“We will supply our cigarettes wherever there is a legal, legitimate demand for them, knowing that if we don’t, someone else will.” [Interviewer] “Even if they’re going to be smuggled back to this country and you know they’re going to be smuggled back to this country” “We will sell legally to our distributors …. If those distributors subsequently sell those products on to other people who are going to illegally bring them back into this country, that is something totally outside our control and is a direct function of the enormous levels of tax in this country compared to the levels of tax on cigarettes in other countries ”
“The essence of trading business is that we are not seeking to build brands. To some extent, this position is forced upon us by the fact that we do not own our premium brands outside Europe. However, we do own Sovereign, Mayfair, Dickens & Grant and Dorchester in most markets, and it is acceptable to use those brands (i.e. Sovereign Black) for trading opportunities on the clear understanding, to be confirmed by any customers, that they will not sell on for re-shipment back into the UK. The established reputation of these brands in the UK could be exploited in trading markets such that they could sell for a higher price than Sovereign Classic, etc”
“does not answer the fundamental question of how so much Namelex product came to be discovered in suspicious circumstances on the Marina and intercepted by our anti-smuggling staff, and how Gallaher could satisfy both Customs and Excise and themselves that Namelex (or their customers) were not selling to smugglers”
“Gallaher has, in the past, repeatedly made it clear to Namelex that it would not countenance the sale of any of its products to smugglers. We have provided a copy of the relevant part of your latest letter to Namelex and taken the opportunity to, once again, restate our position so that there can be no doubt as to our attitude.”
“To date Gallaher have released to us about 257,000 cases free of charge and we can proudly confirm that all this quantity has already been given to our clients and more, to support the continued marketing of Gallaher business and to resolve the problem of the spotted paper outer products. In fact, we have to-date not only given our clients the 257,000 cases free of charge, but we have committed another 268,000 cases free of charge to this business as further support over the next few months …… Our commitment to this business is made with confidence since Gallaher has more than demonstrated its commitment to the business and to us by supporting the development of our cooperation with the 257,000 cases already released to us and the 268,000 cases to be released to us once manufactured and shipped as confirmed by Mike. We would greatly appreciate receiving the release of these free of charge goods as a matter of priority, preferably before the end of August, as confirmed by Mike, in order to assist us recover our heavy investments”
“As I planned, I met with Abu Hameed yesterday who was, as usual, upbeat. While thanking us for our support, he expressed his concerns about our continuing support given his level of investment. He acknowledged that he had been assured of that at all times by Mike and Fadi but had felt the need to see me face to face and to get it from the horses [sic] mouth….Fadi spoke to him privately following our meeting and also felt he was reassured. We hope to see an acceleration of his process now. They are committed to clearing the matter up in the next 2 weeks and I will keep you posted.”
“In assessing the options, the other fact to be cognizant of is that [Namelex’s] customers have not been fully informed of the way in which they have run the business. In particular, their key customer has been given volumes of goods by them in the belief they were supplied by Gallaher and expects further volume to be forthcoming. These goods are also the ones that Namelex expected to pay for and give free themselves.”
“I apologise for not being more explicit in my previous note to you this morning but, as I am sure you understand, I have been rushing around in an attempt to get everything organised for our mutual best interest. In relation to the$ 30m issue, I am advised that the delay is only due to the increased administrative bureaucracy brought about by the recent world events. We understand if it is not completed before the end of the year it will definitely be finished in early January 2002. In fact, although I myself am scheduled to be on holiday with my family now until 3rd January, I will come to the office next week to push it through…”
“A negative view from Gallaher will result in an unthinkable chain reaction of claims and counter claims resulting in a legal nightmare for all of us”
“(3) Representatives of NTA or persons associated with NTA, most notably one Charles Hadkinson has (sic) made representations to the Gallaher Group, Mr Tlais and Highstreet Enterprises which could potentially result in disputes between them …. (5) The parties hereto desire to acknowledge, represent and warrant to each other that there are no direct or indirect actions, claims or disputes arising out of or related to the Distribution Agreement [i.e. the Namelex Agreement] or otherwise between them.”
“1. There are no direct or indirect actions, claims or disputes between them of whatever nature whether actual pending or prospective (a) arising out of or in connection with the Distribution Agreement or (b) any other course of trading relationships, business dealings, discussions or exchanges of correspondence between (i) GI or other members of the Gallaher Group or their respective directors or employees and (ii) NTA, Mr Tlais or Highstreet Enterprises …… 2. If any party to this Agreement believes that it has any such claim as is described in Clause 1 of this Agreement such claim is hereby irrevocably waived.”
