in the bristol employment tribunal case … · nov/dec 2004 821a-d- “intro” bonus (allegation...

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IN THE BRISTOL EMPLOYMENT TRIBUNAL Case No:1402867/2006

B E T W E E N:

MR BRIAN LITTLE

Claimant

- and -

(1) MAGELLAN AEROSPACE (U.K.) LIMITED

(2) MAGELLAN AEROSPACE CORPORATION

Respondents

___________________________________

CHRONOLOGY (V2.0 – 26 February 2012)

___________________________________

Background events

7 May 2003 730 Mayflower Aerospace – Potential Purchaser?

Email from Phil Underwood to Brian Little {749}

“Brian

In case I never make it clear I personally want to thank you for all your efforts

you are making to salvage this business. I more than anyone recognise the

example you set in time effort and professionalism in this business, (not of

your own making). I am not very good at saying thankyou, but you continue

to recognise my position in this affair and stick up for me all the time. Thanks

for elevating the issue below they are ignoring the £80K problem (his loan)

and this will become an issue sooner or later.”

23 Aug 2003 749 Mayflower Aerospace – {749} “Cash continues to be managed tightly

but remains on target for the Group to remain within its present facility until

10 September 2006. All creditors remain to terms (bar four who have been

contacted individually and agreed to a short-term deferral) and debtors are

largely to terms ie the Group retains customer support”

9 Oct 2003 756A Email from Ken Brundle in Bombardier to C “I advise you strongly to

look at Magellan before you get involved again. Magellan have started their

relationship with Shorts in a disasterous way, so much so, that I have severe doubts

whether they are the type of Company we want to do business with.” and C reply

Causal in Allegation 3: Not in ET3: RANeill :RAN w/s = 18-20:Not in RCS

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11 Oct 2003 757 Email exchange between Mr Underwood and Mr Little

“Brian

I have again requested from Richard Neill what my position is in the business.

I have no response to my earlier request and I am afraid this is no longer

acceptable. The issues are what is my role, will I get a new contract, is there

an incentive package, when will my loan be settled.

Sorry to be frank but enough is enough, they have had the business for 2 weeks

and are not looking after the people side of the business. There is a general

feeling of uncertainty throughout the business when we should be picking

people up.

I have set a deadline of Wednesday, so my boss and mentor thought it

appropriate to let you know. Regards Phil” and C reply

21 Oct 2003 757A-D Pinsents draft with C employment/ role options choices for R

April 2004 Completion of MAC/MALUK acquisition of Moore’s of Bournemouth

May/June 04 790/791 Keith Baigent letter to Little (Allegation 2 : Not In ET3 :Not RAN)

23 June 2004 366-379 C forwards Pinsents documents on Memorandum on Directors

Responsibilities in Potential Corporate Insolvency situations to RAN JD and

Moeller

10 Sept 2004 805B Claimant – Magellan Aerospace perspective

C writes to Edwards stating /confirming he is not interested in CEO role - do

not see anyone in our corporation....

Nov/Dec 2004 821A-D- “Intro” Bonus (Allegation 10:Not in ET3:Not RAN/JAB 24&JD17)

20-22 Jan 05 841A+ Off site in Oxford - David Stewart – throwing pen

(Allegation 9: Not in ET3 : Not in RAN / JAB23 & MW8 only)

830F-G C received PinsentMasons Employment Update – Discretionary

bonuses : A Word of Caution – see 17 March 2006 entry (sent with MALUK

Engineering employment contracts to JAB/RAN in late Jan 2006 after visit)

(Allegation 32 ;Not in ET3 : RAN43-52: JD14-23 : JAB32-38.

16 March 2005 880A-D Edwards and Neill ask C to take on wider Group duties whilst

retaining existing MALUK functional responsibilities.C takes on MAC

business strategy, business development,sales & marketing primary

engineering and IT.

9 April 2005 886 C Email to Neill and private forward to Butyniec re JSB as CEO

Allegation 29: Not in ET3: RAN41/30 : JBU11 : ME10? Not in RCS

Nov 2005 1120A+ C Directing parts to S/Con Allegation 51:Not in ET3:RAN 27/No others

3

23 Nov 2005 1131 Mr Vandersteen of Airbus Procurement sends email with first complaint

from AUK to Phil Underwood includes

“Personally I have no intention of re-arranging a strategy meeting until such

time that you can present to Airbus a credible plan to recover today’s poor

delivery and quality performance.

To be clear, you personally committed to both Andy and myself a D1 in excess

of 85% across the patch by December. As I see it you have no plan, only a

leap of faith “intent”.

I have asked Mark Mc Intyre to arrange (as soon as possible) a session with

yourself and your Canadian boss to establish how you are going to inject a

dose of credible operational and change management leadership in to all you

sites, as well as a complete layer of organisational skills and expertise to

manage and improve all the chronic fracture points you have .................

24 Nov 2005 1136 Underwood to Butyniec

“Steve Vandersteen is head of supply chain logistics and therefore

responsible to Airbus for our performance. We are struggling and they have

lost faith in our ability to meet the increased rates in our business.

So suggest you visit and we put our heads together and come up with a plan

we can achieve.”

Early Dec 05 1143 John Dekker notes from telecom with Smith – relates to 1154 below

1154 – MALUK Budget updates for MAC and Helen Clorley – Allegations

14,16,17,21 : Not In ET3 : Not in Mr Neill witness statement / SS 39-46

18 Dec /2 Jan 457-480 Delinquent in having MALUK Board meetings – email exchanges.

Mr Smith appointed to permanent position and MALUK CFO / Secretary

23 Dec/2 Jan 1226A-M MOU2 – Allegation 26:Not in ET3 RAN42 / JD28-29 RCS161

5 Jan 2006 464-466 MALUK Board Meeting –

Cash It was stated that MALUK do not anticipate requiring any funds from

Magellan Corporation in the near future other than for the A350 amortisation

and any amounts that may be required to fund property purchase.

It was noted that the BNP funding for the “new” A380 amortisation deal

needs to be in place by end Q1.2006.

R Neill stated that the expectation was that MALUK would raise sufficient

funds to fund the purchase of the Bournemouth property. However, this is not

expected to be met from any trading cash surplus.

January 2006 1275/3 Bonuses for UK Head /O (Allegation 20:Not in ET3:Not in RAN)

Dec/Jan2006 1261/1269 Haydn Martin – Hamble (Allegation 24 : ET3/9.1: Not in RAN )

21 Jan 2006 1336 Martin Bellia to Shawn Smith copy JAB and C Bonus payments and

2.3% (Allegation 36 : ET3.9.10 : RAN53/JAB39/ JD27/JBU17/SS57) with

forms 1xxx-1xxx signed by C (Butyniec noted by C initials - after short

discussion on 23/ 24 Feb 2006 in Bournemouth.) RCS Para 73 and 102.3

4

Jan/Feb 2006 1371/1391-1393 Bids (Allegations 28/34 : Not in ET3 :Not in RAN/JD24)

30 Jan 2006 1448-50 Quarterly Certification Letter – MALUK Engineering – Q4/2005 – C

and SS signed off2- 4 Feb 2006 1398-1400 Email exchanges re MALUK

Creditor Payment Policy

3/5 Feb 2006 1401-2 Cash get back on budget SS - various email exchanges JD/ BL / CP

SS – JD - copy PU/SS “We are still in a situation whereby all creditor

payments are authorised by myself first, and we are only sending payment to

those that are a threat to production or are threatening legal action”.

10 Feb 2006 3545-3547 – requested Oct 2007/Ordered at Request 14 - 28 Nov.2008

FY2005 Audit Closing minutes by E&Y

Challenge for 2006 is to increase prices as these are currently not reflective of

costs; notably through discussion with Airbus in Q2.

There will be considerable cash flow input (£2m, but dependent on price rises

negotiated) required in 2006 to finance development. This will be derived from

a mixture of Invoice discounting and parent funding.

Audit differences Given the timing of the meeting only the largest differences

were discussed at the meeting......... Engineering Overheads was not

Protected Disclosures start

14 Feb 06 PD14 Made to Smith: Engineering Overheads (BL w/s 234 On 14th

February

2006 the Claimant forwarded Mr Precious above email to Mr. Smith and

demanded an explanation as to why such a policy was being implemented)

Respondents PD schedule; document 3545-3547 and Mr Precious SWS

paragraph 8. (para 299 CS) Engineering Overheads Brian Little W/S

para 157

Respondents PD schedule

PD 14: Col 1 Discl No : Col 2 QD No Col 3 (1) Law No and Col 3(2) R/B = No

16 Feb 2006 1430 Micklewright concern re delay and focus of Canadians – AUK

complaint and

1433} which states “andy copy of schedule as discussed. Please work really hard

with jim b to make this a success. many thanks brian” . Contra to Allegation

41/ET3.9.9. Not in Neill witness statement and no documents to support

19 Feb 2006 1457-1460 Quarterly certificate for MAC – Q4/2005 - signed by BL -

includes

“Rich/ John We have discussed the situation on the Airbus A340 programme

and the continuing challenges regarding future programme volumes/sales.

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Clearly this may have some inpact on the Aeronca situation and I believe we

need to keep under continual review during 2006. Within Airbus there is now

some discussion regarding A3456 programme that is looking for various

options as regards the A340 product line. I will keep you both advised” - BL

19 Feb 06 1437 C sends email re possibly only further 75 aircraft/300 engines - total

150 a/c

22 Feb 2006 1445A-B: Airbus A340 pricing – exchanges with J Furbay / RAN and C

23 Feb 2006 1445C Neill instructions re A340 pricing-“Walkaway has to be around 15% ...”

13 Mar 2006 1482/PwC Mr Smith email to Dekker re FY2005 audit adjustment summary

The inclusion of £114K for engineering overhead absorption which had the

effect of increasing Engineering/MALUK/MAC profitability.

Mr Smith includes in schedule potential offsets to the management accounts

submitted by MALUK which includes the removal of budgeted accruals for

Engineering Bonuses (£90K) and Head Office bonuses (£25K) which had the

effect of increasing Engineering/ MALUK/MAC profitability.

Feb/Mar 06 1483A C interference in Capex Allegation 52 ; Not in ET3 : RAN29:No others

16 Mar 06 C raises issue about recoverability of NRC (PD21 not pursued)

17 Mar 06 PD 16: Made to Neill and Ball C raises MALUK capriciously failed to

consider paying Engineering Bonuses (“EB”)


PD 16 : Col 1 Discl Yes : Col 2 QD No Col 3 (1) Law No and Col 3(2) R/B = No

Causal in Allegation 32 ;Not in ET3 : RAN43-52: JD14-23 : JAB32-38. .

RCS paras 102 (7), 112 (1), 137–PAU, 146 – PN,182 (4)- PP,225/226 and 352

Mar-Aug 06 PD 20: (see also below) Made to Neill and Dekker: In addition to the above,

several times between March and August 2006, the Claimant informed Mr

Neill and Mr Dekker that, in the absence of any firm undertaking or agreement

from Boeing, the Second Respondent could not have a reasonable belief that

its actual profits for the first half of 2006 were accurately reflected in the

Second Respondent’s published quarterly financial statements.


PD 20:Col 1 Discl No : Col 2 QD No Col 3 (1) Tends breach Yes and Col 3(2)

R/Belief = Yes

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11 May 2006 246 MAC Board meeting – C present

Mr Edwards advised the directors that the following are significant issues the

Corporation has to resolve : Aeronca’s contractual issue with Aircelle on

pricing for the A380,A340 and A318 and the contractual pricing issues and

operation difficulties at Haley.

15 May 2006 1715 from Ms Ball email to M Edwards – copy Neill and Butyniec

C - ....£13012 ... C no understanding of people or money ... bankrupt company

Allegation 32 Not in ET3 Engineering Management Bonuses – employment

contracts (RAN43-52: JD14-23 : JAB32-38).

