At times it must be fun being a judge. Last month, Mr Justice
Peter Smith, an English judge, found himself telling His Royal
Highness Prince Al-Waleed Bin Talal Bin Abdul Aziz Al-Saud –
one of the world's richest men – that it is not OK to lie
when selling an aircraft. Even when the buyer was Colonel
Gaddafi.
In March this year, Forbes estimated his wealth at $20 billion (the
Prince says it is closer to $30 billion). The Judge ruled that the
Prince should pay a $10 million commission to a broker who helped
him sell an A340 business jet to Gaddafi. The Prince had argued
that the payment to Daad Sharab, a Jordanian businesswoman, was
discretionary.
A key part of the trial was a letter that the Prince had sent to
Gaddafi. In the letter, the Prince had said: "The aircraft
price of $135 million represented what the aircraft cost us,
including extras and modifications that were made to the aircraft
since we bought it."
But when cross-examined by Sharab's counsel, Prince Al-Waleed
admitted that this was not true.
Al-Waleed: "We bought it at $95 million, your
Lordship and the objective was to maximise our sale price. So when
you said $135 million, you had to give some justifications. So,
yes. And actually, not only that, we have done zero modifications
on it, not only minor modifications, we have done no modifications
whatsoever."
Counsel: "So it was not true when you said it cost
$135 million, including modifications?"
Al-Waleed: "When I sell the plane, I have the right
to sell it at any price I want."
Counsel: "What you don't have the right to do is to lie
about the original cost of the aeroplane?"
Al-Waleed: "I didn't lie."
After more of this questioning Justice Smith intervened saying:
"I think, Your Highness, when you speak to your lawyers after
this case, you might be disappointed and you might want to consider
the way that you enter into contracts, if that is the way you go.
Because you cannot, as a seller, say things which are untrue to
induce a contract and expect the contract to survive."
The Judge later added: "Sometimes, when you buy something, you
rely upon what people tell you they're selling. In an area
where people are honest with each other, you take a man at his
word."
Although, to be the fair to the Prince, Gaddafi who dragged the
deal out for several years was not a reliable buyer.*
(This article is kindly reproduced with the permission of Alistair
Whyte from www.corporatejetinvestor.com)
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