“All Brands sold by GI to the Distributor under this Agreement are intended for final sale via distributors to consumers in the Territories. The Distributor agrees therefore to: (a) sell only to distributors who are legally authorised to sell tax-paid tobacco products in the Territories or in duty free zones within the Territories. (For the avoidance of doubt the duty free zones exclude traditional duty free outlets, which includes without generality to the foregoing [sic] duty free shops in airports etc); (b) use its best endeavours to resell the Brands under terms and conditions that are designed to ensure that the Brands are ultimately sold to distributors in such manner; and (c) sell the Brands in amounts commensurate with the estimated demand in the intended markets within the Territories.” (a) sell only to distributors who are legally authorised to sell tax-paid tobacco products in the Territories or in duty free zones within the Territories. (For the avoidance of doubt the duty free zones exclude traditional duty free outlets, which includes without generality to the foregoing [sic] duty free shops in airports etc); (b) use its best endeavours to resell the Brands under terms and conditions that are designed to ensure that the Brands are ultimately sold to distributors in such manner; and (c) sell the Brands in amounts commensurate with the estimated demand in the intended markets within the Territories.” (ii) Clause 5(iv) provided that TEL “shall resell [Brands] only to persons or firms where there is no reasonable cause to believe that such persons or firms will sell them outside the Territories.” (iii) Clause 4(i)(2) of the TEL Agreement provided that TEL would not The ‘not’ is missing, but is clearly meant. “resell the Brands to any person, corporate or unincorporated entity, state or other governmental or quasi agency that the Distributor knows or has reason to believe to be engaged in any illegal trade in cigarettes.”
“ keep full, proper and accurate accounts and records showing clearly all sales transactions and inventories relating to the Brands and all services rendered by the Distributor pursuant to the Agreement and … produce the same to GI or its duly authorised representatives upon reasonable notice. The Distributor shall retain all such accounts and records for at least six (6) years or more if required by applicable law.”
“The Distributor …..wishes to become GI’s exclusive Distributor in the Territories for the Brands for an initial period of 5 years, to be automatically renewed at the end of that period for a further 5 years subject always that [three conditions were then specified]”
“The Distributor acknowledges and accepts that GI and Gallaher intend to co-operate with governmental or valid regulatory enquiries into any illegal importation and sale of the Brands sold pursuant to this Agreement or otherwise.”
“conduct its business in accordance with the policy on International Trade of the Gallaher Group (as amended by Gallaher Group from time to time)". The Amended Agreement of January 2003 added to the above the words “and shall procure that any sub-distributors appointed by the Distributor to undertake business within the Territories shall conduct business in accordance with the said policy on international trade.”
“I have read the above policy and confirm that I understand it and will be bound by its terms in all dealing with companies of the Gallaher Group. I further confirm that I will obtain the same undertaking from any sub-distributors to whom I supply any products of the Gallaher Group”
“In the event that Gallaher discovers that any particular distributor has been shown to be behaving improperly or Gallaher has reasons for believing that they may be, Gallaher will re-visit that trading relationship with a view to discontinuing that relationship, if appropriate. In particular, if Gallaher concludes that any distributor is a smuggler it will terminate that trading relationship with immediate effect. In turn, Gallaher will expect its distributors to endorse a similar policy in respect of their customer.”
“that in respect of any assertions of impropriety that I may have made against the Gallaher Group or employees thereof, I now realise I was mistaken and I withdraw any and all such assertions in their entirety. I also irrevocably undertake to refrain from making any such allegation in future, which I acknowledge could damage the good name and/or reputation of Gallaher Group or its employees”
"I made a commitment to Customs at our joint meeting that within the region of one to one and a half years a strict level of control would be applied through vigilance and policing of the systems, including applying the red card procedures on any customer that breaches the ITP. This commitment stands …"
“The way the market visit was structured did not give us the opportunity to verify the information provided by a selective wholesale [sic Presumably “selected wholesaler” was intended. ] regarding consumer demand… You did request to see a cross section of retail outlets and were not granted the opportunity. Our observations, however, on packs and cigarette filters on the streets, the movement of brands provided by wholesale [sic] when they were not interrupted, packs carried by consumers, and small cigarette vendors did not point to any consumption of Dorchester and Sovereign in the 3 cities visited. In addition to this, Sovereign did not exist in distribution at wholesale point. For your information, 160 million of Sovereign are ordered every month. It was therefore essential to strongly highlite (sic) this fact to our partner otherwise we would have emerged from the meeting agreeing with their views about a significant market demand which we cannot substantiate”
“What he said, Khaled, is that this document, it is not belong to him, it is something belong to his brother. I do not remember exactly the story, how it happened. I told him Khaled, are you sure about it? He said, yes, I am sure, I have no involvement with these things.”
