Select Committee on Standards and Privileges First Report

APPENDIX 33 - Continued


The Case of Christoph Bettermann

  Between 1984 and 1991 Bettermann was an employee of the Al-Fayed group of companies. At the time of his resignation in 1991 he was (inter alia) Deputy Chairman of Harrods and Chief Executive Officer of International Marine Services of Dubai (IMS), a provider of offshore services in the Arabian Gulf and the Middle and far East.

  He is a lawyer by training and a German citizen with an English wife who was an in-house lawyer at Harrods.

  Bettermann resigned on 24 June 1991, having discovered that Fayed had ordered his telephone at the company flat he occupied in London to be bugged and his telephone calls to be recorded clandestinely.

  Bettermann had received an approach with a view to his working for Crescent Petroleum International, based in the UAE. Fayed took exception to Bettermann discussing this possibility and confronted him with a transcript of a telephone conversation Bettermann had had about it.

  Fayed's behaviour disgusted Bettermann, who insisted on resigning. Fayed threatened him that, if he returned to Dubai "he would make it very embarrassing for me and would destroy me" (Bettermann's words).

  Fayed was as good as his word after Bettermann accepted the appointment as President of CPC. On or about 2 October 1991 he wrote to the Emir of Sharjah, H H Sheikh Sultan bin Mohamed Al Qasimi, in the following terms:

  "I fired Christoph Bettermann from (IMS) due to his dishonesty and his abuse of position in running the company, by embezzling millions of dollars from the company and I am in the process of filing legal action against him.

  "For Your Highness' information, one of the deceptions I discovered involves Crescent Petroleum Corporation (CPC). It was the salvage operation of the oil cargo amounting to $1. 8 million. A cheque was issued by order of one of the officials of CPC for US $900,000 in favour of Cornish Investments. . .

  "I would appreciate it if Your Highness could find out if Cornish Investments has any relation with CPC prior to my taking legal action to return the amount to the company. It came to my attention that Mr Hamid Jafar has signed an agreement with Christoph Bettermann appointing him in an important position in CPC."   In essence Fayed accused Bettermann of corruptly diverting $900,000 due to IMS to Cornish Investments, a company in association with CPC. Furthermore, Fayed alleged that this fraud was arranged whilst Bettermann was still employed by IMS but had already secretly contracted to work for CPC.

  Not satisfied with trying to wreck his reputation by means of these wholly untrue fabrications Fayed also instituted civil proceedings and criminal proceedings for fraud against Bettermann in Dubai.

  As a result of Fayed's laying this information Bettermann was summoned by the police, his passport was taken away and he was told to produce financial guarantees or go to jail. He was photographed and fingerprinted and charged with theft and embezzlement.

  The trial commenced before the Dubai criminal court on 22 February 1992 and ended with his acquittal on 25 December 1993. Fayed's lawyers caused endless delays; over a two year period Bettermann had to endure approximately 25 court appearances.

  These appearances involved the indignity of being locked in a caged dock from 8.30 am to 2.00 pm with all the other alleged criminals (between three and 20, virtually all Arab) to be seen that day, including murderers and drug-dealers. He was required to remain in the dock for the duration of each day's proceedings, even if his own case was adjourned.

  The prosecutor depended entirely on Fayed and his lawyers for instructions and for evidence and witnesses. He repeatedly had to request adjournments in order to obtain "evidence" and find witnesses.

  Fayed's civil proceedings for recovery of the $900,000 was heard in tandem with the criminal proceedings. On the 25 December 1993 they too were dismissed and Fayed was ordered to pay Bettermann's costs of $160,000. Fayed refused to pay and Bettermann was obliged to sue separately for them.

  Fayed appealed against the decision but the appeal was dismissed. He then appealed to the Court of Cassation, the highest court of appeal in Dubai. That appeal was dismissed on 22 October 1994 (two days after The Guardian printed his lies about me).

  No further avenues for appeal in the civil proceedings existed.

  Fayed also attempted unsuccessfully, via his Dubai lawyers, to persuade the prosecutor to appeal on the criminal charges.

  Although his legal actions in Dubai ended in complete failure Fayed required Bettermann to spend three years of his life defending himself in the Dubai courts on allegations which were completely spurious and invented by Fayed himself.

  Another distressing aspect of the proceedings was the publicity they received in the Press in the UAE and in England. Bettermann had to secure an injunction in Dubai in July 1992 to prohibit the disclosure or publication of information about the case.

  On 7 May 1993 an article repeating the allegations was published in England in Private Eye. The source can only have been Fayed.

  Following his acquittal in Dubai Bettermann requested a full and unqualified apology for the allegations. Fayed refused and Bettermann sued for libel in England. Fayed said he would defend vigorously any proceedings. He was as good as his word and placed every impediment in Bettermann's way.

  Notwithstanding the Costs Order against Fayed in his unsuccessful prosecution of the same allegations in Dubai, Fayed sought an Order for Security for Costs of £322,393.93 against Bettermann in the libel case. This sum was plainly intended to deter Bettermann from pursuing his action.

