Full Text of Lucky Report (Part 2)

Tue, Aug 30, '05

| [ Part 2 ] | [ Part 3 ] | [ Part 4 ]
[ Part 5 ] | [ Part 6 ] | [ Part 7 ] | [ Part 8 ] | [ Part 9 ]

Finally, in respect of matching the offer, C&W raised the issue that they were not told the identity of the rival bid, so they could not therefore assess whether the offer was bona fide or not. C&W further took the view that by not knowing the identity of the sponsor, they were restricted in their ability to explore other companies for joint sponsorship. Legal opinion from the WICB stated that there was no requirement to disclose the identity of the rival bid. C&W disagreed.

The question for the Committee is to determine whether C&W was treated unfairly because the identity of the rival bid was not disclosed. The Committee is of the view that an integral part of any offer is the identity of the person making it. In contract law, it is not only the terms which are agreed upon between the parties, but fundamentally thereto is the identity of the parties agreeing.

One cannot separate the terms of an offer from the party making the offer. Full disclosure by the WICB of the party making the offer would have allowed C&W to better assess the bona fides of offer as well as the credibility, capacity and ability of the party making it. Since full disclosure was not made, and the basic principles of administrative law were not adhered to, C&W in our view were not treated fairly by the WICB in the negotiating process and C&W's position was materially and adversely affected thereby.

Despite C&W turning down the offer by letter dated March 16, 2004 to WICB, Mr. Donald Austin, General Manager of C&W in Barbados, approached President Griffith and made a verbal offer of $4M per annum. He gave evidence as follows:

"Sometime between March 17th and March 20th 2004, I made a call to the President of the WICB Mr. Teddy Griffith to try to broker a deal to conclude our negotiations for the sponsorship of the West Indies cricket team to 2008 on behalf of Cable and Wireless. During our discussions, I indicated that Cable and Wireless wanted to retain the sponsorship of the team, and I enquired what would be an amount that the Board could accept that would lead to the conclusion of a new agreement, although on the 16th March we had formally informed the WICB that we would not match the WICB's proposal for US$29.55m over 5 years.

After some discussion, Mr. Griffith indicated that US$4.0 Million would close the deal. I indicated that I would need to discuss this with my colleagues and it will take a week or so to conclude, as I needed to get agreement from several of the islands for this new offer. He indicated that there was a meeting with representatives of the new sponsors coming up shortly and that we would need to get back to him as soon as possible. Mr. Austin went on to say, "On Monday March 29th, 2004, I called Mr. Griffith and made an offer of $4 million for the Home series only. He indicated that he had already met with the potential new sponsors and that there was a 21-day exclusive discussion agreement with this party, so he would not be able to consider our offer at that time. I indicated that we had eighteen years of sponsorship, and I would expect that we should be favorably considered given this relationship. However he further noted that he would not be able to review before the expiry of the exclusive period.

Later that evening, there was a function for the cricket team which was attended by Mr. Roger Brathwaite. I took the opportunity to draw Mr. Brathwaite aside and indicated to him that the offer made by Cable & Wireless to the WICB was now $4 million for the Home Series only and that Cable and Wireless was interested in closing the deal. He responded that Mr. Griffith had spoken to him but that it was not possible to consider the offer as they were in a 21-day period exclusive review with the potential new sponsors. I indicated that Cable and Wireless had a long association with the Board and it was puzzling that the Board did not seem to want to discuss our offer.

He again reiterated their position, and that the offer would have to be considered after any formal discussions with the potential new sponsors".

In respect of the 21-day exclusive review period referred to by Mr. Austin, the Committee has not seen any evidence of such an agreement at that time. The Committee questioned Digicel (Mr. McDermott) about this exclusive agreement, and this is what he submitted to us in writing:

"The Review Committee referred to a "21-day exclusivity letter? signed at the end of the meeting in March 2004.

No exclusivity agreement was signed at the end of that meeting. An exclusivity agreement was however signed at the end of May 2004 in the circumstances set out below.

In March 2004, Digicel was advised that Cable & Wireless had declined to match its offer and r accordingly the WICB was prepared to meet with Digicel and negotiate terms under which Digicel would become the new Principal Sponsor of West Indies Cricket. On 23rd - 24th March 2004 a meeting was held and at the end of that meeting there was an agreement in principle. Based on the terms agreed and the issues discussed an extensive draft agreement was subsequently prepared by Messrs Kippax Beaumont Lewis and submitted to Messrs Myers Fletcher & Gordon (the WICB's attorneys) on May 14, 2004.