“Settlement of the$ 1 m is now well advanced and you proposed that after it is complete, this$ 10 supplement should continue and be used to draw down the account in respect of the goods sold at 365 days and for which we remain unpaid. I advised you that I was agreeable to this but that, as part of the co-operation on this matter, we would need to receive your sales and stock report on a more regular basis (i.e. monthly) .”
“• Lack of distribution expertise and infrastructures by sub-distributors • Lack of disciplines in the areas of stock control / inventory management • Current activities based on limited market know-how • Gallaher / customs requirements re corporate governance … • Lack of Supply Chain fundamentals”
“specific problems involving Gallaher staff who were encouraging the smuggling of the brand and making sales behind my back to my own customer and to individuals who were fronting for people who were on the customs blacklist”, and to “many other things that have come to light that you may or may not be aware of and before we go down a road from which we cannot return I believe it is my duty to inform you fully of everything that has taken place…”
“We need to urgently draw the line with Norman who is loose cannon at best. He is not reporting to me or anyone else by the way he is operating.”
“It is true that the new business plan produced by Mike and Norman in January contained significant quantities of Sovereign, but I would point out that Stateline had been withdrawn, Dorchester was building back year on year as the market cleared through the damaged product. Without any new brands available to Tlais what do you expect? As I have to produce a minimum of$5 million a year to survive.”
“I agree that it looks difficult to make a business case to deliver his supposed$ 5m + per annum requirement from the cost and overhead that we have indicated to him, and that does lead to suspicions that he is looking to focus on duty-free activity. I think our approach should be to be seen to be working cooperatively to develop the business options (to continue to make it difficult for him to fallback to a legal challenge route); whilst ensuring that this will be [a] properly controlled and managed operation…. I am sure that there will be more twists and turns here and Tlais may well conclude that he can’t make it work, but in the meantime, we are buying time and building a fact trail that helps us. In the meantime, despite several requests to improve our offer, we have held the line – as you say, his banking problems (if genuine) are his concern”
“He is going to dance around all he can but the fact remains those markets cannot absorb this level of new product overnight. Our competitors have been there for some time with recognised brands. We have all made the best efforts to move it forward but reality is that in emerging markets margins are low and to build volume takes time. His profit expectations are optimistic to say the least, Norman seems convinced that Dorchester will sell very well, I really think he has lost touch of reality.” “Neutralising the business”
“I hoped that by insisting on Gallaher having$ 3m of marketing p.a. before any profit split we would effectively neutralise the business if shipments are to Duty Paid Market because the volumes become very unlikely i.e. 3 BN p.a. just to cover marketing on$ 10 margins”
“As we are dealing with a British Company with a limited mentality it is important that you prepare the … information in a manner that caters for this type of individual. A good professional western presentation is essential....”
“Under that agreement, in respect of all sales made by Tlais Enterprises Limited you have various obligations, including: a. To comply with our Policy on International Trade; b. To ensure that sales are intended for final sale to consumers within your territories; c. To supply us within 7 weeks of any shipments with evidence of the shipment of the order to the appropriate territory; d. To keep paper records showing clearly all sales made by you; and e. To ensure that anybody to whom you sell goods complies with our Policy on International Trade”
“I am very concerned at their potential reaction if I simply supply them with your current explanation Which was that the problems had arisen because TEL had supplied damaged Dorchester to various territories mostly on an FOC basis. . In the circumstances, I must ask you to provide me with details of: i. The parties to whom you have supplied Iranian and other Dorchester product in Libya, Afghanistan, Iraq and elsewhere; ii. The countries within Latin America and parties to whom you have supplied Dorchester; iii. The volumes of Dorchester that were mixed with Sovereign and the parties to whom you supplied these goods; iv. Given your obligations to ensure that sub-distributors to whom you sell product comply with our Policy on International Trade, the steps that you took to ensure that your customers exercised proper control and management over goods that you supplied.”
“I would TRY and control up to 80% of the business during the one and a half years initial period. I also requested a replacement for Sovereign that had previously been in the hands of smugglers”
“As you know we have been trying over the last six months to find a way to reengineer the business model with TEL to make the controls and management as watertight as possible. We are not there yet and we have increasing concerns that we will ever achieve this with TEL. The commercial discussions are ongoing and could well break down – we will know in the next few weeks …If they do break down then we would understand why you want to issue a red card given that between us we have done everything possible to make things watertight. As you mentioned, we agreed protocols with TEL in 2003 and despite the assurances given about Dorchester there have been ongoing seizures. If you do issue a red card, then under the contract we would have to formalise the suspension of our distribution agreement which would ensure no further sales.”