  In pursuit of this application Fayed caused his English solicitor to swear an affidavit stating falsely that Bettermann had conceded in Dubai that he had been a party to an insurance fraud. This was completely untrue as Fayed well knew from a clandestine tape recording which he had himself ordered to be made - which established not only that Betterman denied such an allegation but also that no insurance fraud could possibly have been committed as the relevant cargo was not insured!   In addition to the false accusations levelled by Fayed against Bettermann in his letter to the Emir of Sharjah, in the Press and in the pleadings in the legal proceedings both in Dubai and England, in his witness statement Fayed made additional false statements that Bettermann had asked Wilfried Schneiders (IMS financial controller) and his secretary, Judith Stafford, to destroy documents which incriminated him.

  He made further false allegations that Bettermann, by wrongly calculating his bonus, improperly obtained from IMS money to which he was not entitled.

  The Bettermann case demonstrates, if further proof were necessary, the lengths to which Fayed will go to destroy someone he classes as an enemy. There is no limit to the amounts he will spend nor depths of dishonesty he is prepared to plumb in his unscrupulous determination to seek revenge.

  On 15 February 1996 Fayed was obliged to accept in a Statement in Open Court that all the charges he had made against Bettermann were completely false and invented. He paid six-figure damages and costs in all amounting to nearly £1,000,000.

  He was obliged to accept Bettermann's contention that:

  "Fayed had published the allegations knowing them to be completely untrue and having fabricated them as part of a wicked scheme to exact a cruel revenge on him for his resignation from the Al Fayed group."   The scheme Fayed employed against Bettermann is strikingly similar in motive and executive to that which he has adopted against me.

  In Bettermann's case, as in mine, Fayed relies entirely upon his employees to corroborate his fabricated allegations.

  1. Ian Tew

  Ian Tew ran IMS's Salvage and Towage division reporting directly to Bettermann. During the Iran/Iraq war there was a good deal of salvage work in the Gulf.

  A tanker called the York Marine was hit by Iranian gunboats. IMS agreed with a Dutch salvage company, Smit Tak, to co-operate on salvage work in the Gulf sharing revenues on a 50/50 basis.

  Smit Tak agreed with the owners of the vessel and Crescent Petroleum (who owned the cargo) to salvage it. IMS and Smit Tak performed firefighting services and towage. Smit Tak proposed requesting a security of £660,000 for the cargo. Bettermann argued for £950,000 (or (US$2 million) - a higher figure is preferable as it leaves greater scope for negotiation of a settlement.

  Tew estimated a salvage award of $500,000 for the cargo and entered this figure in a handwritten schedule kept for his own records. He also estimated $500,000 for the vessel. IMS's lawyers supported Tew's estimates. Settlement was eventually agreed at $900,000.

  Crescent wanted to structure the deal in an unusual way. They wanted to issue a cheque to IMS for $1.8 million and for IMS immediately to issue a cheque back for $900,000.

  The supposed purpose of this arrangement is explained in paragraph 12 of Bettermann's Further Witness Statement: a share of the revenue from the sale of the York Marine's oil belonged to Iran. Bettermann supposed that the pay-back arrangement was a way of ensuring that Iran indirectly contributed towards the cost of the damage inflicted by Iranian gunboats.

  Concerned that the purpose of the pay-back might be to effect an insurance fraud Bettermann asked the Crescent representative, Hamid Jafar, if the cargo was insured. He said it was not. Jafar's assurance was later confirmed by Crescent's insurance brokers in writing.

  Bettermann explained the arrangements to Fayed and a number of alternatives. Fayed expressly authorised Bettermann to proceed on the agreed basis, including the pay-back arrangement. The $900,000 was to be remitted to a company called Cornish Investments.

  Tew later falsely claimed that Bettermann deliberately told him to underestimate the salvage awards due to IMS (claiming that IMS was entitled to $1.8 million not $900,000). Underestimating the award would have benefited Crescent, into whose employment Bettermann subsequently transferred.

  In fact Bettermann consistently pushed for higher figures rather than lower. Tew proposed $1.2 million as the minimum settlement figure; Bettermann decided on $1.7 million for negotiating purposes.

  IMS and Crescent could not agree a figure. Crescent offered $600,000. Bettermann proposed $1.2 million. Crescent offered to split the difference at $900,000. After discussion with Tew and Smit Tak the matter was left in the air for a while. IMS eventually agreed the $900,000 to avoid an arbitration fixed for January 1989 - and the risk that IMS would be awarded only Crescent's lower figure of $600,000.

  Tew made a number of false statements in his witness statement:

  (i)   he said he believed the agreement was that Crescent should pay $1.8m for the cargo salvage;

     He could not honestly have believed that Crescent would pay so large a sum as $1.8 million for the salvage of the cargo.

     He had noted, in his own handwriting in his record book (which he produced on Discovery), his estimate of $500,000 for the vessel and $500,000 for the cargo.