23 May 2006 1750 e.g.Sample letter to Mr Phil A Underwood signed by JSB in which

MALUK Engineering Managers advised that bonus payments are in

recognition for FY2005. Also new employment contract terms / bonus plans

7 June 2006 1778 C asking Walker about legal advice on Madeleine Harris redundancy

(Allegation 37 / ET3.9.2 – Not in Neill witness statement)

June 2006 1790 A340 pricing - Furbay – RAN , JSB,JD, BL, Don Boitson

“After some lengthy discussion with Nicky I have some progress to report as

follows: “A340 – was able to move her to 9.7%, up from 6%. I then moved

from low teens to 12%. While we are not finished yet, additional progress is

going to be very tough.”

28 June 2006 1807 AUK Mr Vandersteen email to BL and PU- Complaint 2

“Neither Magellan Delivery or Quality performance have shown any signs of

improving in the last 8 weeks – in fact we have felt significant deterioration in

June ......................”.

10 Jul 2006 1847/PwC Mr Groot email to Mr Dekker MAC Cash Flow Forecast

Attached is my review of the cash flow forecasts from this past week

MALUK difference due to assumption of sale of $3million sale of receivables

not achieved. However, £2million in advances from MAL have been made

which is real cash shortfall. Explanation requested for deterioration in cash

flows over last two week period – £586K .

12 Jul 06 1859 email Walker to Jo-Ann Ball - BL is treating me like a junior

inexperienced person I feel like walking out!! Again). – issue re redundancy of

employee on maternity leave

18 Jul 06 1874 email from Walker to C: Sorry if I seemed a little short last week I have

had some serious family problems which affected me more deeply than I could

have thought. (Allegation 37 / ET3.9.2 – Not in Neill witness statement)

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Respondents Closing Submissions at Para 64- 66 and 182 (1) , 350

19 Jul 06 1875 email from Walker to Ball re Paul Precious’ exit interview: “he was

pretty scathing about Shawn (Smith) and his technical ability on the actual

words committed to paper!

C had several meetings at Farnborough Airshow: It was obvious that

A340 sales were disastrous and that the future looked very poor as A340

being superseded by A350XWB and A340 Engineering upgrade cancelled.

20 Jul 06 1876 Email Walker to Ball that Dekker needs “to conclude whether Shawn

lacks in any way technically I believe”

21 Jul 06 1883A – Farnborough obvious that A340 was being superseded by A350XWB

Smith goes on holiday for 2 weeks from Friday 21 July 2006 ---

25 Jul 06 1907– item 3c. Cash/Receivables/Payables cash is tight.

26 Jul 06 Clare Wade asks to speak to C and says that Smith now on holiday and

uncontactable, thinks need at least £500k - £1m is required and asks for

C’s help. Cannot fund payroll for Friday and C instructs to ask Canada

for money and he will call later in evening to follow Canada up.

MALUK’s accounts: Available balance minus £43k. Definite receipts £701k,

payroll £648k. Trade creditors £2.9m all at least 3 weeks overdue

1925 letter from Airbus re price increases

1928 email from Corrie Prinsloo to Clare Wade and C and others

Email from Claire Wade to Steve Groot cc C “currently there are

insufficient funds to meet the payroll for July”

1929 Financial report 24 July 06 - £2.9m overdue creditors.

1932A Financial report 26 July 06 - £2.2m overdue creditors

28 Jul 06 1936 Email from Ball to Dekker and Walker requesting his comments on

Paul Precious’ interview notes

1937 Paul Precious reasons for leaving: I will not have to work directly for

someone I neither trust, respect or question his technical ability.

What changes would have kept you from considering – moving to a

more operational role away from directly reporting to Shawn Smith

1938 Your manager’s reputation – Universally unpopular and technically

inadequate. Too much financial engineering done to hide problems

rather than fix them

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1939 Interviewer’s observations:

The issues have been discussed with Jo-Ann Ball and nothing reported here is

unknown to John Dekker. Paul was unaware of certain restrictions imposed on

his line manager from Corporate office. With their views on how data should

be recorded and represented unknown to Paul, I believed he placed this at the

door of Shawn Smith which resulted perhaps in the comments about technical

ability etc being negative

1940 It is my opinion the financial controls and methods of reporting

imposed by Corporate office on Shawn have led Paul Precious to develop

negative perceptions of his manager which he has been unable to

overcome and which subsequently resulted in his resignation.

28 July 06 1941A – Overdue trade creditors £3.122m

31 Jul 06 1985 Letter from MAC Re Quarterly Representation Letter – Engineering

Division

1 Aug 06 PD 20: (see also above and below) Made to Neill and Dekker: C discussed

with Edwards and Neill and Furbay at the staff meeting by telephone

conference (minutes not found) the problem of the fact that here were no sales

of A340 at Farnborough and because of launch of A350 sales would be

dramatically effected which would be discussed more when in Canada next

week (MAC Staff meeting minutes could not be located by MAC – CMD4)

1-4 /9 August 2006 PD20 Boeing 737 (JD/RAN) - Paragraph 302

2 Aug 06 1954 – Neill to Fairbairn (Airbus) re price increase – “.. and in Brian’s defence

he is doing his best to push this thru urgently to achieve resolution. ASAP.

1956 PD 19: C email to Dekker, Neill, Butyniec, Zanatta, Groot: I am not

comfortable that we have “sufficient coverage” in writing back from Boeing


PD 19:Col 1 Disclosure Yes : Col 2 QD No Col 3 (1) Tends Breach Yes and Col 3(2)

R/Belief = Yes

3 Aug 06 1958 -Fairburn to Neill (cc C) and C reply (re signing the agreement) this is

much worse than I thought and had understood from Phil: Re Airbus

Negotiations on pricing

4 Aug 06 1972A – C to Neill – re final changes to letter to Boeing

7 Aug 06 1988 – C to Neill and others. This is the “best” response we could get from

Boeing at this time

C arrives in Canada for week

9

Groot complained to C about MALUK’s constant changing of cashflow asking

when it could be sorted out. C states that MALUK’s did need £500k

immediately and another £500k more now - see 10 July 2006 doc.

8 Aug 06 C reads MAC management accounts/div accts provided to him by Larry

Kutuada for MAC Quarterly certificate purposes

1989 – email between C and Boeing re sign off of letter

1993 C email to Neill et al re sign off of letter

1994A C to Airbus relieved that it is resolved “would really appreciate all

your efforts on cash payment.”

PD 22: Made to Neill: In Canada, C, after lunch discussed with Neill in his

office, the issue of dramatic drop in A340 sales going forward and order

cancellation again with Neill (10-15 minutes)

8 / 9 August 2006 PD22 A340 (RAN/JD) Paragraph 221 - 229

1994C? Financial report 8 Aug 06: Overdue creditors £2.323m

9 Aug 06 1995 C email to Neill et all re final letter ready for signature 1996

2000 Walker to C re compromise agreement for Madeleine Harris

PD 20 and 22: Made to Neill and Dekker: 2006 – Sub-certification sign-off

sheet - “A340 AERONCA and Boeing 737 to discuss” in the light of

conversation with Neill the day before (PD22)

8 / 9 August 2006 PD22 A340 (RAN/JD) Paragraph 221 – 229

1 - 4 /9 August 2006 PD20 Boeing 737 (JD/RAN) - Paragraph 302


PD 22:Col 1 Discl No : Col 2 QD No Col 3 (1) Tends breach No and Col 3(2)

R/Belief = No


PD 20:Col 1 Discl No : Col 2 QD No Col 3 (1) Tends breach Yes and Col 3(2)

R/Belief = Yes

2008 – final letter from Boeing signed

1-4 /9 August 2006 PD20 Boeing 737 (JD/RAN) - Paragraph 302

10 Aug 06 10.30am –Audit Meeting – BL did not attend

12 noon - Board Meeting. No discussion about improving terms on A340

pricing. Edwards was annoyed with Canada team for messing up.

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PD 23: Made to Neill and Edwards: After board meeting C discussed A340

poor sales and the need for adjustment in the accounts with again with Neill &

Edwards. C undertook to look at this in detail by Strategy Meetings

(September) but that it required a minimum of CAN$10m or up to 50% of

NRC (CAN$20m) (PD23)

9 August 2006 PD23 A340 (RAN/ME) Paragraph 230 – 238


PD 23:Col 1 Discl Yes : Col 2 QD No Col 3 (1) Tends Breach Yes and Col 3(2)

R/Belief = No

2013 – Fairbairn (Airbus) to C. Request need for “extreme confidentiality” re

price increases which have been agreed because of repercussions on all

Airbus’s suppliers.

11 Aug 06 2015 – C requests a copy of Precious exit interview for himself and Dekker

from Walker

AM: C spoke to Dekker and informed him in MAC’s boardroom that the draft

MALUK Statutory accounts for 2005 would misleading reflect a higher profit

if it did not properly reflect the engineering overheads

11 August 2006 PD15 MALUK Eng O/hs: FY2005 stat.accounts

(JD) – Paragraph 299


PD 15: Col 1 Discl No (now yes) : Col 2 QD No Col 3 (a) Law Yes and

Col 3(b)No Col 3(c) No R/B = No

C flew out of Canada

14 Aug 06 2014A – Financial report 14 Aug 06 – overdue creditors £2.323m

2015 – Walker to C re exit interview. Dekker already has a copy and Ball has

asked for me not to distribute further until Dekker decides how to proceed due

to sensitive nature of some of the content

2016 – C sends email to Zanatta and Butyniec offering to help in the Boeing

discussions to help getting US$1m advance on the pricing discussions

15 Aug 06 2017 Email from Stocker of All Metal re material delay in shipment and

supply of metal (Allegation 42: Not in ET3 or Neill witness statement/PU)

8.30-11am C had engineering meeting which showed serious problems with

A380

12-1.15pm C had meeting with Vandersteen at Aztec hotel

11

1pm – MAC released Q2.2006 results to Canadian Stock Market

2019 – 3pm Staff meeting; Rich Neill and Dekker by phone Little and

Edwards

C told Butyniec that he had had a difficult meeting with Vandersteen

and questioned why Butyniec had put forward a proposed settlement re

A340 pricing which was less than Furbay : C had already agreed and

was lower than was in the accounts [this would have increased the

losses by CAN£500-600k]. Butyniec said that was what he had agreed

in Canada and its gone.

“Cash is tight”

Edwards: “No more cash for UK”

4.30pm C called Stocker All Metal Services to try to defer payment and

orchestration of complaint (Allegation 42: Not in ET3 or Neill w/s)

6pm C worked out cash position showing that a minimum £500k was needed

immediately to meet obligations in the next 60 days if everything went well

(15 Aug until 16/30 Oct

9.30pm Toronto team Conference call to Market analysts –

2026C Neill: Highlighting success of Boeing 777 which was the direct

competitor to A340 and in so doing wholly aware of the impact upon A340

sales and no sales at Farnborough.

2026E Neill: Money is always tight, Nic. No matter how much money we

have, we can find ways of spending it, but not, we’re managing

2028 call at 17.36 which is 10.36pm to UK mobile from Dekker’s mobile

(PD1-3)

PD 1: To Dekker: the Claimant continued to inform Mr Dekker that the First

Respondent was significantly in debt to various trade creditors/suppliers, and

that such debts were now at least 3 weeks overdue

15 August 2006 PD1,2 and 3 MALUK Contracts/Payment policy/doubtful

solvency(JD):265-282

Respondents PD schedule - November 2007

PD 1:Col 1 Disclosure No : Col 2 QD No Col 3 (1) Tends Breach = Yes

and Col 3(2) R/Belief = Yes

PD2: To Dekker: the Claimant informed Mr Dekker that he believed that

there was a likelihood that (without funding from the Second Respondent) the

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First Respondent would not be able to pay such creditors and would therefore

remain in breach of its obligation to pay its suppliers


PD 2:Col 1 Disclosure No : Col 2 QD No Col 3 (1) Tends Breach = No

and Col 3(2) R/Belief = No

PD3: To Dekker: the Claimant informed Mr Dekker that by reason of the

above, the First Respondent was clearly of doubtful solvency and that its

directors were currently acting in breach of their fiduciary duties owed to the

First Respondent’s creditors.