“Ahead of the meeting [i.e. the Treasury Select Committee Meeting on12th January 2005 ] you may want to issue a red card and … given the level of seizures of both Dorch + Sov, we would understand TK [Mr Keevil] would be happy to join the discussion if you have not decided Our perception under the MOU that it is both Gall + Customs interest for you to issue Red Card before + not after Select Committee. TK has briefed our Chairman who supports this viewpoint If no red card we cannot under distribution contract fail to supply + we now know that we will be unable to have control + management that we both require. There is now pressure to supply TEL with stock. As we have not supplied whilst negotiating new agreement we are now being threatened with legal action for not trading. If there are others in C & E who do not want to progress this, then we would be happy to meet whoever.”
“Most importantly, [he] was not satisfied that what was currently proposed by Mr Tlais would ensure that we could exercise satisfactory control and management over the Gallaher brands which were proposed to be supplied to the new business if the arrangements were finalised”
“In view of Gallaher’s concerns about whether future supplies of cigarette would remain in their intended destination and the level of seizures already established, and in keeping with the terms of our MOU, Customs request that Gallaher take action in respect of the risks of further product supplied to TEL contributing to the tobacco smuggling problem in the UK. We will want to review this action with you at our next meeting in the New Year.”
“I understand that the “red card procedure” … is now encapsulated within the [MOU].. Nevertheless, so that Gallaher and TEL are absolutely clear as (sic) the position, I need your confirmation as a matter of urgency that TEL should now be treated as being subject to the “red card procedure, I should stress that in seeking this clarification, I also understand that the action that needs to be taken is solely our responsibility”
“If on termination of the Agreement the Distributor has on hand any stocks of the Brands… GI shall be entitled (but not bound) to purchase all or part of such stocks from the Distributor or require the Distributor to sell all or part of such stocks to a third party nominated by GI at (in respect of stocks of the Brands) their ‘in warehouse cost price’ to the Distributor (unless such stocks shall not be in a sound and saleable condition in which case at their lesser value)…. The price payable by GI to the Distributor on any such purchase as aforesaid may be set-off by GI against the amount of any monies then owing to GI by the Distributor but without affecting the right of GI to recover any balance of such monies owing to it.”
“So far as unsold Stocks are concerned, your clients are obliged and TEL hereby requires them to cancel [invoices outstanding] and collect the unsold lights on payment in full of the costs incurred in the storage of these goods and the settlement of the destruction account; TEL will look to GIL for (amongst other things) payment in full of the costs and demurrages surrounding the storage of these goods for the full period that they have been in the possession of TEL…”
“After consultation with Abou Hameed, the only way for this business to be successful is for us to do it ourselves, with no intermediary assistance. This is too important a business to place in the hands of a trader who would not give it due care. Therefore, at the insistence of our Protector, we have decided to conduct the sale and distribution in Iraq ourselves”
“Subject always to applicable laws and regulations, sales of Gallaher cigarettes (and other products) will only be made available to distributors, joint venture partners, licensees etc who are prepared to provide the following commitments to Gallaher that: • They share Gallaher’s vision to build business in legitimate markets and are prepared to devote the necessary resources to develop trade in those countries; • They will only sell products supplied to Gallaher into countries where duty will be paid (excluding duty free outlets) and that they will comply with all applicable laws and local requirements relating to the importation of cigarettes into those countries; • They will take no action to promote or facilitate the resale of products to their customers in violation of applicable laws and regulations; • They will not sell products supplied by Gallaher into countries where Gallaher has other distribution arrangements in place for such products or infringe Gallaher’s trademarks; • They will not trade with those that they know are or have reason to believe are involved in smuggling cigarettes. Indeed, they will make the necessary enquiries to satisfy themselves that their customers in turn will behave responsibly; and • They will co-operate with Gallaher in allowing Gallaher representatives to visit emerging markets for the purpose of auditing the supply chain to those markets and to inspect stocks in the possession of distributors, wholesalers and retailers.” • They share Gallaher’s vision to build business in legitimate markets and are prepared to devote the necessary resources to develop trade in those countries; • They will only sell products supplied to Gallaher into countries where duty will be paid (excluding duty free outlets) and that they will comply with all applicable laws and local requirements relating to the importation of cigarettes into those countries; • They will take no action to promote or facilitate the resale of products to their customers in violation of applicable laws and regulations; • They will not sell products supplied by Gallaher into countries where Gallaher has other distribution arrangements in place for such products or infringe Gallaher’s trademarks; • They will not trade with those that they know are or have reason to believe are involved in smuggling cigarettes. Indeed, they will make the necessary enquiries to satisfy themselves that their customers in turn will behave responsibly; and • They will co-operate with Gallaher in allowing Gallaher representatives to visit emerging markets for the purpose of auditing the supply chain to those markets and to inspect stocks in the possession of distributors, wholesalers and retailers.”