  (ii)   he said that Bettermann had told him deliberately to underestimate the salvage award due to IMS;

     This claim was a complete fabrication, essential to establish Fayed's dishonest allegations of fraud against Bettermann.

  (iii)   he denied discussing with Bettermann reports of Crescent's lawyers (Clifford Chance) and their fire experts (Minton Treharne & Davies);   Bettermann had discussed with Tew the offers and counter-offers. (see paragraphs 5-9 of Bettermann's Further Witness Statement).

  In particular, Bettermann discussed with Tew the essential elements of the two reports produced by Crescent's lawyers and fire experts:

  (a)   the lawyers' estimated maximum settlement figure of US$470,000; and

  (b)   the fire experts' opinion that the tanker fire would have extinguished itself without IMS's firefighting actions.

  Bettermann gave Tew a copy of the fire report which has marked on it in Bettermann's handwriting: "I.T. Confidential! For discussion 7/7".

  (iv)   he was unaware of and disapproved of the pay-back arrangement.

     In fact, Tew had known of and was content with the pay-back arrangement throughout.

  He lied in his Witness Statement because it suited his employer, Mohamed Fayed: in particular he falsely asserted that Bettermann had ordered him to underestimate the salvage award due to IMS, without which lie Fayed could not establish his dishonest and baseless allegation that Bettermann was engaged in a conspiracy to defraud IMS and to divert the money to Crescent, into whose employment he was intending to move.

2. John MacNamara

  MacNamara was director of security for House of Fraser plc. He was directly ordered by Fayed to investigate the IMS/Crescent transactions on Fayed's behalf.

  In August 1991 MacNamara interviewed Wilfried Schneiders (financial controller of IMS) in Germany. MacNamara claimed that Schneiders signed a statement purportedly confirming the fraudulent nature of the pay-back arrangement and stating that Bettermann knew that this was in fact a "kick-back" benefiting Crescent at the expense of IMS.

  Schneiders later stated that he did not agree to the contents of any such statement despite pressure brought to bear on him by MacNamara. The statement produced by MacNamara was not signed and no signed statement was ever produced.

  In September 1991 MacNamara travelled to Spain to see Bettermann. MacNamara claimed on his return that Bettermann initially admitted that the pay-back transaction was a "kick-back" and a fraud on the insurers.

  At the outset of the meeting Bettermann asked MacNamara if he was recording the conversation. MacNamara lied to him and said he was not.

  Fayed later sought to rely on what purported to be a transcript of a tape-recording of this conversation for the purpose of informing the Court (in his application for Security for Costs) that Bettermann had effectively admitted a fraud.

  Furthermore, the tape recording was produced on Discovery. It had been tampered with. It was incomplete, inaccurate and misleading. Even on that basis it does not contain anything to justify MacNamara's claim that Bettermann admitted a fraud.

  What it does include is an admission from MacNamara that, if the cargo was not insured, there could be no question of an insurance fraud taking place.

  MacNamara had no idea whether the cargo was insured. He assumed that it was by reason of the involvement of Holman, Fenwick & Willan, whom he believed to be loss adjusters. In fact, as Bettermann informed him, they were not loss adjusters but solicitors. Bettermann repeatedly told MacNamara that the cargo was not insured.

  MacNamara told Bettermann that Schneiders had admitted his participation in a fraud under Bettermann's direction and had signed a statement to that effect. This was a lie. When MacNamara produced what purported to be such a statement it was unsigned.

  In a further improper attempt to extract a confession from Bettermann MacNamara falsely told him that Hamid Jafar was not the owner of Crescent Petroleum and was swindling his "principals" at Crescent by procuring the payment of Crescent's money to Cornish Investments.

  It is clear that MacNamara lied and/or retailed lies told to him by Fayed for the purposes of entrapping Bettermann into confessing a crime which he did not commit. Furthermore, it is to be inferred that MacNamara tampered with evidence in the form of tape-recordings either on his own initiative or at the behest of Fayed.

3. Mr L M Harris

  Mr Harris is not an employee but a partner in D J Freeman and Co., Fayed's solicitors. He produced to the Court in support of Fayed's application for Security for Costs an affidavit annexed to which was what purported to be a transcript of the clandestinely recorded conversation between MacNamara and Bettermann.

  The purpose of this annexure was to inform the Court that Bettermann had effectively admitted that he had been party to a fraud on Crescent's insurers.

  Fayed must have deliberately misled Harris as to the contents of the recorded conversation in the knowledge that his lies would be represented to the Court in a sworn statement as the truth. MacNamara must have conspired with Fayed to mislead his solicitor and the Court by virtue of his role in tampering with the tape.

  The irresistible conclusion to be drawn from the foregoing is, not only that Fayed himself is an inveterate liar and wickedly vindictive but that the word of his employees cannot safely be relied on in corroboration of anything he says. His employee witnesses are either dishonest by temperament or capable of being suborned by his vast wealth, complete lack of scruple or domineering personality.

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Prepared 8 July 1997