While Dany Bahar has told a Swiss newspaper that he is taking legal action against Group Lotus for wrongful termination of his contract, the word from up in Norfolk is that the legal firm Olswang is now in residence at Hethel, going through all the contracts that were signed by the firm since the new management took over in the middle of 2009, looking at what was done.
Group Lotus’s ultimate parent, DRB-HICOM, continues to say that it is not going to sell the British car company, but it is unlikely that the Malaysian conglomerate has the desire (or the cash) that would be needed to turn the business around, given that it has to find a way of getting rid of a rumoured $420 million in borrowing from a number of Asian banks. Unless that can be done, it is going to be hard to find a buyer. The word is that in the short term all contractor contracts are not being extended and the firm is cutting costs wherever it can. This would to suggest that the plan is to polish the company up a little and then put it on the market and see what can be got for it.
While there are some of Bahar’s flunkies who believe that his brand-building strategy would have worked and that in a few years Lotus would be selling 8,000 cars a year, others in the industry believe that DRB-HICOM was wise to put a stop to the spending. It is fashionable at the moment to suggest that Lotus was a failure before the new people took over, but the reality was that after former CEO Mike Kimberley returned in 2006, the company did very well, given the limited resources available. It produced the Evora, the company’s first new model in 12 years, and in 2007-2008 made a profit of £1.5 million, while also registering a 300 percent increase in its technology business. A poor exchange rate in 2008 meant that the firm lost £1.2 million for the year ending March 2009.
Kimberley was then taken out of the equation because of serious back problems early in 2009, and the-then parent company Proton took the decision to put Bahar into the role as his replacement. The theory was to spend large amounts of borrowed money in the hope of turning Lotus into what Bahar called a “British Porsche”, with the brand built up through motorsports activities (a la Ferrari) and on a raft of new models. The industry watched sceptically as money flowed here, there and everywhere. Bahar said that the firm would get into operating profit in 2014 or 2015, but the losses were dramatic, with £12 million in the year ending March 2010 and an even more spectacular £20m loss in the year ending March 2011. This year’s figures are expected to include further losses.
It remains to be seen what can be saved. Bahar and his people did a number of deals to allow others to use the Lotus brand in different ways, either geographically or in different racing series, but while these may continue and become brands in their own right, the future of the core company remains in doubt. In Formula 1 terms GenII has the right to use the Lotus name, although it is not clear whether this includes merchandising. In the World Endurance Championship it seems that there are similar rights that have been sold to Colin Kolles’s Kodewa GmbH, which is reportedly in the process of building a Lotus LMP1 car which will be offered to customers in 2013.
Joe – the same Swiss article talks about the Lotus Advisory Council being dissolved (I think) – do you have insight on that ?
That sounds like cost-cutting to me.
So did all the money go on sponsorship then? All they have achieved seems to be dilution of the brand. A bad thing for a buyer I’m guessing.
Mike Kimberley was fired when he supported the Litespeed /MGI budget capped entry and Chairman Selah didn’t.
I do not believe this is true
Whose are the ‘Lotus Classics’ clothing stores? Saw one in Monaco, while the ‘flagship’ store is due to open imminently on Regent Street in London.
They belong to Group.
I can’t tell you how many times I’ve heard the “brand building” strategy used in business usually followed up by a notification in the papers telling creditors how many cents in the dollar they’ll be getting…
Building a brand isn’t the same as selling a product.
Still a very big mess whichever way you look at it!
I hope his legal ‘shakedown’ is unsuccessful and he gets stuck with all court costs, better yet counter sued successfully and expensively personally!
Out come the scumbag lawyers to piss away some British taxpayers pounds refereeing this poor mistreated marketing ‘Guru’.
Yep, your gonna turn Lotus into a ‘British Porsche’ overnight virtually and go on to fill that massive void created by the thriving Global economy. Pure genius.
Any Eskimos need some more Ice out there? Maybe a little swamp land in Florida? The Board deserved what they got
I do hope the implication is not that DB will qualify for legal aid in the UK.
Though come to think of it, the rules seem to indicate that you must be stinking rich and either be a politician or have a title. ~(or be a foreign national bent upon the destruction of the country.)
You cannot get legal aid for employment law disputes. The only “taxpayers pounds” will go on meeting the minimum redundancy payments owed to Group Lotus staff when they finally go bump.
Do staffed Courtrooms and Judges come at no cost?
Mike Kimberley apparently wrote an email to the Proton board in KL saying that they didn’t have a clue about what the Lotus brand was let alone building on.
This was after they wouldn’t support his/the re entry into F1 with Litespeed/MGI.
He apparently included an analogy using the the words dog, wave and tail!
Not smart in a muslim company.
The press release distancing Lotus from Litespeed entry came soon after his “medical leave”
As I said I do not believe this was the case. You may feel different, but then you have not declared whether or not you have inside information. Nor have we heard from Mike Kimberley or people who would know what happened. If they wish to comment, they are welcome ot do so.
