $160,000 US and gave me a full release and discharge. The agreement
was drafted by Mohamed Al-Fayed's lawyers, Allen and Overy and
executed in Dubai at the offices of IMS. Mr Adnan Karim signed
on Mr Al-Fayed's behalf under a Power of Attorney granted to him
by Mr Al-Fayed on 1 July 1991. The payment was made by banker's
draft dated 3 July 1991, and I provided a written receipt.
39. Following my departure from IMS, I had no
employment and Hamid Jafar offered me a job with Crescent at
the beginning of July. Francesca and I were married on 19 July,
and then had an extended honeymoon travelling in Germany, Spain,
France and Portugal. Whilst in Germany I contacted several Headhunters,
and asked them if they knew of any openings or of any companies
for sale or which I might be able to invest in. I was thinking
particularly of companies in the former East Germany, in view
of the recent collapse of the East.
40. I was contacted in Germany at the beginning
of August by John MacNamara, who wanted to question me on Mr
Al-Fayed's behalf. I said that I would be travelling to Spain,
and he said that he could speak to me there and would give me
a call. In the event, I agreed to meet him in Malaga, and a conversation
took place between us on 7 August 1991, in which he asked me
about the settlement I had negotiated with Crescent Petroleum
in 1988 concerning the York Marine, and suggested that I had agreed
to repay Crescent $900,000 as part of a fraud on insurers and
in order to deprive IMS of £450,000 from the salvage award.
I was amazed that he should ask such questions, as Mohamed Al
Fayed had known and approved the terms of settlement and, far
from defrauding insurers or IMS, I had specifically entered into
the agreement because the cargo was not insured and because $450,000
was $150,000 more than I believed IMS would have recovered on
arbitration, when the expected figure was $300,000. Mohamed Al-Fayed
told me to enter into the agreement in order to gain the additional
$150,000 for IMS.
41. Mr MacNamara accepted that, unless the cargo
had been insured, there was no question of any insurance fraud
having taken place, and it was clear that he had no idea himself
whether or not the cargo was insured but assumed that it was
because of the involvement of Holman Fenwick and Willan whom he
believed to be loss adjusters. I explained that Holman Fenwick
and Willan were in fact solicitors, by the end of the meeting,
he had made clear that he would immediately set about finding
out whether the cargo was in fact insured. During the conversations,
he produced and read to me what he claimed was a signed statement
from Wilfried Schnieders, but the contents of the statement were
totally untrue, and I did not believe that Mr Schnieders had said
that I had defrauded IMS of $450,000 when he knew that I had
helped it to gain $150,000 more than it would have received on
arbitration. I asked to look at the statement and, as far as I
recall, I was shown a typed statement which had not been signed
(D159).
42. I had a further conversation with Mr MacNamara
in the Intercontinental Hotel in London on 29 August 1991. By
the end of August 1991, I had no prospects of employment on the
horizon other than the offer from Crescent. I therefore decided
to accept the offer from Crescent, and telephoned Hamid Jafar
to accept the appointment. I entered into a written contract
with Crescent on 30 August 1991, and signed the agreement on
or around 26 September 1991. It was certainly not a bad offer.
In terms of salary and benefits it was more or less commensurate
with what I had earned at IMS. I regarded it however as a step
sideways rather than a step forward and I would have preferred
to have a business of my own. On the other hand, I was extremely
unhappy about the way in which I had left Dubai, and I was glad
to be going back to the Emirates to put the record straight.
43. In my conversations with Mr MacNamara, I
had made it clear that it would assist him with his enquiries
to speak to Hamid Jafar and Klaas Reinigert and to look at the
salvage file I had kept on the case and the salvage file kept
by the Marine department. I assume that he carried out these suggestions,
as he had said he would, as they would have established once
and for all that the settlement I agreed with Crescent concerning
the York Marine was completely in order. I was therefore extremely
surprised to be summoned to Bur Dubai Police Station for questioning
on 28 September 1991, when the police interviewed me for well
over two hours about the York Marine.
44. I was also shocked to learn that Mohamed
Al-Fayed had sent a letter to the Ruler of Sharjah, to the effect
that he had fired me from IMS for dishonesty and abuse of my position,
and for embezzling millions of dollars from the company (P1).