PD 3:Col 1 Disclosure No : Col 2 QD No Col 3 (1) Tends Breach Yes


11.10pm C drafted notes and sent an email letter to Vandersteen to try to

mitigate complaint.

16 Aug 06 2030

At 03.14 Dekker to Smith (cc C, Underwood, Neill, Butyniec, Groot)

I understand the cash pressure this week..... This letter (HSBC overdraft

request) must not go to the bank unless it has corporate approval....We need to

discuss this matter fully tomorrow as it has implications for all MALUK

directors.... The cash flow must also involve detailed input from Phil and

Brian as they will need to assist in developing different methods to

manage/accelerate cash flow from customers.

At 08.07 C email to Dekker Smith (Cc Neill et al) as per our discussion last

evening indeed a couple of weeks ago when Claire gave “heads up” while

shawn was on holiday that we needed circa £1m to cover the month end

payroll £500k and expected mid month creditors and PAYE payment.

Circa £500k needed for Monday am next week.

2031 At 08.16 C email to Dekker (private) I expect that at today’s meeting at

9am you will eventually confirm £500k is Ok for transfer..... Can I reinforce

that I want you to ensure Murray is on board re the principles in my emails to

1 Jan 2008.

2031A At 10.33 Baigent encloses 6 supplemental invoices recently raised on

Airbus for total of £604k

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2032 Wade to C: enclosing an updated schedule of funds received from

Canada £2.35m in 2006

2035A Financial report £2.323m overdue creditors

17 Aug 06 PD 17: Made to Smith C had informed Smith that that MALUK was likely to

be in breach of its obligation to publish a true and fair view of MALUK’s

financial position, unless the FY 2005 Statutory Accounts reflected the

payment of approximately £60,000 bonus, although it had obviously been paid

in FY 2006.

17 August 2006 PD17 MALUK Engineering bonuses for FY2005

statutory accounts (SS) and £500K parent company funds request from

MAC – Paragraph 300- 301


PD 17:Col 1 Discl No : Col 2 QD No Col 3 (1) Law Yes and Col 3(2)

R/B = No

2037 Management Committee meeting MALUK –Underwood, C, Martin

and Smith

Typed up notes: 2046:

“Cash – SS- didn’t realise Murray on the Tuesday staff call until he spoke at

end re No cash to UK- said John had told me this last week when in Toronto,

we need the other £1/2m- Ss needs to follow up with John. ....BL policy is

wrong anyway.... BL MAL group very low on cash in last 30 days too –

concerning after MAL board last week... BL spreading the cash needs through

the month to balance with the creditor terms - we had done this in 2004/5”

17 Aug 06 2047A “Whistleblower” Protection policy dated 17 Aug 06 (top left hand

corner – printed by BL in Bristol office)

2047C How the Complaint will be handled

All reports will be dealt with promptly. Initial inquiries will be made to

determine if an extensive investigation is appropriate and the form it should

take. Some concerns may be resolved by agreed action without the need for

investigation. Appropriate corrective action will be taken if warranted by the

investigation. The Audit Committee will determine the proper treatment for all

complaints related to Accounting and Control Matters and breaches of the

Code. Such complaints will be forwarded by the Audit Committee to the

person deemed appropriate for the investigation. The Audit Committee will

determine if an outside investigator should be retained. The Vice President,

Human Resources will determine the proper treatment for all complaints

related to Employment Issues

14

18 Aug 06 2049 Email Prinsloo to C and Smith, Underwood and Groot enclosing trade

creditors

2051 Email from Butyniec to Neill Little Dekker et al re A340 negotiation

18 Aug 06 2062 Smith to C and Underwood:

As you can see form this as we stand we are currently still £172k short of

meeting our commitments next week, namely the payroll. As we stand we

are therefore still not in a position to release any more cheques to

creditors, thus where we are on stop currently we are not going to resolve

yet, based on this.

This situation is resolved if:

We can get Airbus to pay next week the retro invoices...... any other input

or coercion of Airbus is welcome

Meccachrome pay the £300k they owe by next Friday next week...

Other Engineering Airbus debt – obviously any strings that we can pull to

get any of this paid next week now need to be pulled even tighter than

they were before

21 Aug 06 2054 Conference call: Smith, Walker, Dekker and Ball –convened at

Smith’s request because of C’s treatment of Smith

Smith said that C undermining him

Wade told Smith that C had told her that 3 people had left because of him.

Wade leaving because she finds Brian difficult to work with. Smith indicated

that C had a dossier on him

Walker also complained of C accusing her of incompetence

Haydn threatening that he is being constructively dismissed

Rich (Neill) asked if there had been any formal complaints against Brian under

Magellan’s ownership. To Mary and Shawn’s knowledge there had not been.

21 Aug 06 2062: C to Smith and Underwood.

Meccachrome earliest Friday..... Jonathan and I will work

Airbus Engineering - unlikely but best hope is £300k – will see what we can

do but probability by Friday is low

2062A/B Financial report 18/21 Aug 06 overdue creditors £2.243m

2063 Email from Vandersteen to C to express my/our concerns

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Reply by C to V, I am committed to do this and will follow up with Simon

22 Aug 06 2064 Financial report 22 Aug 06 £2.243m

2066 MAC staff meeting – Neill, Dekker, Ball by phone C, Underwood,

Smith

Cash is tight

23 Aug 06 2071A Financial report 23 Aug 06 £2.243m

24 Aug 06 2071A Financial report 23 Aug 06 £2.243m

21 Aug 06 2075 Vandersteen letter complaining about R’s service levels.

His third complaint within a year : Allegation 44 : ET3.Para.9.8 : RAN64 -

Claimant’s drafting of a letter of complaint for Mr Vandersteen/PU relayed to

JSB then JAB/MW then RAN.

Respondents Closing Submissions Para 72 and 351

24 Aug 06 2077 C to Micklewight (Airbus) asking for payment of £1.2m of work on

the basis that if not paid would not be in a position to meet obligations as

director.

25 Aug 06 2077 C to Micklewight and Simon Price stating that Simon had phone him

and assured that he was directed now to move forward the process.... C stating

he could now relax a bit more on holiday.

2079 C to Dekker “..meantime I am doing everything possible to enhance

“free cash” progressively by mid September. Our creditors position has never

since July 2002 been this BAD. Regards Brian”

2079A Financial report: Overdue creditors £3.615m

2080 C to Simon Price (Airbus) “..I am now on holiday for 3 weeks but will

endeavour to coordinate an appropriate response from MALUK.”

2081 C to Jim Fairburn (Airbus) again responding to letter although on

holiday

2082 C to Neill and Butyniec: “Simon has finally sent the letter he indicated

he was going to on Tuesday (when I was pursuing the Engineering monies

etc)” and forwarded the letter to them

Aug 2006 Post termination document 2950/2951 Treatments / David Stewart –

Allegation 53 : Not in ET3 : RAN29 and no other witness statements

16

C went on holiday for 3 weeks and not in email contact from 26 Aug until

2 September.

28 Aug 06 2088 Butyniec re Vandersteen letter: Not sure where this is coming from nor

where it needs to go! Any comments

29 Aug 06 2088A Financial report: Overdue creditors: £3.615m

2089 MAC Corporate Staff Meeting Minutes

Present: Neill, Edwards, Underwood, Smith

Absent: Dekker, Little +3 others

Liquidity: Craig Vaughan does a weekly analysis on AR and AP. Cash

is tight deleted.

41. Airbus UK Price Corrections Machining side Q2 £1.8-£2.0m

almost agreed , retro to April 1/06.

30 Aug 06 2093 Email to all: Strat Plan Sessions with timetable

31 Aug 06 2096 Prinsloo to C: Engineering is bringing in £800k next week.

Meccachrome money I will only see Monday if it gets to our bank on Friday

1 Sep 06 2102 Jonathan Powell to Smith CC Little - A quick note to confirm the

actual audit adjustments for 2005 that I’ve just put on Sage: They are

1. £14k Inventory reduction due to the costs to complete calculation

2. £80k Accrual reduction due to revisions to the bonus figure

3. £134k Inventory increase due to the overhead absorption.

The net effect is to push last year’s profit up by £200k from £550k to

£750k for inclusion in MALUK FY2005 statutory accounts

2 Sep 06 C returns into email contact but still on holiday until 18 September

2107 C to Smith cc Underwood: Shawn as discussed pay eng

creditor/payroll and £1m other creditors. Working on the other items etc. We

will delay ams and Apollo – by MY telcon if necessary at mid-month. Will

discuss again on Thursday regards brian

5 Sep 06 2217 (07.28) [C not cc’d] Henry David to Darcia Hurst (Boeing) Re Ellanef

Price Remediation( CC Zanatta, Chidiac, Butyniec; Neill)

Frankly we are being pressured by our Board of Directors for something more

than a date you plan to complete your analysis.... Darcia we have politely

suggested on several occasions that if Boeing could, as a first step, allow us to

reverse the price reduction on the 737NG integrator kit that began in January

2006 it would go a long way to helping us. If Boeing was able to commit to

17

this first step in the next couple of weeks, it would provide reassurance our

Board needs. With the kit adjustment behind us, we could collectively work on

the balance of price adjustment over the next month or so. .. If possible we

would like to suggest a conference call... sometime today, September 5th

to

discuss the above

2109 (10am Can( MAC Corporate Staff Meeting: Butyniec, Neill, Dekker,

Ball + 8 others, by phone Edwards, Underwood, Smith + 10 others; Absent C

+3 others

No mention of cash is tight

41. Airbus UK Price corrections- all invoiced with AUK for payment

2120C (11.57) Powell to Meccachrome – thanking for receipt of payment of

Euro 746k but asking for payment of 2 more outstanding invoices of Euro

192k

2108 (16.01)Smith to C: Re Titanium Price Increase: Brian, I have spoken to Barrie

Jenkins on this, he is still waiting for someone in Airbus to produce the

agreement to enable payment of these invoice. Anything you can add to help?

– Price corrections – he is chasing up with Dave Micklewright/Jim Fairburn to

get signed off. Also on this Barrie asked when we would get the individual

orders changed so that we don’t need the supplementary invoice each month,

once this happens Airbus finance will not need to get involved and we will get

paid easier. Thanks Shawn.

2108 (17.43)C to Smith: Re Titanium Price Increase: Reply Following up all three

items.. regard Brian

7 Sep 06 2113 Smith to C: Re Engineering results: changes to the preliminary report:

Why are we reducing the result by $45k, by way of provisioning against these.

2113 C to Smith: See Jonathan Powell’s notes. And I adjust for the same

reasons I always do – I have the experience and insight to know where the

challenges are... I am not debating this shawn.

2242 (6.06am) Pollard (Rolls Royce) to Neill: Re Magellan Aerospace Corp

I have not seen the data myself but our “intelligence”” unit has looked

at reported data and one of the reporting agencies we use and

concluded Magellan is high risk. Rating at CCC and there is only one

worse than this. This is a verbatim I did see:

“From the financial analysis, one of the main issues is that they haven’t

turned a profit in over 4 years now. Margins appear to be slim and they

are having difficulty covering their overheads and financing (interest

expense). The balance sheet is not all bad but there still have a high

18

levels of debt and liquidity is marginal. The strength of the Canadian

Dollar is a key problem they have to address.”