“I further confirm that I will obtain the same undertaking from any sub-distributors to whom I supply any products of the Gallaher Group”
“I used to talk to Khaled in daily basis, daily basis, maybe two or three or four or five times per day, sometimes. And sometimes in the night, to tell me exactly where it is going and what he is making and what he is doing. The shipment and everything”
“I have done my duty. Adam Trading has sign the ITP, I have given my order, and my instruction also he has to follow the customer. I cannot follow everything myself.” “I told you, all the time, my instruction to Mr Adam Trading to be sure about his distributor. I cannot tell you more than that.”
“In the event that Gallaher discovers that any particular distributor has been shown to be behaving improperly or Gallaher has reasons for believing that they may be, Gallaher will re-visit that trading relationship with a view to discontinuing that relationship, if appropriate. In particular, if Gallaher concludes that any distributor is a smuggler it will terminate that trading relationship with immediate effect. In turn, Gallaher will expect its distributors to endorse a similar policy in respect of their customers.”
“As a result of the …[Adam Trading Schedules] it was clear by mid-February that the reason for the extremely high level of seizures ….could only be explained by the lack of control exercised by TEL over its customers and, in particular ….Adam Trading. While the lack of control and management was the obvious inference to draw from the seizures [the Adam Trading Schedules] provided confirmation that the inference was correct and indeed showed that the failings by TEL were not merely the result of a lack of care, but most probably the result of deliberate complicity in smuggling..”
“[The Adam Schedules were] clear evidence ..not just that [TEL] had failed to take proper steps to control the goods, but .. they had been at least reckless in the way they sold, and potentially complicit with smugglers”
“What we were seeing on the face of it was evidence of shipments to a whole variety of ports where we had not received any documentation to support any rationale as to why [they] were going there. On the face of it, they were wholly incompatible with shipping to the markets in question and we believed they were evidence of malpractice by Adam Trading at least and given the close relationship with Adam Trading and Tlais, cast grave concerns about Tlais’ complicity in those arrangements.”
“full, proper and accurate accounts and records showing clearly all sales transactions and inventories relating to the Brands and all services rendered by the Distributor pursuant to this agreement and will produce the same to GI or its duly authorised representatives upon reasonable notice. The Distributor shall retain all such accounts and records for at least six (6) years or more if required by applicable law”
“The only accounts disclosed by TEL to GIL as part of the disclosure process are for the period1 November 2002 to31 December 2003 . These show negative working capital as at31 December 2003 and total assets of only about$ 12,800 . However, what is particularly significant is that the accounts do not appear to reflect the business of the company; they show only some modest fee income when they should, on TEL’s own case, reveal millions of dollars’ worth of cigarette sales resulting in about$9 million profit for the 2002-03 period. However these sales and alleged profits are not recorded anywhere in the accounts. It is clear to me that the accounts as presented to this court do not appear to show anything like a true and fair view of TEL’s financial position, if indeed it was the entity that was carrying on the business referred to in the defence and counterclaim. The absence of other accounts or financial information to support TEL’s trading position is also a matter for concern in view of its extensive claims for alleged loss of profits and other business losses.”
“4.12 The US$15.3 million unmatched third party bank receipts (i.e. approximately US$34.7 million less US$19.4 million ) can be split into the following four categories: • US$1.8 million which appear to relate to known customers (or persons / entities identified as the payer of an amount already matched) but which we are unable to match to specific entries in the customer account statements; • US$3.1 million from named third parties but which are not a known customer (i.e. a party identified as the payer of an amount which we have been able to match another receipt from) • US$1.4 million of receipts from OTI which are matched against sales invoices identified separately; and • US$9.0 million of other receipts for which we have seen no further information”
“4.13 We do not know what these unmatched receipts relate to, however we agree that there are a number of possible explanations. These include: • receipts from customers as listed in the customer accounts, for which we do not have sufficient information to make a match; • receipts from sales which have not been included within the accounting records disclosed; • receipts from old debts due from sales made in the Namelex era; • receipts from Mr Tlais, or members of his family to provide additional working capital to finance the business; • receipts for business carried out by Mr Tlais which is unrelated to that of TEL”. • receipts from customers as listed in the customer accounts, for which we do not have sufficient information to make a match; • receipts from sales which have not been included within the accounting records disclosed; • receipts from old debts due from sales made in the Namelex era; • receipts from Mr Tlais, or members of his family to provide additional working capital to finance the business; • receipts for business carried out by Mr Tlais which is unrelated to that of TEL”
“Even if there were any respects in which it could be considered that TEL fell down in any way on the strict letter of the requirements of the distribution agreement, any defaults could in no sense be considered serious or irremediable (as I have described in this witness statement). TEL’s conduct at all times was agreed to or acquiesced in by Gallaher itself and/or was entirely reasonable and appropriate given the situation in which TEL was dealing and in which it was placed by Gallaher.”