On May 28, 2004 Digicel and the WICB co-signed a Letter of Intent concerning the terms upon which Digicel was to be appointed as, and the rights to be granted to Digicel as the new principal sponsor of West Indies cricket. The parties agreed to a period of exclusive negotiations up to July 31, 2004 and notwithstanding that date to act in good faith in an effort to execute a "Definitive Agreement", in substantially the terms set out in the draft agreement, by midnight Jamaican time on June 13, 2004. The contract was eventually signed on July 5, 2004.

The WICB agreed that during the period of exclusivity it would not solicit any enquiries from any other person in relation to a similar sponsorship arrangement, nor would it negotiate with any other party, enter into any contract or commit to enter into a contract with any third party to that end.

The WICB and Digicel agreed that neither party would release any information to any third party regarding the negotiations, without the prior written consent of the other. The process as outlined is consistent with the commercial practice of proceeding from expressions of interest to the execution of an MOU and finally the signing of a final agreement. The period between the signing of the MOU and the signing of a final contract is often covered by an exclusivity and non-disclosure agreement to allow the parties to finalise the details of their agreement while giving some protection to them during the period of discussion. Mr. Austin further advised that in early April 2004, he spoke to the CEO again but he did not receive any further responses. He stated that he did not confirm the offer in writing as he had committed C&W albeit verbally. Thereafter he never heard from the President or CEO in respect of the offer.

It is interesting at this stage to consider what Dave Cameron had to say re the negotiations. He opined that in early December 2003 the negotiations with C&W had "broken down" and was adamant in this regard. The CEO continued to correspond with C&W (see letters of 5th December 2003 Roger Brathwaite to Lisa Agard, her response of 9th December 2003 and Mr.. Brathwaite's of 15th January 2004. See Appendix 9). It therefore appears that either someone was withholding information from the other or the Chairman of the Marketing Committee was not communicating with the CEO.

Our investigations revealed that all of the contact with ISM to the Board was made through the CEO. The CME said that the CEO and the Chairman of Marketing were the two individuals who really, as he put it, "drove through the discussions point". If these two were the alleged driving force one 'may question why Mr. Cameron did not know that the negotiations with C&W were on-going. When asked if he had any discussions with the broker, the CME said, "No, we came in after." He then specified that "After they had agreed to terms is when we came into the loop."

i>"We did not know it was Digicel. We had an offer from, an entity saying this was what they were prepared to put up." When asked who they were, he said, "At that time we did not know what the money amounts were. We did not know who it was. When I say 'we', I mean the Marketing Committee and myself.

The only people that received the offer were the Chief Executive Officer and the President, because they had to sign non-disclosure agreements as to the terms of the agreement and who it was, so there were some high level discussions going on at that point." (Our emphasis) ?To say we could have been brought in up front, we could only have been brought in if we had signed those non-disclosure agreements." Then when Mr. Millien was asked if he was brought in when it was a fait accompli, his answer was in the affirmative. He further recalled them stating that "this is what we have agreed to and we want you guys to hammer out a contract. So to that extent I got my first meeting with Digicel attorneys and ISM/SBI in Jamaica."

When asked who approached whom, whether it was SBI, ISM or a Board member, the CME replied that he thought it was almost a fait accompli by the time they (the WICB) wrote to Scotiabank (on December 30, 2003) and repeated, "It was primarily driven by the CEO and the President, Mr. Griffith.?

He then revealed that, "The first time I met these guys was when we sat down to hammer out the contract. I had not received any correspondence from them, any phone call or any e-mails. That would have been probably in mid-June. We had little time to get the contract done. We spent eighteen hours one day. We started at 8 o'clock in the morning and did not finish until 4:00 a.m. trying to hammer out this contract". The Committee would have thought that the CME would have been brought in at a much earlier stage in the process.

When the Committee asked Mr. Millien who brought SBI into the matter, Mr. Millien responded that he did not know. By that time it was, as he put it, "floated that sponsorship was available and we had written to a few people asking them to indicate their interest." He proceeded to say, "We were just thinking, 'Well, this is a broker.' We did not know if it was a bank approaching us; a financial institution, a cellular entity, a mortgage company. We did not know. So the offer was presented as if it was received by the Chief Executive Officer. After that, they signed a non-disclosure agreement so that we could take it a step further to find out who we were negotiating with. This is not uncommon in the industry.?

When asked, do you think it was the right decision to have effectively concluded negotiations with C&W without having another sponsor on the horizon, his answer was, "You could not have another sponsor on the horizon because you would have been breaking the contract? You had to go through a process to get to a stage where you felt it could happen. Because if you were talking to somebody simultaneously, not only would you be in breach of the contract but ethically you would have been on shaky ground."