2242 Neill forwards email to C, and other MAC officers

8 Sep 06 2118 (12.03)Lisa Thomas to Little and Underwood attaching letter to

Airbus:

(14.27)C to Thomas/Underwood – Ready to discuss/adjust, give me a

call. Dave has signed off the retro invoices and Jim F[airbairn] will

now work though the titanium pricing etc process with me during next

week to have these approved the following week – on dave return.

(Plus other matters)

2120B (19.23) C to Jim Fairbairn: Comprehensive email dealing with retro

price correction invoice(requesting payment), titanium price invoices,

Magellan/CAV response on the SA bid ribs 2-27 and engineering 380

2123 (20.19) PD 4 C to Smith and Underwood: “..please see the normal

trade creditor statement – updated by units via Clare on Friday ---- this

is inconsistent with what you indicated in our telecon re the

Bournemouth “dimension” at least. Print shows – circa £950k total for

the creditor payments which should have been made at end July – 45

plus overdue to terms when cheques would be received by creditors

(see also Efacs/runs and uncleared cheques).....

I have confirmed arrangements with AMS for mid-month one off

payment delay to 27 september (from 15 Sep) and expect Apollo will

also confirm OK on Monday on same 27 sept basis.

Lets fix our track record – I am not doing all I am doing any longer

unless we fix ourselves - we never had the current problems like this in

the past and I understand Phil has indicated to Corporate that we were

unable to meet our deliveries and sales forecasts for August as a direct

result of creditor problems etc – impacting deliveries by many 000’s.

8 September 2006 – PD4 – Para 294 (para 313)


PD 4:Col 1 Discl Yes : Col 2 QD No Col 3 (1) Tends Breach

Yes and Col 3(2) R/Belief = Yes

2121 (20.22) C to Bob Segal re his email re issues with Rolls Royce stating

that he has the same issue on a RR bid in UK (ie MALUK is v week

financially)

2120C (21.06) C to Mecachrome re outstanding invoices chasing Euro 192k

19

2122 (21.28) C to Smith and Underwood: As per telecom brief today

forwarding correspondence in response to Smith’s request for assistance re

Titanium Price Increase and other matters)

2123 (22.09) C to Underwood, forwarding email re paying creditors (of

20.19): Phil – I expect this to be carried out as below and over the next 21

days – if not I will resign from MALUK Board and remain only as an office of

MAL corporation. I have sorted the relevant D&O cover etc. Regards brian

2124 Financial report: £1.866m overdue creditors

9 Sep 06 2129 (13.00) Underwood to Little and Thomas assuming that the reference

to £20m savings in 2008 was removed.(re letter to Airbus)

2130 (13.22) Underwood to C: Re C’s email to fix track record: Brian I will

run through this with Shawn on Monday and see why we cannot do this. I do

not see anything fundamentally wrong with your request. It is where we

should be aiming to be. However, whilst we have loss making businesses we

need to continue to be cautious. Will get back to you on this Monday Regards

Phil.

10 Sep 06 2154 (09.37) C to Prinsloo – please provide salaries at 2006 levels for

Pettifer and Wade

2138 (09.38) C to Wade: Claire please read below carefully –(C’s email to

Smith and Underwood of 8 Sep re discrepancy of creditors and payment

thereof). The implication of my discussion with shawn was that there was only

£94k excluding August due at Bournemouth etc I assume elsewhere would

have been about the same but your updated creditors list as at Friday was circa

£900k for same. When Shawn asks you will know now why and no doubt – I

think – this info is right. As you will see I am determined to get all the creditor

stuff up to date over the next few weeks. Note also comments re AMS and

Apollo to be confirmed re two week delay (agreed with both MD’s by myself)

If this does not make sense call me

2129 (10.10) C to Underwood: Assumption wrong. It was sent to Airbus

concurrently at the same time as asking Underwood and C for OK 2130

(10.11) PD 5 C to Underwood in response to his email of 9 Sep:

“I am now fed up listening to a few suppliers and now Airbus commenting on

our creditor challenges – the cash position going forward is fine if we can do

the sales and wind downs properly – excluding BNP/Canada re-payables.

Prior to September 2005 I never experienced anything like the rubbish we

have today – if it is now affecting deliveries/sales etc – your/Jim Robinson

email etc (still not got a copy of the email you sent to Jim Butyniec) and the

20

only mechanism apparently known to Shawn is legal notices etc to determine

who to pay – then no LONGER – we have lost a working capital value of circa

£400 - £500k plus at any time solely based on creditors reducing terms or

moving to proforma – stuff we had largely “fixed” after the pre-pack

receivership. Our finance people telling suppliers to send in legal notices to

help get paid just explains how “troubled” the culture amongst our junior

finance staff has become. SIX times we have asked Canada for money this

year – two to make the payrolls and we ran into an “unauthorised” overdraft

in August. So Phil it is simple I AM NO LONGER GOING TO SIT AT MAIN

BOARD meetings and saying very little when we are in a “mess” like this –

for which I am personally responsible for very little. It is our responsibility to

bring the money IN and it should be OUR responsibility to determine to WHO

and WHEN it goes OUT – based on business understanding/customer

relationships, not on legal notices, who shouts most – what sort of company is

this becoming. I hope I have made myself clear – incidentally the most

worrying thing is also that Shawn believes the numbers are not as bad as on

the cash balance sheet – the one circulated by Finance based on the Friday

creditors update from the business – REALLY ON TOP of the most significant

item in a business.”

10 September 2006 – PD5 – Para 295 MALUK (PU)


PD 5:Col 1 Disclosure Yes : Col 2 QD No (because not in public interest)

Col 3 (1) Tends Breach Yes and Col 3(2) R/Belief = Yes

11 Sep 06 2132 (05.49) C to Wade: Could I see a consolidated list/ageing again from

the various systems during the course of this week – say as at Wednesday pm

– after AUK remittances for this week taken into account. Thanks brian.

2137 (08.21) Smith to C & Wade (cc to Underwood): This info is available

on the weekly cash flow.

2136 (09.00) Smith to C stating effectively stating that it was all under

control and the information they have is sufficient. Relying upon the cash low

report of 1st Sept:

£368K of creditors 90 days old

£1.97m of creditors 60 days old

The correct picture of creditors is shown on the weekly cash flow

2137 (11.14) C to Smith (Underwood and Wade) replying: Shawn.. unless I

am mistaken (the data requested will be available) next Tuesday/Wednesday

>>>> I want to understand (with Phil and yourself what it is then and then

21

again what will be the receivables overdue at 30 September – to ensure that we

have pulled in all debt possible and have some understanding of debt at risk

?? regards brian

(11.14) C to Smith and Underwood (but not Wade) Shawn this is

the info provided by the businesses – you CANNOT take the data based on

Invoice dates – have the businesses RUN again based on creditor overdue

dates. This was adjusted by Eric also to allow for the mid-month creditors –the

reason why it is on the daily/updated weekly cash update is that it is simple to

see the consolidated age of those creditors linked to cash. It think you will find

that the info is not the same when you check the detail - do so. Can you also

confirm that there is NOT therefore circa £900k of creditors who were due

payment at the end of last week by end July . If things are going this well then

why are we having all the problems/feedback internally and externally and

jeopardising deliveries/sales regards brian

2146 (11.54) Smith to C re budget timetable

2143 (12.12) Smith to C: Brian, I believe that the situation is very easy to

see on the weekly cash flow which is run on invoice date, it is therefore not

difficult to see if an invoice is 60 days old and we have 60 day terms then it

has become due. As I said in my previous email there are £368k of creditors

that are overdue and £1097k of creditors that have not become due as of 31

Aug...... As for the issues to which you refer, I am now struggling with this. I

can only assume this is a hangover from August when we not paying anybody,

however, now we have had some significant receipts in all creditors that have

been requested have been paid. In addition both Bournemouth and Wrexham

have cash to spare i.e. cash that they can send out if the need arises. They are

both aware that further cash is available should it be required.

As far as I am concerned the information is there and I do not propose

to spend any more time on it at this juncture. Obviously I monitor the position

on a daily basis and it is formally update each week in the cash flow which

should be sufficient.

2138 (13.06) Wade to Smith forwarding C’s email to her re discrepancy in

Smith’s figures and hers.

2140 (15.24) Underwood to Butyniec. When arriving at AMS at the start of

the meeting Terry apologise for the e-mail which he said was unnecessary but

that Brian had asked him to send it. He had also been briefed by Brian on how

to deal with the meeting by ensuring that I recognised I was part of the

problem etc.

I agree that my instructions to Purchasing were taken to the extreme and that

we should have picked up the phone and discussed the situation with AMS. I

22

also recognise that we caused a problem with the Rib Billets but the majority

of the reschedules are due to Airbus rescheduling which are quite clear

throughout SMS reports.

I have only discussed this with Shawn and was not going to make an issue of it

as it would sound like I was griping and you have enough to deal with,

Regards Phil

2149 (3.55pm) C to Neill and Butyniec re Vandersteen response.

2143 (16.22) C to Smith cc Underwood: So is this now 368k and

£1097k for everywhere – so based on cash by Wednesday from Auk we will

have surplus funds of circa £1m (deferral of AMS/Apollo of £600k) – if it is

lower £1.8m to £1.45m (268k an 1097k) below then please arrange to release

a further £500k – with instruction that this is the most cash until sept 20 o the

units. We can then review where we are at re debt to be collected by 30 sept –

based on my other email. Let’s fix our track record also regards brian

2146 (16.25) C to Smith cc Underwood – disputing Smith’s position on fees

of EY and stating that they need to manage it down and it will not happen

without a plan

2147 (17.54) Apollo Metals to C: re proposal for payment

2192 (18.35) C to Smith: What is your considered view re Apollo proposal

for payment

2147 (18.51) C to Apollo – considering with my colleagues

2148 (19.20) C to Smith and Underwood re cashflow attaching MALUK

consolidated weekly cashflow 08.09.06.

Shawn still confused – i think i may see some of the difference re a

recognition of the variable creditor terms 60 days is not for everybody etc..

The chart shows almost £1m of 60 day plus debt – this is more than

normal – we should be after this with vengeance in the next few weeks “clean

for BNP or not” and believe we should push now to understand why all per 31

July sales cannot be paid by 30 September – lets pull all the debt through and

understand the risk etc etc – Phil discuss tomorrow.

Will discuss later – will you confirm all interco payment made prior to

Toronto staff meeting today – this has been raised in a few monthly reviews,

regards brian

12 Sep 06 2154 (09.55)Prinsloo to C: Enclosing salaries of Pettifer and Wade

2174 MAC Staff call (15.04) for 3 hours 44 mins

23

2175 MAC staff minutes

Present: Neill, Ball and others; By phone: Edwards, Little, Underwood,

Smith and others; Absent: Butyniec, Dekker, Groot

RBC requested a meeting this week re liquidity

Chas/Receivables/Payables - need EBITDA improvement from

operations. Craig Vaughan does a weekly analysis on AR and AP.

Item 35a Aeronca

a) Aircelle A380 forecast from MALUK to be forwarded. Aircelle has

advised that 340 and 380 will reduce next year

2179A C to Furbay, Butyniec, Neill Dekker and Boitson re concession

for A340

2180 (9.19pm) C to Smith cc Underwood, Wade, Powell and others

Shawn – on going through the results today and quickly in staff

meeting i recognised that we processed the “audit adjustments” for last

year end in the Engineering results in August – hence the numbers and

explanations. IT does not look as if we did these in the rest of the

accounts in the Consolidation – surely we must do this. Also do we

have a draft of the Stat accounts for 2005 yet incorporating the same

?? etc to review regards brian

2181 (23.24) C to Underwood re Daily Cash rpt Sept 12 in response to MAC

daily cash rpt

Unless shawn gets the cash disbursed soon – to the level I requested –

assume we will have Corporate coming looking for some – particularly

if BNP not done please ensure he does what he has been told – Airbus

remittance in tomorrow will boost further regards brian

2190 (23.32) C to Walker stating that he had received Precious exit notes

from him direct a fine/great loss

2200 ............. Shawn became aware of these comments and believed that

this was undermining his role as a Chief Financial Officer and

impeding his ability to achieve compliance with new directives

from corporate and to effect changes in the costing and reporting

systems in the UK. John Dekker raised the same issues. .............