“Under our contract you are, of course, required, amongst other matters, to notify us of the final destination markets and provide the documents necessary to demonstrate that the goods have gone to the final destination markets. HM Customs will undoubtedly ask Jeff for this information in the near future. Could you please arrange for Mike to provide him with this information? At the same time can you let Jeff have a full stock reconciliation and your proposals for liquidation of your stocks, as he will need this information for HM Customs? If you could provide this information next week it would be very helpful.”
“Since that point 5000 cases of Sovereign have been released, 1600 fresh Dorchester full flavour and the full balance of Businessman. All other stocks remain the same. The location of the goods also remains the same.”
“promptly after the arrival of each shipment of the Brands in the Territory, and in any event within (7) weeks of the arrival of any shipment of Brands to a territory, [TEL] shall supply to GI or Gallaher evidence of the shipment of each such order to the appropriate Territory.”
“Materiality involves considering the following: the actual breaches, the consequence of the breaches to [the innocent party]; [the guilty party’s] explanation for the breaches; the breaches in the context of the agreement; the consequences of holding the agreement determined and the consequences of holding the agreement continues”
“I cannot be the accounting, I cannot be the salesman, I cannot be everyone in the office. He has a duty. I was getting a telephone call. He was informing me about money…the money has been received, this is what I used to know. Now, the details of who sent it, who does this and that, I have no idea”
“All Brands sold by GI to the Distributor under this Agreement are intended for final sale via distributors to consumers in the Territories. The Distributor agrees therefore to… (c) sell the Brands in amounts commensurate with the estimated demand in the intended markets within the Territories.”
“The failure or omission of GI at any time to require the Distributor’s performance of any obligation or duty under this Agreement shall not affect the right to require performance of that obligation or duty in the future. Any waiver by GI of any breach of any provision hereof shall not be construed as a waiver of any continuing or succeeding breach of such provision a waiver or modification of the provision itself or a waiver or modification of any other right under this Agreement…”
“We will be preparing portfolio strategy for this and other AMELA markets including customer research identifying preferred distribution profile for brands and regions. We want to have ability to approach, sanction choice of distributor (sic)”
“I probably met with the ITC every six weeks and at no point did they say to me that Dorchester had a 3 or 4 per cent market share… I did not ask them what the Dorchester market share was but I do recall that we were assessing the launch of a Virginia brand and apart from – well, to be honest, they laughed at us and they said: what is the point of doing that? There is no one here who smokes those kinds of cigarettes. So we asked for the listing of what they had imported, which they gave to us. This would have been 2002, and nowhere did we see Dorchester on that or indeed Sovereign.”
“It is not possible to import value brands into the Syrian duty paid market as GOTA seeks to protect its domestic franchise. There is a limited opportunity in duty free (border shops) for Dorchester as an extension of the Iraqi market”
“the Distributor will (1) take no action to promote or facilitate…., or (2) resell the Brands…”. “resell the Brands to any person, corporate or unincorporated entity, state or other governmental or quasi agency that the Distributor knows or has reason to believe to be engaged in any illegal trade in cigarettes.”
“the best available in their respective markets and had many years of experience in the cigarette business. Each of them was a substantial commercial entity, involved with other markets, manufacturers and brands. Certain of them were the largest distributors in their individual countries and controlled the bulk of the cigarette business (of a number of manufacturers) in their respective markets”
“Q. What due diligence was performed on this company? A. I told you, all the time, my instruction to Mr Adam Trading to be sure about his distributor. I cannot tell you more than that. I am following Adam Trading, I am following the spotted goods, everything, you know, really in the end, I cannot go to the smoker, he does not give me ITP.”