Has Ron Dennis locked him up yet to spearhead the McLaren Sportscar business? Maybe thats why they haven’t signed Lewis’ new contract yet, they may need that extra cash to bag this ‘talent’
Hey Nik,
PAYDIRT!!!
Know you’re busy, but good news week on all counts, I hope
Incidentally, Olswang are just who I’d choose to grind things down to a immense bill and naff all action. Slight experience of them.
On a human level, I have to have some sympathy for Danny B. He’s been a fool. He’s far from out of the woods, also.
Doubt he reads, but bet DB’s counsel might be looking about: If you have a legit claim on this one, get a real bastard, not a big team. And although I am biased heavily to want to know what transpired, don’t argue this In Camera, be open, only way you can shift any blame that may rightfully be shifted. If you litigate into a scandal, being all quiet does you no good, whatever the outcome. I’d also want to push this fast, not for legal reasons, but so if you fail in your claim, less collateral damage and aggrievance. That’s hard to balance with a wish to clear one’s name, but just plain fact regardless.
I still think there was plenty of funny business not attributable directly, as in buck stops here, to Danny B.
Aww crap, is this going to be a tribunal job? Ugh. I’ve done those a few times, no losses. Procedure and whole thing sucks so much I have no words. From either side.
My doctor’s going to have a fit if this kicks off, I’m supposed to be resting to baseline a cortisol test . .
sorry John (other John) your post are normally quit entertaining/interesting, but this one has left this poor motor head dumbfounded!
Hi OBS,
I was addressing another regular, to start with, so bad form of me.
Olswang are a big law firm, who once drove a petty case which affected me to insanely high costs. They are a favorite, I think, of big business with moral problems. Anecdotally. You could argue that of a lot of bigger firms, but this one stung me, and their client of the case which concerned me is highly dubious.
Nik is making a documentary about Lotus.
We talked offline how hard it might be to get Danny Bahar on record. I figured he had to talk. Honour, etc., even if misguided.
Just about looks like Danny Bahar is about to go on record.
Then I talked about employment tribunals, in which I have won a case or two for either side of that debate. (not really a big boast, if you knew how it worked) I found that process depressing, nigh arbitrary, and so sighed, that we might not hear very much of what goes on, as to Danny, clearly. I was much informed by my study of how early Soviets worked . .
Back to Danny. Compassion for mankind is not a bad idea. On principle, who wants another bitter man bobbing around this planet? I also am up for atonement of sins, and that comes from realisation.
So, I just figured he would do better to get things done quickly. If he looses spectacularly, chapter over, everyone can move on.
If Danny was acting under instructions from some murky political background, however, we should all know.
I want to know why David Cameron went cap in hand to the Malaysians over this, for a start. Cause and effect? Supplication, begging them to stop messing with jobs in Norfolk? What, exactly? FOI request heading to the Home Office soon as . .
Nevertheless, please accept my apologies for “talking Gaelic” on the sly!
yours, ~ john
Ah! much better! thank you John.
my pleasure! and thank you for calling that out.
From what I have read elsewhere and totally unsubstantiated is that allegedly Mr Bahar used Lotus resources to indulge himself in some property renovation for his own personal use or gain outside his agreed terms of contract.
What if he was instructed to take too free a hand?
Tin foil hat on here, but then he would be possibly taking advice from in house counsel, who owe their jobs to another ultimate paymaster, the same . .
and how better to burn your patsy, than set him up for the fall, on grounds sure to meet widespread opprobrium?
If my conspiracy theory had any value, it would make for a awesome constructive dismissal case . .
We don’t like what Danny Bahar has done, but in law, act swiftly, convict slowly.
I now have to atone somehow for my awfully dim view of human nature!
You won’t hear a peep from MK…I understand his termination contract included a gagging order.
He indeed did have back problems and IMO this was used as an excuse to get him out.
The truth will out.
I spoke to MJK once by phone. I think his manner would not necessarily go down well with Malaysians. The only time we were in the same room, we didn’t talk. I was with Alex Yoong (now Caterham talent spotter/trainer).
I was approached by a gentlemen at the end of the day, who was in his words a high level recruiter. I got the distinct impression he had a client who he felt would be a good fit for the Group Lotus CEO job.
I got the impression someone was waiting in the wings.
Conjecture on my part. I could be wrong.
Hey Joe,
A slight correction – Lotus are building an LMP2 car for 2013, with a possible look at LMP1 somewhere down the line.
I think that you will find that Kolles is building a Lotus LMP1 car for 2013
The one designed by James Key?? Definitely LMP2, with a view to LMP1 – most likely when the new regs hit in 2014.
http://www.racecar-engineering.com/news/ex-hrt-f1-operation-to-develop-lotus-lmp2/
story uses heavily modified renders of an Audi R18.
I think the only answer for Lotus is to enter pre-pack insolvency, with a new buyer or buyers in the wings. i guess that either Magna, Ricardo or Prodrive might be interested in the engineering side.