13 Sept 06 2189 (2.32am) Underwood to Smith forwarding C’s email re payment and

daily cash report

24

Shawn FYI As per our discussions last week. Note I am about to sign

off approx £60,000 of machine upgrades to get the output up in

Bournemouth. I will ask Alison to include in her next cash flow

forecast. Regards Phil

2190 (3.38am) Walker to Ball, letting her know that C had got Precious exit

notes direct

2191 (07.31) C to Smith, Wade, Underwood and Dekker and others

“There were comments by Aeronca and Chicopee that we had not

discharged our interco payments etc to them. Please review all the

outstanding interco payments/reconciliations to ensure these are up to

date.

2192 (08.44) Smith To C and Underwood. My considered view is that the

[Apollo] proposal is not in our best interests.

2192 (12.28) C to Smith – what angles have been considered – ring and

discuss – regard brian

2194 (14.12) C to Mark McIntyre at Airbus: We cannot amortise any further

sums for the A380 programme

2195 (14.37) C to Smith: Re daily cash balances. Shawn assume you will

release the further £0.5m no more pre next Wednesday –as we

discussed re normal trade creditors etc – all end July now up to date

and working our way into key August customers etc . Also ring and

discuss Apollo as discussed regards brian.

2195 (14.44) Smith to C and Underwood. Brian Once I see Airbus receipts

tomorrow I will take a view as to how much can be released. Apollo –

if you wish to discuss further please ring me but my position is that I

don’t see that this is a good offer and as such should be rejected,

Shawn.

2195A Financial report: 14 Sep 06: £1.866m overdue creditors

2197 (15.10) Underwood to C: Re A380 engineering payments: What’s

going on > They are not honouring the last agreement never mind

more! Regards Phil.

2196 (15.35) Jones to C, Underwood and Smith. Brian we have received the

Airbus remittance this afternoon for £329k price increases as indicated

below, the payment date is tomorrow, regards Nigel

25

2196 (17.25) C to Smith and Underwood: re Jones email: So why cannot we

pay at least another £500k etc as I have requested – this would allow

up to £800k if we needed to regards B

2197 (19.07) C to Underwood – re A380 engineering payments – What part

of the last agreement have they not honoured other than treatments

contingency.. simply closing the link now to ensure final payments etc

regards brian

2198 (19.08) C to Stuart Wilkins re Apollo proposal: Stuart my colleagues

do not wish to accept your counter-offer. I am sorry we were unable to

make the original proposal of deferral by 2 weeks to 27 September

work – payment will therefore be made as normal mid- month 16

September 2006 in accordance with the contract.

2199 (4.03pm USA) Stuttard to Edwards and Neill re draft memo to C (not

sent):

Raises issues with Smith complaining about C’s behaviour

“Some people have interpreted your passion about items as aggressive

and threatening and hence feel intimidated when such conversations

occur. While these comments are made about employees junior to

yourself clearly it is to your own benefit that this should occur with all

members of MALUK staff.

Brian this has been a difficult letter to write; you can provide valuable

insights and leadership on key items in the company and yet we

believe your value is diminished when people react to you in a

negative fashion. If we can deal with the corrective actions mentioned

in the conclusions above then we will all benefit and the organisation

will improve on all fronts.

However, if we cannot accomplish this, friction will continue within

the organization and then options will have to be considered.

14 Sep 06 2202 C to Neill re editing of C draft letter in response to Vandersteen

complaint 3 between 11 – 14 September

Thursday 2207 (07.38) C to Walker. Re Precious exit interview- raising concern that

Wade is paid £6k more than Pettifer was. Also asking for reasons for the

Toronto meetings.

2206 (08.30)Walker to C: Re Claire Wade/Previous interview. Response

stating that thought Dekker was aware of salary.

2206 (3.33am possibly US time) Walker to Ball re C’s Claire Wade email: I

am copying you in on this as Brian still seems to be attempting to build some

26

sort of a case against Shawn which is not helpful. I have a very long meeting

with our Union official yesterday and would like to speak to you about this. It

is apparent that they have very real concerns about the future viability of the

UK operation due to their perceptions of weak management and leadership of

the two VP’s. Mary

2208 (08.36) C to Walker: As a director .... I am not entitled/indeed should

have seen the documentation from Paul Previous exit interview – particularly

as it is circulating in Canada and I am an officer of the corporations. While i

understand you may have had such instructions – and the difficulty that

represents – this is a disgrace and there is little point in having a Board/being a

UK director in such circumstances, regards Brian

2208 (08.49) Walker to C: IN terms of your final paragraph I fully

appreciate your sentiments and concerns here but this is a matter to be taken

up with Canada as I am sure you will appreciate. I hope this will not result in a

deterioration of our professional relationship - it was not my decision. I

believe that I have always tried to help and assist all the UK board members as

required.

2210 (09.28) Jones to C and Smith: Re Creditors on Stop:... we are not in a

stop situation with any suppliers”

2211 (09.54) Wilkins (Apollo) to C: Re Payment terms. Brian, I am a little

surprised you didn’t want to discuss my offer.... In the meantime, as a personal

favour to you the payment due 16 Sep can be slipped to 27 Sep

2210 (10.22) C to Jones: Nigel when it is threatened it is too late. Shawn

should be issuing instructions today to release a lot more cash to our normal

trade creditors to get into a decent situation –creditor track record etc Last

month we lost sale at Bournemouth directly because of creditor

2211 (10.24) C to Wilkins (Apollo): Re payment terms. Stuart I thought that

was what you were trying to do.. I will discuss with my colleagues again and

advise. Thanks re 27th

and we will do that in any event... brian

2214 (10.27) Smith to Wade (cc C). Re payment terms (Apollo) See below

the payment is to be made on the 27th

.

2214 (10.31) C to Smith: RE Payment terms (Apollo) And what about the

counter –offer?? I sit still irrelevant? Regards

2216 (10.34) Smith to C: Re Creditors on Stop. Brian... when we get further

vision of receipts for next week, namely, the Airbus remittance I will take a

view as to what cash is going to be available for next week. ... We lost sales at

Bournemouth last month because we didn’t have the cash to make the

payments, the process was irrelevant. Shawn

27

2214 (10.36) Smith to C: Re Payment terms (Apollo). I don’t see anything

has changed.... As such I still don’t believe that this is a good offer

2216 (10.42) Jones to C and Smith: I am not aware that we lost sales due to

suppliers not releasing goods, in fact I am surprised by the comment... Nigel

2224 (10.55) C to Underwood: (NOT Smith) Re Creditors on Stop phil ring

and discuss

Ring me to discuss – Shawn i have asked you to release more it is

obvious we can – Just do it – min £0.5m. If you do not then I am

stopping any further efforts to accelerate cash in and resigning as a

director of MALUK - you are inept. I am saying no more on this

subject – you take the actions and I will respond accordingly. Kind

regards Brian

Allegation 48/ET3:9.3 amended in Aug.2007–not in Neill w/statement

2217/PwC 10.58)[C not cc’d] Darcia Hurst (Boeing) to Henry David

MAC cc Zanatta, Chidiac, Bytyniec, Neill Re Ellanef Price

Remediation

Even though the Magellan board is pressuring Boeing to come to a

quick resolution because of their commitment to spend $9m, Boeing

needs to conduct due process before reversing savings already reported

to airplane programs.

As you can see Boeing simply cannot provide any further information

at this time except for a targeted date to come to a resolution. As you

know, it takes time to accurately analysis cost and present a proposal to

management or customers, as reflected in the time it took to put this

cost assertion together for Boeing

2226 (13.33) Underwood to C: Re Payment Terms (Apollo) If we need to do

this for the group ie Covenants etc then that would be a valid reason and you

would need to make that clear to Shawn. But other than that we would be

hitting 2007’s performance and I cannot see the benefit. We are pushing to

clear our creditors and this will be sending mixed messages.

2219 (13.04) Walker to C: Re HO Accountant Recruitment forwarding the

email to Dekker at the time.

2220A (13.06) C to Wade enclosing the age creditors by due date for

Fabrications, Structures and Bournemouth. Clare see attached – i assume

tomorrow DCB trade creditor update will be consistent with this and the

cheques printed in the Bournemouth “drawer” – please confirm after

tomorrow updated regards Brian

28

2221 (13.13) C to Smith and Underwood sending the age creditors by due

date for Fabrications, Structures and Bournemouth.

2224 (13.32) Underwood to Walker forwarding C’s email re resignation

threat: Mary Further threat again I have not told anyone please keep for

reference.

2229 (13.32) Underwood to C: Brian if you send the email below (inept) to

Shawn then I suggest we need to call a UK Board meeting and deal with this

in a proper recorded fashion, can you copy me the email please.

2229 (13.37) C to Underwood: No he has not seen it yet – discuss first –this

is his last opportunity - discuss with me first regard brian

2227 (14.15) Iain Gray to Clive Renson and Trevor Higgs: Re Loop 2 ACD

delivery which was stopped until 15 Sep due to ongoing commercial issues on

7 Sep [2228]

Brian Little is on holiday –we are having ongoing commercial

discussions and I am sure will resolve but we cannot support their position of

non delivery of Loop 2 ACD sheets. (Earlier email from Trevor Higgs: Clive i

suggest u get this resolved, you may wish to inform Mr Little he has picked

the wrong subject to chance is arm, I will not settle till he delivers!!! Trevor)

(14.36) Clive Renson Re Loop 2 ACD delivery

I am confident that after yesterday’s Steering Committee Meeting

when the decision was taken to go ahead and pay an additional $600k

to Magellan that there will be no further discussion on withholding

data.

2235 Jonathan Powell to Smith Underwood and C: Warning of revision of

forecasts and losses

2234 C and Underwood – telecon – 3pm

“Need to sort out the supplier payments etc why had he not done this.

Shawn is just messing around and I am busy during my holidays to get

money in and out of insolvency/overdrafts. Except a further £300k

approx form Auk today/tomorrow by special cheque. Should have

£2m+ in bank by weekend. We need to creditors up to date/properly

pay off. Re board mug I agree - you need to talk and sort out shawn re

getting this one – our position is untenable as directors. Will call you

back this pm on your way home

PD9, PD10 and PD11 <Paragraph 297>

C and Underwood – telecom 6pm

29

Need to pay off in sequence not legal notices etc – fed up with this

nonsense. I will call John Dekker this pm and you discuss with Shawn

tomorrow. This policy re payments + creditor terms must change and

properly sort cash flow for year end.

PD9, PD10 and PD11 <Paragraph 297>

See below under 2240

2236A C to Meccachrome – chasing 2nd

payment

2240 PD: 6,7,8,9 &10: (7.39pm) Telecon: C with Dekker

1. Shawn refusing to pay creditors. Still have £1.3m creditors well

overdue and asked shawn several times to clear this up in sequence.

This policy re legal notices/production needs to be changed it is wrong.

I have asked him to release £400-500k now – I do not think he

understand what he should be doing/judgment etc – just keeping

ignoring UK director duties

2. Strategy Session/Canada - next wee – need to review further Gross

Margin et notes – more structure etc to support budgets etc. John –

budge timetable - had I seen – No?