“The Distributor (whose exclusive business is tobacco distribution) wishes to become GI’s exclusive Distributor in the Territories for the Brands for an initial period of 5 years, to be automatically renewed at the end of that period for a further 5 years subject always that: (a) the Distributor shall not have committed a material breach of the Agreement which is not capable of remedy as provided for in Clause 10(ii) of this Agreement; and (b) the Distributor shall have achieved the targets contained in Schedule VI to this Agreement for years 1 and 2 of the Agreement and subsequent variations thereof for the period years 3 to 5 of the Agreement; and (c) the Distributor has the ability to effect the efficient and universal distribution of the Brands in the Territories subject to the terms and conditions herein contained and the policy on International Trade of the Gallaher Group which the Distributor has signed and with which it has confirmed that it will use its best endeavours to comply.”
“which in the absence of any material default and compliance with his business plan already agreed with Gallaher for the first two years and to be agreed for the remaining 3 years, will be automatically renewed for a further five years;”
“.. be pronounced not guilty of the acts with which they are indicted, as said acts are mentioned and thoroughly described in the committal order no 1138.2005 of the Thessaloniki Appeals Court Panel Council”
“1. This conviction was made unanimously by three senior Greek judges after a major criminal court hearing. 2. It was made after consideration by those judges of considerable oral and documentary evidence presented by the Public Prosecutor and in circumstances where Mr Tlais was represented by Greek Counsel and had a full opportunity to present his case. 3. Whilst it is fair to say that there is an automatic right of appeal this is a well reasoned judgement delivered by experienced judges with no obvious flaws in it.”
“That GIL would co-operate with TEL so as to assist TEL in the exercise of its best endeavours under clause 2(v) (b) of the TEL Agreement and in conducting its business in accordance with the ITP, further or alternatively that GIL would not act in such a way as to frustrate or impede TEL in the exercise of its best endeavours or in the conduct of its business as aforesaid.”
“That GIL would act in good faith towards TEL in its dealings with TEL and in its dealing with third parties (and in particular HMCE) in relation to TEL’s business.”
“Yemen poses a real risk of instability due to the current war on terror and as such I would recommend that we continue with Yemen within our programme to grow slowly and redirect the investment focus to the Gulf region which will yield better returns”: Mr Tlais accepted in evidence that: “We was worried about Yemen. It is true, we were worried but we carry on.”
“be entitled to look to GI for the loss of any of the Brands that are defective due to a mistake in Gallaher’s manufacturing process or that are otherwise unsaleable due to reasons for which GI is solely responsible. The Distributor shall, however, bear the loss of any Brands that are unsaleable because of damage suffered after the Distributor takes title to such goods and while such goods are in the hands of the Distributor or its distributors or wholesalers, if any. Except as aforesaid, GI does not warrant the merchantability or fitness of the Brands, and all such warranties, explicit or implicit, are hereby specifically disclaimed and denied.”
“As to the current old stock in the market, we await the final count from Hazem and the proposed arrangement for destruction …any final count will be done by us and we will wish to supervise the destruction in order to process compensation”
“In the case of the stock which had suffered deterioration in Iran, it is perfectly feasible that product, when correctly shipped and managed in the chain, can spend 2 weeks port side in the Middle East, With ambient temperatures in the 40° C+ bracket temperature inside containers can rise to the levels used for these experiments. It can fairly be argued, therefore, that the product supplied to the market was not fit for purpose and that we are therefore liable for the deterioration”
“In Dubai I indicated you will supervise the separation of stocks according to code and will focus on releasing the approved codes to market in accordance with whatever agreements Abu Hameed reaches with Hasem”
“It would have been in everyone’s interest if they [the Dorchester] had been destroyed from the beginning. The problem is that when a customer is sent out of condition goods they would immediately start to incur costs that at some point they will seek to recover and then the goods are sold again and again to unsuspecting individuals. I have no knowledge of the individual shipments you have quoted and cannot, in this instance, tie down the shipments to particular clients. We have endeavoured to clear the goods within our markets as agreed with Gallaher…We are very disappointed these goods have entered the transit market as this was not something that would have happened in the past with Dorchester and can only be as a result of the clearance of these damaged goods.”
"6.$10 per case premium on Sovereign agreed going forward post$1 million ."