He continued to say that: "I do not want to cast any blame but what I would say is that there should have been more involvement by more persons to get more of a consensus. The way it evolved, and it evolved quickly, is that the offer came in and we had a certain time by which to make a decision, so we were pressed for time, bearing in mind that we had already invoked the clause and the worst-case scenario was that we could have no sponsor to go into the tournament. The best case scenario was that we had a deal in front of us that was financially better than whatever existed in the past. Looking back at the whole situation now, the only recommendation I would make is that, one, we should have had more time to really analyse the total and, two, have more people involved in it. As I said, it was a high-level discussion by the CEO and the President which filtered down to the Marketing Committee and me at different intervals for input of specific things and more so in relation to the hammering out of the contract and the execution of such thereafter.?

Regarding the commission agreement, the CME's responses were "I never knew that there was a ten per cent commission for a firm, SBI, in the negotiations." When shown the Commission agreement of the 23rd of February, the CME said that it was something to be raised with the CEO. It was the first time he was seeing that commission agreement and did not know, when negotiating, whether such an agreement existed. He also stated: "I know there was a commission payable but my understanding was that it was for bringing the deal, like a finder's fee, and that was it. During the course of this tour I was informed that it was paid on what the players get and that kind of thing." The Committee is surprised therefore that a commission agreement was signed and the CME was not aware of it.

At this point, we mention the evidence of Lisa Agard. At that time she was the Executive Vice President, Legal Regulatory and Public Policy, at C&W. In response to the question as to whether negotiations had broken down with the WICB in December 2003, Miss Agard replied: "No, not at all. On the contrary, C&W was of the very firm view that it had concluded negotiations with the Board because there was a new sponsorship agreement to take effect as soon as the current one had expired. The supporting evidence can be located in the correspondence file.

Before concluding this aspect of our Report certain excerpts of Miss Agard's interview should be mentioned. Inter alia she recalled that, "On November 6th, the President responds to what I can only presume was my October 20th e-mail it is in the bundle basically he said:

Thanks, Lisa. We have completed our internal review of version one and have passed it along with our comments to our attorneys for review. We will now review version two and hope to be in a position to revert to you in a fortnight with our comments after which we will be in a better position to estimate when I will be in a position to make a recommendation to the Board. I have asked Roger to maintain contact with you directly if there are any issues that need immediate discussion."

Miss Agard continues ?Then we heard absolutely nothing from them until a letter of December 5, 2003 (See Appendix 13). Miss Agard regarded the exchange of letters in September 2003 as a commercial agreement (See Appendix 14). The President had opined that it was not a commercial agreement because it was "subject to Board approval and contract". In response to the foregoing comment, Miss Agard said in part: "I do not expect that after an 18 year relationship that I sit down in series of meetings with persons no less than the President and the CEO and agree to commercial terms, exchange correspondence, send you a revised contract. I heard nothing about it, there is an issue with it and then you tell me it was subject to contract and subject to approval by the Board. It is extraordinary to me.?

In conclusion, an analysis of all the evidence on balance, reveals that, for the reasons hereunder, the WICB treated C&W unfairly in the negotiations.

(1) The WICB did not respond within a reasonable time to the concerns it had in the proposed contract that was submitted to it on October 20, 2003. The Board wrote C&W on December 5, 2003, indicating that terms and conditions were introduced in the draft contract which radically altered the basis of the old existing agreement. Looking at the question of fairness, C&W was not given an opportunity to respond before the ten month period had ended and it is clear that for the whole of the month of November there was no communication between the WICB and C&W. The ball was then in WICB's court.

(2) The WICB asked C&W to match a higher offer, by at least $1.975m than what the WICB actually received as there was no disclosure of a commission agreement.

(3) The WICB withheld the identity of the party that C&W was asked to match for the clear disadvantage and subsequent detriment of Cable & Wireless. There was a fundamental lack of transparency on the part of WICB.

Finally, in as much as the evidence shows that C&W were treated unfairly, we feel obliged to mention press releases and statements issued by C&W after the Digicel deal was signed:

1. In an interview between Rachelle Franklin, the Senior VP Corporate Marketing of C&W and Ryan Patrick of CaribbeanCricket.com in December 20, 2004, Ms. Franklin stated, "We did not lose the deal. We made a conscious decision to sponsor the ICC World Cup in 2007. We walked away from the series sponsorship...".

2. In a C&W open press letter published on December 22, 2004, C&W stated ?we have decided to relinquish our sponsorship of the West Indies team.?

* In the next installment, the Sponsorship Negotiation Review Committee answers the question: Does an improper relationship exist between the WICB and Digicel.