3. Mgt Accounting – rates per hour – changes for UK/Bournemouth -

as discussed in Toronto last month. We need to get resource to help

Jim/ etc Phil do this – we are simply not making the progress necessary

and Shawn does not really understand.

4. Airbus- Arbitration/Arielle - more info and A340NRC etc need to

review scenarios/options etc re rates and how to hand in FY06/Q3 etc

have discussed with rich last month. Will see you on Monday

afternoon – will you speak with Shawn etc

PD9: To Dekker & Underwood: the Claimant informed both Mr

Dekker and Mr Underwood that it was essential (again for the directors

to comply with their fiduciary duties owed to the First Respondent’s

various creditors) that the Policy be abandoned


PD 9 : Col 1 Disclosure No : Col 2 QD No Col 3 (1) Tends

Breach Yes and Col 3(2) R/B = Yes

PD10: To Dekker & Underwood: the Claimant informed both Mr

Underwood and Mr Dekker that he had serious concerns as to the

competence of Mr Smith and/or his ability to carry out his duties

30

(whether fiduciary or otherwise) as a Director / Chief Financial Officer

/Company Secretary with reasonable skill and competence


PD 10:Col 1 Disclosure No : Col 2 QD No Col 3 (1) Tends

breach No and Col 3(2) R/Belief = No

PD11: To Dekker & Underwood: the Claimant informed Mr

Underwood that he was concerned that the directors of the First

Respondent were not being consulted in relation to the Policy, and that

Mr Smith’s poor business judgement meant he was not giving the

matter the proper attention

Respondents PD schedule PD 11:Col 1 Discl Yes : Col 2 QD No

Col 3 (1) Law No and Col 3(2) R/B = No

PD6: to Dekker: The Claimant informed Mr Dekker that

notwithstanding an improvement in the financial position, the First

Respondent remained significantly indebted to its various trade

creditors and had ‘overdue’ debts amounting to £1,293,388

PD 6:Col 1 Discl Yes : Col 2 QD No Col 3 (1) Tends Breach =

Yes and Col 3(2) R/Belief = Yes

PD7: to Dekker: the Claimant informed Mr Dekker that of the above

figure approximately £400,000 was significantly overdue and/or that

according to the terms of the various agreements such debts should

have been discharged by the First Respondent between February and

July 2006 (that is to say between 6 months and 6 weeks previously)


PD 7 :Col 1 Disclosure No : Col 2 QD No Col 3 (1) Tends

Breach Yes Col 3(2) R/Belief = Yes

PD8: to Dekker: the Claimant informed Mr Dekker that it was of

paramount importance – in order for the directors of the First

Respondent to comply with their fiduciary duties owed to such

creditors – that the sum of £400,000 be immediately released to pay

the oldest debts


PD 8:Col 1 Discl No : Col 2 QD No Col 3 (1) Tends Breach No


31

PD24: to Dekker: On 14th

September 2006, the Claimant informed Mr

Dekker in a telephone conversation that his previous concerns about

Aeronca’s NRC had still not been addressed, that this was a live and

worsening issue and that they needed to discuss this again while the

Claimant was in Toronto in the following week for the strategy and

budget meetings, with particular regard to the Second Respondent’s 3rd

and 4th

quarter 2006 published quarterly financial statements


PD 24:Col 1 Discl Yes : Col 2 QD No Col 3 (1) Tends Breach

Yes and Col 3(2) R/Belief = No

14 September 2006 - PD’s 6,7,8,9,10 etc (Paras 283-293) PD24 (A340 – para 239-240)

2241 (20.13) Segal to Little and Neill and others

“Rolls-Royce is placing Magellan companies on new business hold

until we demonstrate stronger financial results.

2249 (9.43pm) Neill to Segal: Re Rolls Royce. Bob I think this is likely

premature.. and the review is not complete until we answer such

questions. Questions all relate to Deb reduction. John Dekker is almost

complete in getting all the info required and will review with Calger

and White tomorrow am.

2245 (21.29) Butyniec to C re comments on Vandersteen letter

2245 (23.20) C to Butyniec thanks

15 Sep 06 2250 (2.34am Can) 7.34am Underwood to Butyniec forwarding email re

Smith being inept (Allegation 48 :ET3/9.3 – Not in RAN witness statement)

2254 (06.28 Can) 11.28am C to Butyniec sending draft of response (as

edited by RAN) to Vandersteen complaint letter

2258 (07.32 Can) 12.32 Underwood to Butyniec forwarding emails from C

alleging pestering staff over operational issues, this is for your

information.

2264 (07.32 Can) 12.32 C to Butyniec forwarding emails re updating draft

terms and conditions and reminder to discuss

2281 (0735) C to Smith Shorrock, Gents what progress are we making on

this and also moving the two Bearing suppliers for Bournemouth to

mid month credit terms, regards Brian

2253 (7.53) Smith to C and Underwood: Creditors on Stop

32

Brian, as far as I am concerned the policy remains. This morning I will

let the businesses have the cash they need to pay the suppliers as they

request. I you have a problem with this approach then I suggest you

speak to John. Unless John issues an instruction otherwise I shall

continue to adopt the process as described in paragraph 3

2271 (7.55am) Fairbairn to C: What we agreed yesterday is that the pricing

list supplied by Airbus UK will be the master document

2276 (08.05) Smith to C and Underwood: Supplier payment discussions.

Brian, you have obviously been discussing payment terms and

different proposals with major suppliers recently. I am concerned that I

for one was not party to the fact that you wished to have these

discussions with these suppliers. In future can you please let me know

what you are intending to discuss with suppliers in respect to payment

terms. In addition I would have thought that any discussions with

suppliers would have been Phil’s domain. (see 2030 16 Aug email

involving C in creditor/debtor efforts and subsequent emails where

Smith asks C and thanks C for assisting)

Allegation 33/49 : ET3 Para 9.4 : RANeill w/s 69-70

RCS Paragraphs 353, 362 (Apollo) & 363 & 364 &392 (iv)

2253 (8.32) C to Smith and Underwood. I have now spoken to John directly

last evening as I feared you would not do as we discussed.

Consequences will follow, Regards Brian

2281 (0833) Shorrock to C, Smith and Underwood. NO discussions yet with

any suppliers re payment terms – still some outstanding payments from

end August. Once we have a couple of months history of one time

payments then I believe we can tackle this subject

2276 (08.34) C to Smith cc Phil Underwood: Re Payment Supplier payment

discussions: Shawn fuck off – I have had enough of this now – perhaps

more experience and ability than you will ever understand regards

brian [Smith cuts across understanding since 16 Aug 06: (see 2030 16

Aug email involving C in creditor/debtor efforts and subsequent emails

where Smith asks C and thanks C for assisting)

Allegation33/49 : ET3:9.4

2030

At 03.14 Dekker to Smith (cc C, Underwood, Neill, JSB,

Groot)

33

I understand the cash pressure this week..... This letter (HSBC

overdraft request) must not go to the bank unless it has

corporate approval....We need to discuss this matter fully

tomorrow as it has implications for all MALUK directors....

The cash flow must also involve detailed input from Phil

and Brian as they will need to assist in developing different

methods to manage/accelerate cash flow from customers.

At 08.07 C email to Dekker Smith (Cc Neill et al) as per our

discussion last evening indeed a couple of weeks ago when

Claire gave “heads up” while shawn was on holiday that we

needed circa £1m to cover the month end payroll £500k and

expected mid month creditors and PAYE payment.

Circa £500k needed for Monday am next week.

2278 PD 12: C to Dekker: (3.43 Can) 8.43. As per our conversation last

evening, this is just the last “straw” in a long line of

mistakes/inadequacies/lack of comprehensive business understanding

with Shawn. (PD12)

“John – As per our conversation last evening – this is just the last

“straw” in a long line of mistake/inadequacies/lack of comprehensive

business understanding with Shawn – you either make it clear that he

does what makes business sense or instruct me to resign as a director

of MALUK and retain the officer position in Magellan only. (No doubt

he will put a spin on this but I look forward to the logical discussion. I

have been unhappy with the governance processes for some 12 months

now in MALUK and the “regular” failure to improve. Regards

Brian”.

PD12 <paragraph 297>

Respondents PD schedule PD 12:Col 1 Discl Yes : Col 2 QD No

Col 3 (1) Law No and Col 3(2) R/B = No Bad faith

2280A (08.43) C to Smith, please send me a resignation form for MALUK

Board

(08.47) Smith to C; replies re MALUK Board

2276 (05.09 Can) 10.09 Smith forwards “F off” email to Dekker.

2253 (05.11 CAN)10.11 Smith to Dekker: John I assume this conversation

after we spoke yesterday afternoon. Perhaps you are able to enlighten

me as to the consequences, Thanks Shawn

34

(05.11 can) 10.11 Smith to Dekker forwarding emails re C’s enquiry re

Aerostructures Invoices Sep 06 and debt creeping up.

2272 (8.12am) 13.12 Dekker to Neill forwarding “a series of troublesome

emails” forward by Smith at 05.11 on 15 Sep 06: C’s enquiry re

Aerostructures Invoices Sep 06 and debt creeping up.

2276 (8.13am) 13.13 Dekker to Neill forwarding the “f off” email from C to

Smith

2278 (8.14am) 13.14 Dekker to Neill forwarding the “last straw” email from

C to Dekker

2285 (9.38am) C to Vandersteen to arrange face to face to discuss matters

2288 (8.39 am can) 13.39 Dekker to Neill: Forwarding AR over 90 days

Sept 8

2288 (9.06am can) 14.06 Neill to Dekker: Re AR over 90 days Sept 8: John

do you have the AP as well

2289 (9.53am) 14.53 Steve Groot to Dekker and Neill. Page called uncleared

items has a payables summary on it

2290 (9.04) 14.04 Neill to C (cc Edwards, Dekker, Butyniec, Ball)

Brian; I have been provided copies of the Email exchange between

Shawn and yourself and am appalled at what I read. I am not privy to

the details behind the issues on the payables mentioned and can only

judge the E mails form the tone demeanour and language used. All

Three shock me that a mature business person would write or say

something like this...

As an office of the Public Corporation you have a fiduciary duty to that

public company and its shareholders and hence you must both respect

and support financial decisions that are provided by the financial group

since they are worked out from the perspective of the total corporation.

We sign off on certs each quarter to the board that we are following

policies and procedures on this basis.

This says then that you cannot make deals with both customers and

suppliers which are outside this process without the buy in of others I

don’t do it Murray doesn’t do it nor should you.

How you have had an argument in writing with a colleague and in this

process have threatened to resign Boards etc as well as question

maturity of others. This is no way to settle issues like this. It is

childish, bullying and disrespectful to others. If you feel this way then

35

resign the directors role don’t threaten to do it and then not follow

through

Between all of this I have asked for the details behind the payables

you are requesting and we will review in Toronto and compare this

with the balance of the corporation is managing the current cash

position. If you have made agreements that we are not privy then

you should share these details as well.

These are difficult times and if we pull together we will get thru them

much more effectively than if we are divided as to purpose and I

cannot conclude from this that we are united right now.

2290 ((9.56 can) 14.56 Murray to Neill: Well thought out.

2290 (10.04) 15.04 Neill forwards email approval from Murray

2291 Morning : Meeting between Underwood and Airbus UK

(Vandersteen and Burns)

“A340-600 – Trashed”

2293 (11.20 can) 16.20: Underwood forwarding “f off email” to

Butyniec: Jim when you ring will cover this and my meeting

just now with Steve Vandersteen. Regards Phil.

2285 (11.40) C to Romeo Maddalena re Shipment of A330 and A321

Trial Fit Ribs to Airbus.

2297 (11.37) C to Smith: re FW Daily Cash Balance: I think this

largely confirms what i have been saying for the last week re

our ability to substantially clean up overdue normal creditors

etc and you can now determine what you are going to do - my

actions will continue to be based on that decision brian

2304 (11.41) Smith to C: Please be more specific with respect to

your comment “my actions will continue based on that

decision” What actions exactly?