“(4) [Gallaher] and Mr Tlais want to enter into a direct trading agreement via a company that he has procured is incorporated [sic], if the current Distribution Agreement between NTA and [Gallaher] can be lawfully and properly terminated (5) The parties hereto desire to acknowledge, represent and warrant to each other that there are no direct or indirect actions, claims or disputes arising out of or related to the Distribution Agreement or otherwise between them” and provided that: “in consideration of the above recitals and their desire to enter into a new business arrangement (immediately following the termination of the Distribution Agreement) the parties hereto agree, acknowledge, mutually covenant, represent and warrant to each other as follows: 1. There are no direct or indirect actions, claims or disputes between them of whatever nature whether actual or pending or prospective (a) arising out of or in connection with the Distribution Agreement or (b) any other course of trading relationships, business dealings, discussions or exchanges of correspondence between (i) GI or other members of the Gallaher Group or their respective directors or employees and (ii) NTA, Mr Tlais or Highstreet Enterprises or any company or business of which NTA, Highstreet Enterprises or Mr Tlais is a director, officer employee, shareholder or with which NTA, Mr Tlais or Highstreet Enterprises is otherwise directly or indirectly connected; 2. If any party to this agreement believes that it has any such claim as is described in Clause 1 of this Agreement such claim is hereby irrevocably waived.”
“The law as to the accord and satisfaction of a breach of an agreement was much discussed in argument. There is no doubt that the general principle is that an accord without satisfaction has no legal effect, and that the original cause of action is not discharged as long as the satisfaction agreed upon remains executory. That was decided so long ago as 1611 in Peytoe’s Case. If however, it can be shown that what a creditor accepts in satisfaction is merely his debtor’s promise and not the performance of that promise, the original cause of action is discharged from the date when the promise is made: Sibree v Tripp; Hall v Flockton; Evans v Powis.”
“Legal Matters (ii) It was further agreed that the termination letter would confirm that; … (b) that (sic) you, High Street Enterprises Ltd., NTA and its directors, officers, employees and shareholders will have no claims against the Gallaher Group Plc, its associated companies, its directors or employees arising in any way out of the NTA contract or its termination and GI shall give an equivalent confirmation to you, NTA and its directors (iii) It was agreed that you would sign and observe both our International Trade Policy and a new five year distribution agreement between Gallaher International and Tlais Enterprises Ltd, copies of which have been supplied to Dinos.”
“I have undertaken my own analysis of TEL’s financial records, and also the financial and trading records from the Namelex era. These documents have been disclosed to Gallaher. I can confirm that the figures set out in the Counterclaim Schedule to TEL’s Amended Defence and Counterclaim are based on correct assessments of the finances of the TEL business and its profitability (and projected profitability). The schedule to the counterclaim accurately assesses the losses arising from Gallaher’s breaches of contract.” 38. This analysis, of a claim for hundreds of millions of dollars, was carried out in manuscript and the working papers were then thrown away. Its nature, content and validity are, therefore, impossible to assess. The Expert Evidence on markets TEL Mr Gough’s first report 39. On16th January 2007 Mr Gough produced a one page report in which he expressed the opinion that the projections of growth in the various markets as set out in Schedule 1 were “essentially reasonable, on the basis of the assumptions stated” and that the assumptions themselves were inherently reasonable. He had three qualifications in that he believed (a) that the figures for Lights in Syria were over estimated by about 25%; (b) that the figures for Lights for other markets with the exception of Sudan were overestimated by about 10% and (c) that he felt that he had insufficient knowledge of the markets in Sudan to be able to comment on the figures for that country. 40. I note that Mr Gough’s evidence was that there was no market in the Namelex era in the Namelex territories (which included Iran, Syria, Lebanon, Jordan, Libya, Iraq, Yemen, Sudan, Egypt, and Afghanistan) for any of Gallaher’s brands. Mr Gough’s second report 41. On13th February 2007 Mr Gough produced a further Market Report in which he expanded on his earlier views. In relation to the claim in respect of 2003/4 he expressed the following views: (a) Iran. TEL’s allegation is that it would have sold 300,000 cases of Dorchester Full Flavour and 60,000 cases of Dorchester Lights. This would indicate a market share (of a market of 50 billion sticks) of 6% for Full Flavour and 1.2% for Lights. He initially thought that this level of market penetration was somewhat greater than he had expected to see and would have anticipated that penetration would be perhaps 4.5% and 1% respectively at the price point being charged in year 2 of the TEL Agreement. But he noted TEL’s allegation that the historical sales figures by the end of 2002 were between 4% and 7% and growing and Gallaher’s evidence suggesting demand of 20,000 cases per month by March 2003 It is not clear exactly what evidence Mr Gough was referring to. . On the basis of those figures he thought that TEL’s figures of 300,000 and 60,000 were realistic. (b) Libya: He estimated that the Libyan market was in the region of 10 billion sticks so that TEL’s projections would have been some 5.6% in 2003/4, which he thought was a reasonable figure. He believed that the TEL volume figures were broadly correct. The price of$ 125 per case was at the top end of expectations but not “totally unreasonable”