The letter itself was not dated, but he sent a copy to the Deputy
Ruler with a covering letter dated 2 October 1991 (P2). As far
as the Ruler was concerned, the Ruler's secretary informed me
that the Ruler was reluctant to take the letter, and that Ali
Dabashi, Adnan Karim's brother-in-law and my successor as President
of IMS came on several occasions on Mr Al-Fayed's behalf before
the Ruler agreed to accept it. In the letter to the Ruler, Mr
Al-Fayed described the transaction with Crescent as one of the
embezzlement operations he had discovered, and suggested that
I had personally benefited from the transaction because Hamid
Jafar subsequently appointed me to a position with Crescent. In
the covering letter to the Deputy Ruler, he said that he was
drawing the Deputy Ruler's attention to the fraud carried out
by his previous employee Christoph Bettermann in respect of the
salvage operation of the oil cargo with Crescent Petroleum Company.
45. I was horrified by these untrue allegations
and deeply upset that Mr Al-Fayed should send such libellous
letters and make such statements about me. The letters were shown
to me by Hamid Jafar who received them from Ismail Wahid, Director
of the Petroleum and Mineral Department when he met with Hamid
Jafar to discuss the allegations contained in the letters. Ismail
Wahid and other staff from the Petroleum and Mineral Department
came to the offices of Crescent to investigate the matter and
all of the management at Crescent were aware of the investigation
and of the reasons for it. The investigation was set in train
by the Deputy Ruler who was also Chairman of the Petroleum and
Mineral Department. Once the investigation was concluded, a letter
dated 19November 1991 (P4) was sent to Mr Jafar by the Deputy
Ruler, advising him that they had looked into all aspects of
the matter and were completely satisfied that there was not even
an intention of irregularity with respect to the transaction
itself and that they were satisfied that I was not involved in
any embezzlement whatsoever in the matter, as the funds in question
reverted to Crescent, as arranged at the time. IMS had already
been advised verbally and officially of this.
46. On 17 December 1991, I was required to return
to Bur Dubai Police Station, and took with me my lawyer Mr Fuad
Barahim and Mr Ali Hassan Amrani, an employee of Crescent who
had agreed to give any guarantees required by the police from
a UAE national. On this occasion, my passport was taken away,
and I was required to provide personal details for the purposes
of filling out forms. Had I not provided my passport, I would
have been kept in jail. As it was, the passport was not returned
to me until early January 1992. On 19December 1991, Mr Amrani's
passport was taken as additional security, and he and Crescent
provided guarantees to secure my bail.
47. On 16 January 1992, I attended again at
Bur Dubai Station with Mr Barahim and Mr Amrani, when further
details were taken from me and recorded. We were then required
to attend Naif Police Station (in another part of Dubai), where
my fingerprints and photograph were taken, and considerable efforts
were made to detain me, insofar as Mr Amrani's passport and guarantee
were missing from the file sent from Bur Dubai Station to Naif
Station, and I was told that the guarantees given by Mr Amrani
and Crescent prior to 16 January were now cancelled. A police
officer suggested to Mr Amrani that he withdraw his passport which,
in the absence of my being able to produce my own, would have
enabled the police to keep me in jail. Mr Amrani was not, however,
prepared to do this, and I was able to obtain my own passport
by calling my office in Sharjah. Once my passport had arrived
and, after Mr Amrani had provided a further guarantee, I was allowed
to leave. My passport was returned in mid February 1992, to enable
me to travel, although Mr Amrani's was withheld until February
1994.
48. Notwithstanding my explanations to the
police, I was charged with theft and embezzlement, and underwent
a trial before the Dubai criminal court, which commenced on 22
February 1992 and ended with my acquittal on 25 December 1993.
Mohamed Al-Fayed instigated the criminal charges against me, and
also brought civil proceedings against me for the return of $900,000.
As is customary in Dubai, the civil proceedings ran concurrently
with the criminal proceedings. All of the witnesses and the so-called
evidence were supplied by Mohamed Al-Fayed and his lawyers for
the purposes of both the criminal and the civil charges. I am
quite sure, for example, that the Dubai Government did not pay
for Ian Tew to fly in from England. Mohamed Al-Fayed's lawyers
caused endless delays so that over a protracted period of two
years I had to endure approximately 25court appearances
and had the indignity of being locked up with all the other alleged
criminals in a caged dock. There is now produced to me and marked
"JCB1" a schedule which I confirm is an accurate record
of the proceedings. I also confirm that the many delays which
are apparent from the schedule occurred because the prosecutor
depended entirely on Mr Al-Fayed and his lawyers for instructions,
and for evidence and witnesses, and repeatedly had to request
adjournments in order to obtain evidence and find witnesses. For
example, on 4July 1992, he had to request an adjournment
in order to "prepare his evidence" and, six months later,
on 1February 1993, he had to request time to bring witnesses
from London. On 22 February 1993, he requested more time to bring
witnesses from London, in response to which he was told by the
court that the prosecution had to present all its evidence at
the next hearing.