2297 (12.32) Smith to Dekker forwarding C’s email

2298 Financial report: 15 Sep 06: Overdue creditors £1.293m

2300 (4.41pm) C to Simon Price at Airbus re payment of $600k and

supplies

2302 (5.21pm can) 10.21pm C to Neill, Edwards, Dekker, Butyniec,

Ball

36

Rich when you understand all the facts then perhaps you will

understand – please have the courtesy to at least take time to

understand what is going on here – Can you explain what cash

has been brought in in the last 4 weeks, by whom and what

what supplies have affected deliveries etc. I completely resent

the childish bullying etc and have more business experience

and maturity than any of the other MALUK directors. As I said

I am resigning from the UK director position as it is clear we

cannot carry out our jobs effectively. It is completely naive to

think this is as simple as paying a few creditors etc. I did try to

call but there was no answers and am now away from the

weekend to take my daughter to university.

2376 (17.28( (10.28) C to Edwards: Murray hopefully you will have

the patience to listen to this_ AGAIN – but i have stayed quiet

for just too long about what is going on in the UK – despite

many careful attempts to explain and get people to face up to

the issues. Even our main customer has tried to help us to

“hear” will work thru with Rich and others regards brian

2304 (18.56) C to Smith: Watch Brian

2323 (3.44pm can) 8.44pm Smith to Dekker forwarding Watch Brian

email trail

2304 (3.50pm can) 8.50pm Smith to Ball forwarding Watch Brian

email trail

2323 (5.21pm can) 10.21pm Dekker to Neill: I spoke to Shawn at

length on the way home this evening. He is concerned and feels

threatened by the tone/underlying message of this e-mail from

Brian. This has gone over the top. Where do we go from here

with respect to our UK management team? Brian is not

behaving as a team player, no matter how we might try to

rationalize this exchange of e-mail. I believe that we have an

obligation to be fair with Brian but we also have a duty to be

fair to Shawn. If we permit this to continue I am concerned that

we have not lived up to our obligation to him. Look forward to

your views. John

2306 (17.09) C to Dawe re Outstanding Invoices M410 Part 1 etc

2308 (17.29) C to Stephen Jackson Underwood and Smith:.

Mike/Phil/Shawn believe we should post sales in sept and

recognise liability – no profit on a321 and A330 etc.

Recognised small inventory reduction –NRC etc regards brian

37

2309 (18.13 can) 23.13: C to Neill: FW Daily Cash Balance: Rich

you can read this as a small part/relevance to the other email.

Also ask steve john to give you the latest forecasts for MALUK

and tat may help too, regards Brian

2310 (2108 can) 2.08am C to Edwards FW Creditors on Stop.

And exchange between him and Smith re problems of policy

2311 (21.15 can) 2.15am C to Neill showing Airbus payments

2312 (9.21pm)? Can time. 2.21am C to Neill re allegation re

special deals. Forwarding emails from Apollo metals where

he was unable to agree because of Smith veto. (see 2113)

2314 (9.30pm) ? Can time. 2.30am C to Neill and Dekker.

Forwarding email history re Aerostructures Invoice

Queries

2318 (9.39pm) >Can Time.2.39 C to Neill forwarding email

regarding overdue creditors (45 plus overdue to terms ) and

payment of £950k to creditors which should have been made at

the end of July. (PD4) Together with Dekker’s email regarding

“cash pressure” and “we need to discuss this matter fully

tomorrow as it has implications for all MALUK directors” and

“The cash flow must also involve detailed input from Phil and

Brian as they will need to assist in developing different

methods to manage/accelerate cash flow from customers.”

2322 (16.08 Can Time) 21.08 C call to Dekker for 11 minutes 24

secs

2322A Underwood phone records showing 3 calls to Smith totalling 65

minutes.

16 Sep 06 2325 (20.35 Can) 1.25am: C to Edwards forwarding email showing

involvement with Hawker Price Negotiations where Haydn states: Brian – I

believe any assistance you can give in the background to move the debate

from a purely component pricing level would be extremely beneficial at this

point.

2331 (4.41am) 9.41am; C to Neill forwarding email trail re Material Delay

in Shipment.

2333/A (2.31pm) Phone message to Neill: Rich, I just read your e-mail

and I’m a little disappointed that you didn’t think it was appropriate to

try and ring me before you would send such an e-mail out. Clearly you

haven’t understood that there’s a good deal more to it than worrying

38

about creditors and perhaps I’ve stayed too quiet about what’s been

going on in the UK in the last 12 months for much too long. And as I

have to seemingly help bail it out on too regular occasions I think

that’s not helpful and frankly also to have to get authority from Murray

to have my holidays and take time to get cash in and do a variety of

other things in respect of trying to get, keep material supply going I

actually find again helpful, maybe one of these days you’re going to

wake up to the fact that the Shawn is not capable of doing his job and

completely misunderstand what’s required. Okay? Hopefully, you’ll

have the courtesy to listen. Thank you. Hopefully, you’ll have the

courtesy to listen. Thank you.

2334 (1355) Dekker to C: I support all emails up to the last one you sent to

Nigel and Alison. In my view, it was inappropriate for you to put such

a question to Nigel and then copy Alison

17 Sep 06 2334 (10.09 Can) 3.09pm. C to Dekker and Neill.

Why are you not asking the question as to why Shawn had not

reviewed in his regular review of overdue debts/fixed these processes

in the three days per week has has been in Bournemouth – ask does he

even do that directly with any of the staff on the ground – I did -

revealing. I would have thought that with the CASH disputation in the

UK that this would have been regularly followed up by him – sleeves

rolled up. The real question is when ARE YOU ACTULLY going to

deal with poor performance – nice to your face but who is actually

making a difference/really doing his job.. Why did Clare Pettifer

finally leave and now Paul Previous too – have you read all the notes –

I have now Lets focus on what leadership should be doing in this

Corporation to manage a doubling in GP and collect/spend that cash

sensibly regards Brian

2338 (14.07) 19.07pm C to Smith cc Neill, Edwards and Underwood

Shawn can you resend the correspondence/documentation you sent to

John Dekker on Friday which supported your assertion that there are

special deals with customers and suppliers which is NO IN MALUK

financial commercial operation and strategic interest now and in the

future – stating why in your view this is so.

2339 PD13(14.14) C to Smith cc Neill Edwards, Underwood and Dekker

“Shawn – will you please send copy of the last Board minutes – significantly – to Rich and

Murray. Additionally will you confirm how many times I have asked you in emails and/or

verbally to organise another MALUK meeting. For the benefit of Rich/Murray could you

please summarise the responsibilities and liabilities of a UK Director – particularly as regards

finances and key transactions. Are there any reasons why from 20 June 2006 in which

39

MALUK should have had a Board meeting to discuss any items. If so, what were they and

why did they not happen? Could you please have this completed by Tuesday 8am Toronto time

and circulated to all people on this email”.

<PD 13 – para 298> Respondents PD schedule

PD 13:Col 1 Discl Yes : Col 2 QD No Col 3 (1) Law No and Col

3(2) R/B = No : Bad faith

298. In order to highlight the severe financial difficulties of MALUK

and my serious concerns as to the competence of Mr Smith to Mr

Neill, on 17 September 2006 (at 18:48 – {2356}, I also sent an email to

Ms Wade (copied to Mr Neill) in which I requested Ms Wade’s

confirmation on a number of issues listed in my email of 17 September

2006. Can I refer the Tribunal to paragraph 79 in the legal part 2 in

addressing Column 3 (a) and 3(b) and also paragraph 89/90 on the

assertion of bad faith. Mr Neill’s oral evidence is obviously relevant

too - Mr Neill : I have read that a different way – for our benefit to

tell us. .

2340 (2.41pm Can) 7.41pm C to Neill

“Rich – can you formally advise me as to why you copied your mail to

each and every one on this circulation. In view of the gravity of this

letter – independent advice from IOD-business information, linklaters

and a senior banking friend - i am advised your response to this now.

Also this should have been deal with at least in the first instance

through the UK Board of directors – why was that not done

You have started a process in Canada/MAL Group, which i am advised

that we should try and resolve to my satisfaction by say Tuesday PM –

i would prefer before tues staff (and certainly not discussed there. In

the absence of such an understanding it should then be “escalated” to

the Chairman (murray) say for resolution by Friday pm and in the final

even to Bill Dimma – either under “whistleblower” or audit committee.

Before you ask why – i did not send your email with the gravity of its

content and circulation [Ref Neill’s email which stated I have asked

for the details behind the payables you are requesting and we will

review in Toronto and compare this with the balance of the

corporation is managing the current cash position]

40

This is particularly important as I think and feel (and am so advised)

that I have done the complete OPPOSITE of your comments which

have questioned my

1. adherence to the governance processes both in the Group and

MALUK – someone which i am careful about

2. my personal ability to understand the financial implications of

everything i do for both MALUK and MAL group or seek advice

where necessary

3. making deals with suppliers and customers which are outside this

process – shawn in a separate email has been asked to provide the

documentation and contacts to verify this comment. Likewise you

need to do so – this a “grave” allegation implying not in the company’s

interest or “agreed” position. If this cannot be substantiate this is

“effectively” libel of corporate character and finally

4. a personal affront to my integrity , collaborative style, and all the

values i have stood for and stand for in the business and my life – if

you re-read my SIMA - personality profile – this is the absolute

“bedrock” for me.

My advisors, who have seen either all, or extracts of your email during

Friday, believe that form initial reviews your email is extremely grave

on a least three subjects and form Wednesday will prepare their

considered response”.

For both our sakes I look forward to reviewing the evidence that drove

this email and the gravity of its contents. It can only be for one of three

or combination of these reasons. I will arrive in the office on Monday 3

pm and look forward to the discussions. I hope you will take the time

to read the documentation provided, consider it carefully, reflect with

wisdom and then have the humility to do the right thing – i won’t be

gloating, just very very sad. Regards Brian

2342 (14.43 Can) 19.43 C to Stuttard and Neill

Joyce, Rich has a whole series of emails in his inbox during Friday

thro Monday from me- these are highly confidential would you please

get access to these at some time and print out three copies. I should be

in the office at circa 3pm on Monday, thanks Brian

2343 (14.52 Can) 19.52 C to Wade

41

Claire – can you please bring up to date adding three columns – when

was first notification re request for cash in and when was the cash

received – precise dates please regards brian

2345 (2.53pm) 19.53 C to Neill: FW MALUK cash – PRIVATE

Rich please read both emails regards brian

Re sending email from Dekker to Smith and C to Dekker re cash

position and payment of creditors: See “We need to discuss this

matter fully tomorrow as it has implications for all MALUK directors.

2346 (15.09) 20.09 C to Neill and Dekker forwarding the Aerostructure

Invoice Queries – Sep 2006

2347 (15.55) 20.55 C to Dekker forwarding the Daily Cash Balances email

trail

John an example of when i tried to deal with the subject directly with

shawn – he did not choose to response – by email/phone – so what was

I to do next ?? as an ex director of MALUK regards brian

2350 (16.18) 21.18 C to Dekker: please call again – three more items regards

brian

John –we did not speak – three items in support of strat plan process

this week.

