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APPENDIX 3
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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