49. The civil proceedings were dismissed on
25 December 1993, and IMS was ordered to pay my costs. To date,
they have still not paid any of my costs which amounted to approximately
$160,000. Mr Al-Fayed appealed against the decision, but the
appeal was dismissed. He then appealed to the Court of Cassation,
which is the highest Court of Appeal in the Dubai courts, but
this appeal was dismissed on 22 October 1994, leaving him with
no further avenue of appeal. His lawyer, Samir Jafar, also tried
to persuade the prosecutor to appeal on the criminal charges
but the prosecutor refused. His actions against me in the Dubai
court were therefore totally unsuccessful, but I was required
to spend almost three years defending myself in the Dubai courts.
Another distressing aspect of the proceedings was the publicity
they received in the press in the United Arab Emirates and in
England. Some of the articles required me to make complaints through
my Dubai lawyers, as they were highly libellous of me, and it
was necessary for me to apply to the Dubai criminal court in July
1992, for an injunction prohibiting the disclosure or publication
of information concerning the case (p5-11). On 7May 1993,
an article repeating the allegations was published in England
in Private Eye (p12).
50. I felt that it was necessary to take
action against Mr Al-Fayed in person in relation to the letters
he had sent to the Ruler and Deputy Ruler of Sharjah, and in
respect of which he had not withdrawn the allegations of dishonesty,
notwithstanding that I had been acquitted of the charges brought
against me in the Dubai criminal proceedings, and that his civil
action against me had completely failed. I had consulted English
lawyers, Clifford Chance in December 1991 concerning the letters,
but they advised me to wait for the outcome of the Dubai proceedings
before taking any action. I then sought a second opinion from
Peter Carter-Ruck in September 1993, and he similarly advised
waiting for the outcome of the Dubai proceedings before making
a complaint. However, it became necessary for me to take action
before the beginning of October 1994, because the limitation
period of three years would shortly expire. Accordingly, although
the Dubai proceedings were not finally disposed of until 22 October
1994, I instructed Peter Carter-Ruck and Partners to send a letter
to Mr Al-Fayed on 16 September 1994 and simultaneously to issue
proceedings against him for damages for libel and an injunction.
51. By a letter dated 21 September 1994, his
solicitors stated that the letter of 16 September 1994 was "misconceived"
and that their client did not accept that I had any right of action
against him arising out of the letter he had written to the Ruler,
nor did their client have any intention of publishing an apology
to me or paying me any sum whatsoever. They further said that
they found it difficult to believe that I was in a position to
fund an action to trial, as they understood that I was "not
a wealthy man", and asked whether I was being funded by
someone and, if so, whom. I was greatly distressed by this response,
and felt that Mr Al-Fayed was using my financial position (which
is obviously modest compared to his own) in order to frighten
and intimidate me into dropping my claim. Following service of
my statement of claim on 24 October 1994, the defendant's solicitors
issued an application for security for costs, requiring me to
put up security of £322,393.93 in order to proceed with
the action. In support of the application, his solicitor exhibited
to an affidavit a summary of my conversation with John McNamara
on 7 August 1991, which was not only incomplete but gave a wholly
false impression of what I had said, and suggested that I had
conceded to Mr McNamara that I was a party to an insurance fraud.
Mr McNamara had told me at the beginning of that meeting that
he was not recording it, but it has now become known to me through
these proceedings that he recorded the whole of my conversation
with him on 7 August 1991, and also recorded my conversation
with him on 29 August 1991 and a telephone conversation I had
with him on 28 August 1991. There is now produced to me and marked
"JCB2" a copy of the defendant's summary of the conversation
on 7 August 1991. There are also produced to me and marked "JCB3"
copies of full transcripts of the three conversations. These were
prepared for my solicitors by official transcribers from tapes
disclosed by Mr Al-Fayed in these proceedings.
52. Mr Al-Fayed did not proceed with his application
for security for costs because I moved from Dubai to Germany
at the end of October 1994, and became resident in the European
Community. However, he is defending these proceedings on the
grounds that the allegations in his letters to the Ruler and Deputy
Ruler are true, notwithstanding that his proceedings against
me in Dubai in relation to the York Marine allegations completely
failed. I still have no idea what the other alleged "embezzlements"
referred to in the letters are.
53. I can therefore only conclude that the defendant
is intent on destroying my reputation at any cost, and that his
motivation for wanting to harm me is revenge for what he sees
as my disloyalty in choosing not to continue working for him.
54. I am willing voluntarily to attend court
to give evidence if called upon to do so.
55. The contents of this statement are true
to the best of my knowledge and belief.
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