2351 (16.21) 21.21 C to Neill re being missed out on Budget Presentations

2353 (17.27) 22.27 C to Edwards re business going forward

2355 (17.28) 22.28 C to Stuttard re Vandersteen response letter

2356 (18.48) C to Wade and CC to Neill: Recollection (Re solvency/payroll)

Allegation 30/50 : ET3 /para 9.7 : RAN71-72 July/Sept 2006

RCS Para 369

1. Can you confirm that on the Monday after Shawn’s departure on his

main hols (after advising you that no monies should be necessary from

Canada until his return) that you asked to see me. Rather distraught,

regarding out inability to pay the payroll that Friday without monies

from Canada – you estimated at least a £1m would be needed in the

next three weeks and £500k immediately that week. Please confirm

that this is also your recollection Yes/No comments etc We reviewed

you numbers and the reasons etc and concluded that you needed to

formalise that day a request for funds to steve Groot. I indicated that I

42

would also ring and discuss with John Dekker late that evening to

reinforce your position Yes/No

Except while Shawn on hols no decision are made by yourself

regarding the disbursement of cash out -yes/No

2. you are a qualified accountant (similar to your predecessor Clare

Pettifer) and that you were also concerned as would be trading within

several hundred thousand of “technical insolvency” – Yes/No

3. you discussed with steve and he confirmed that funds equal to £500k

only would be sent – cleared for Thursday for Friday payroll – Yes

/No Funds were received on time

4. the following week you showed me the minimum cash despatched -

£42k?? From memory and the documents that supported the cash

need/bank balance – subsequently you produced a spreadsheet

supporting the same – could you please attach a further copy to the

reply – Yes/No and attachment

5. I indicated you needed to take this up with shawn on his return -

and in particular the likely need for a further £500k at mid-month. If

you had any other concerns then come and see me – Yes/No

6. A few weeks later I asked had you discussed it with shawn to which

you replied Yes – and he had simply said you could have taken more

risk – (I am certain/adamant that you were correct/right) Yes/No. You

also indicated to me that you had overheard Shawn discussing it with

Steve and were very disturbed that he had said the same to Steve – he

would not have known you had heard that remark – Yes/NO

Claire – can you please complete the above – adding anything further

which you believe is relevant – as you must expect I am raising this in

Toronto as a matter of professionalism/shall motivation and

Governance In no way am I uncomfortable about what you/I did.

Thank you Regards Brian2357 (18.50) 23.50 C to Neill

forwarding the email from Bob Segal re Rolls Royce placing Magellan

on new business hold until we demonstrate stronger financial results.

18 Sep 06 2360 (4.06) 09.06 Smith to Dekker, Ball, Butyniec, Neill

Re Brian’s request for documentation showing that he had done side

deals with suppliers “ John, I notice that you were not included on the

original circulation. Following the conversations from Friday, I shall

not be responding to this or other emails from Brian requesting

information unless this form part of a formal process. Shawn”

43

2361 (4.55) 09.55 Walker to Ball: Shawn is not in today and therefore we

may need to cancel the conference. However, I need to speak with you

as soon as you arrive for work. It is in relation to the BL v SS issues.

2362 (11.05) C to Neill forwarding email trail re Freighter Material

2364 (09.32) Wade to Smith forwarding C’s email to her re financial

position in July/Aug

2364 (5.02) 10.02 Smith to Dekker –forwarding Wade’s email to him,

stating She is extremely upset and was in tears. (Walker sees email)

2368 (5.37) 10.37 Walker to Ball:

I wish to speak to you urgently when you arrive this morning

My concerns are:

1 Shawn is not at home refusing to come in until the matters are

concluded. He is also indicating that he would find it impossible to

participate in the planned meeting with Canada whilst Brian is still

in employment. He is demonstrating signs of stress and as we have

a duty of care towards him I have told him to work from home. He

has continued to receive threatening emails from BL over the

weekend. [One email exchange (2 emails) following request for

resignation forms and 2 emails one requesting details of

allegations re side deals and one asking him to set out duties of

directors for Neill and Dekker]

2 Shawn could legitimately seek his lawyer’s advice about

constructive dismissal and with the written evidence he holds he

would be successful. Figures could be extremely high to pay this

off and I do not believe that Magellan would want the ensuing

publicity nor the disruption of losing yet another FD.

3 I have had to send Clare Wade home today as she receive an email

from brian which is copied to you which is unacceptable as it seeks

evidence to use against her lien manager, Shawn. She has said to

me this morning that matters have gone beyond a joke and she feels

threatened by the situation and particularly BL [Neill cc’d by C]

4 If Brian has genuine problems with Shawn performance then he

should have addressed them through the normal channels and

followed policy and procedure. He has not asked advice from me

on how he should be proceeding and as far as I am aware he has

not asked John Dekker to take action of this nature.[Neill and

Dekker know to be wholly untrue]

44

5 Brian email to Shawn despite all of the above is gross

misconduct he should be suspended immediately pending

investigations. He should not be allowed to participate in any

meetings in Canada as this could be sued in his defense of our

claim of gross misconduct in that we allowed him to continue to

work. Gross misconduct as you know carries a penalty o summary

dismissal with no notice. This would mean that we would not have

a huge severance payment. He should also be asked to resign his

position of director of the MALUK board upon dismissal. I need

your direction on this as whilst his contract is a UK contract there

is the Canadian element and he reports to Rich. [Neill already

dealt with, seen email and written to C about this. Did not treat

it as gross misconduct]

6 There are matters relating to the customer and BL’s i which irratic

behaviour Phil has spoken to Jim B about.

My understanding is that Brian is on his way to Canada this morning.

He cannot be allowed to work if there is a gross misconduct matter

pending. He must be approached on this as soon as he arrives. Without

gross misconduct suspension it will be more difficult to claim gross

misconduct. However, the decision will be Murray’s/Rich’s but I hope

you will relay my concerns. I need you to tell me how you wish to

proceed in the UK on this matter. Mary

2368 (6.44am) Ball to Butyniec and Neill, forwarding Walker’s email: Over

to you

2364 (8.42) 13.02 Dekker to Neill forwarding Smith’s email: Rich Where

are we going? John

2366 (8.51am) 13.51 Walker sending Disciplinary Policy and Procedure and

resending it 3.49pm

2368 (11.14am) Neill to Murray

Murray I have received a deluge of E mails from Brian since my Emil

to him on Friday and it would appear that Brian has also sent

numerous E mails to people in the Uk some of which I was copied on

some not. The Email below puts a slightly different complexion on the

next actions I was contemplating brian is travelling to Toronto today

to take part in the Strat planning meetings going on this week I had

original intended to meet with him and to try and see what could be

done to straighten out the relationship and with some cooperation

from him continue with his role in strat planning. Now however I don’t

think I can do this but have really no option but to send him back

45

(since it looks like the end of the road) would like your views and input

can you call. He will arrive around 3pm eastern time.

2370 (16.43) Martin to C and Neill: Brian, MD of Gardner Aerospace

London called me to try to expedite payment of his invoices for the D1

week 15 recovery parts, he stated that our accounts department had

told them they should send a legal letter as this was the only way

we were actioning payments. He felt that this was not the true

message we would want to send out into the market so he called me

to advise us of what our team were saying. I raised this at the Excom

meeting in august and Shawn undertook to look at the issue.

(c3pm) Neill and Ball meet C at airport and dismiss him.

2372 Dismissal letter

Dear Brian;

This letter will confirm that for reasons expressed to you earlier, your

employment with MAC and its subsidiary companies is terminated

effective today, Monday September 18 2006. We regret that we have

been compelled to reach this decision, however, we believe it is in the

best business interests of Magellan.

2373 (17.38) Ball to Edwards cc Neill and Dekker, Butyniec

Murray, just wanted to let you know, Rich terminated Brian at about

3.30, he was very firm but fair, saying that “relationships have been so

damaged that Brian you can no longer be effective.”Brian kept trying

to engage Rich in dialogue, saying things like 2-3 illegal things have

been going on in the UK – I will contact Bill Dimma. (My comment – if

they have been going on why has Brian not told anyone before this).....

I also tried to get Brian to take a flight back to Ireland. He tried to call

you and then got out his computer.... I am sorry that he is coming out

to Calgary to try and see you. Brian believes he is the saviour of our

company and only he can do it. Murray, we have taken the high road

in honouring Brian’s contract, treating him with respect, letting him

go for “broken relationships” and not “gross misconduct” or

“harassment of fellow employees”. Any further dialogue with him, I

believe will only prejudice Magellan position.

2374 (17.54) C to Edwards: Murray on flight to Calgary now this pm will

be in your office location circa 7am your time. thanks brian

(20.57) C to Edwards: Murray after discussion with rich/jo anne i wish

to establish that you have seen all the documentation i have provided

them with in the last 72 hours and as a result do not consider it is

46

appropriate to listen and understand why – see my other email to rich

also “maybe a breakdown in relationships – is an outcome of

something. TRYING to do the RIGHT THING changing the culture and

amongst your best performance business people. Pricing and six major

achievements in MALUK as i said in Aug 2005 i am here to do three

thing – i believe you should discuss with me please advice call me ...

brian

(21.51) C to Edwards re Vandersteen letter forwarding to Edwards

(22.00) Edwards to C: Brian trip to Calgary not make sense as fully

committed all day tomorrow and then out of town balance of week.

Sorry

(22.17) C to Edwards: Will wait until next week – this is important

regards brian

(22.20) C to Edwards: Boarding flight now can see you at anytime to

suit you 24/7 regards brian

ANNOUNCEMENT

Magellan Aerospace Corporation wishes to announce changes in its

management structure within the United Kingdom. These changes

were necessary to improve the working of the organization to capture

the opportunities the company is pursuing and will make for a more

effective relationship with your company

Effective September 18, 2006, any communication you would have

had with Brian Little should be directed to Phil Underwood, Vice

President and General Manager, Magellan Aerospace UK or Mike

Shorrock, Group Procurement & Overseas Sourcing Manager.

Mr Brian Little is no longer an employee of Magellan Aerospace

Corporation or its subsidiary companies. Magellan wishes Brian

success in his future endeavour. Edwards and Neill.

C continues to try to bring in cash to the business £200k associated with the A380

engineering reserve (pure profit) and also further engineering monies (See evidence from Mr

Gray and Mr Renson from Airbus)

Who can doubt his good faith?

47

PinsentMasons LLp instructed by R at end of October 2006.

ET1 filed 15 December 2006

ET3 filed 29 January 2007 – pleaded allegations

This summary shows the eight/ten allegations that were PLEADED in the ET3 at Para 9

showing the relevant paragraph and allegation number (s) in each case and their

comparison with Mr Neill’s “awareness”.....

Para 9.1 (Allegation 24)

Although pleaded was not known to Mr Neill or indeed raised by HM in 2810 in Jan 2007

Para 9.2 (Allegation 37) Not in Mr Neill witness statement.

Para 9.3 (Allegation 48)

Not in Mr Neill witness statement (Allegation – PU/SS) ET3 Amended in August 2007

Para 9.4 (Allegations 33/49) September and 15 September 2006 - F/off email response

to SS provocation re Apollo/AMS contract payment deferrals by 12 days when PU/SS

actively involved in proposals and outcomes

Para 9.5 Prov. allegation 57 dropped - No evidence/docs presented by R – FBp7 :3163/3168

Para 9.6

Prov.alleg 58 dropped-C Wade only -17 Aug ?- FBp8 3163/3168;RAN unaware of “exits”

Para 9.7 (A30/50)

C 17 September 2006 email (2356) to Clare Wade re 6 points / copy Mr Neill – action

Para 9.8 (Allegation 44) 21 August 2006 – 11-15 Sept 2006 Airbus - Vandersteen

complaint 3– “concluded” by Underwood to Butyniec ( RAN64 witness statement)

Para 9.9 (Allegation 41) July 2006 - Not known to Mr Neill or in Mr Neill’s witness

statement ( PU/HM)

Para 9.10 (Allegation 36) January - March 2006 Junior Engineers - £10K – 16 one-off

payment: Known to Mr Neill ( RAN53 witness statement)

in the bristol employment tribunal case … · nov/dec 2004 821a-d- “intro” bonus (allegation...

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