DRB-Hicom would have to negotiate a haircut on the loan guarantees but I am sure political pressure could be brought to bear on the Malaysian banks consortium.
Wilson
I would argue shadow directors held no locus standii to enter into the agreements, and repudiate. Don’t fuck around with the jobs. Pre pack might then become necessary, but you have the claims to balance, fat chance it may be to get a sheriff over to MY. But nice and clear. And tell that Cameron boy he’s been suckered, find which banks got dicked over by Mahatir’s debt repudiation / “default” and ask for a DIP loan. On narrow grounds, you can sell legal claims to third parties now. Get nasty, before it gets nasty. Might need DB to spill it, meanwhile. There are protections for that, which might not ruin his life. Sorry, emotional. But enough, already, of this rot.
Sorry, argument would be self dealing with shadow directors who exist overseas. Criminal, dontchya know . .
The Evora cannot be regarded as an achievement given the non existant sales figures. The reviews were great (it was a Lotus, it handles…), build quality wasn’t and the brand could not support a 60K car. Does justify the marketing expenditure plan, but to do the 5 cars would have been far too much too fast.
I’m kind of surprised that the losses at Lotus were rather benign in the past couple of years.
Not saying they were doing great, but if you’re willing to spend $400+ million over 5 or 7 years, losing $50 million in the first two years is in the ballpark, as long as your internal development is progressing reasonably close to the set timetable and budget.
Ironically, the better the Lotus F1 team do the more it will irk DB. I am presuming of course that his seat on the Genii board is no longer a reality.
The funny thing was that he was the CEO of Lotus yet he used to turn up for work in a chauffeur driven Porsche Panamera…..
Have you got a link for this statement. Can’t believe anybody could be that stupid.
looking at Bahar’s trackrecord, it wouldn’t suprise me actually
The “Swizz Beats” fellow who was supposed to add a bit of rap r’n'b glitz to the brand (and was appointed ‘Creative Director’) was (in)famous for not driving his Evora and instead having it towed by truck to wherever he was appearing, so I’d not be surprised.
Well thats not true!
I can categorically state that MJK was NEVER sacked or forced to resign. In fact, he had a fall and cracked some vertebrae in his back meaning he was on Morphine for a year and had to have a major operation. Whilst he didn’t want to leave Lotus only 2 years through the 5 year plan, he could not give the job his normal 120% and it was resign or suffer permanent disability.
To address some points, incidently these are my points not my fathers.
- Thanks Joe for saying what some have forgotten. When people feel threatened or take credit for things that they shouldn’t they often use litigation, and misdirection as an answer to their own shortcomings. I know some people have blamed previous Management for the issues that Lotus are going through, but I can assure you that this is not the case. This is all in the public eye so I am not saying anything new. Joe is correct in what he says. In 2008 Lotus made £1.5 million. The previous year MJK had negotated a total wiping of the companies debts with Proton to give the company a secure foundation. With a clean bottom line the company proved its worth bringing out its first all new car for 12 years, and it was part of the “previous Managements” 5 year plan to build on the quality of the new Evora and bring out the already sorted Evora S and IPS, Facelift the Elise and Exige and Develop the new MES. Furthermore this car, which some know as the new Esprit, was already designed and ready to go into development with a release date of late 2011. After that it was the plan to develop a new Supercar. (this all from Press releases).
- My father was always a Lotus man. From 1969 through to 1978, helping design and develop the Europa TC, Elite, Eclat, Esprit. Then Colin entrusted him to run the company while he concentrated in F1 (his first love). Then when Colin passed away he saw it through 2 more owners to 1993 when he was promoted up to GM. Even at that point he kept an eye on Lotus. When he was with Lamborghini he used Lotus expertise and Engineering skills, passing business their way and then as an advisor to the board and finally being asked to get the company back on an even keel. Lotus is and was his life and the majority of his lifes work. To hear negative rumours spread about him and his Management team of the time effects him deeply, especially when they are all untrue.
I felt this needed to be said.
Incidently, if I can say, for myself, that I hope this most recent incarnation of Lotus, with all the hype, spending and very little cost control, has not damaged the company that we all know and Love. I for one 100% support anyone who wants to get it back on an even keel.
One thing few people have mentioned is the workers, but living just a mile away from the factory I know many people who do and did work there. There have been lay offs that have not been reported and this under DB, not DRB. Many of my friends have lost their jobs, so lets think about people who’s lives have been badly effected by what has been happening there.
Anthony Kimberley MCMI, MIMI
Thanks Anthony. This kind of post is a powerful argument for keeping the Joe Saward F1 Blog comments section alive. Thanks Joe for doing the hard work to give your audience a trusted and fascinating window into the world of F1 and its wild inhabitants. You are in P1 by a large margin.
Milt
Thanks for the facts AK. I used to be a suppliern to “Cars” before I retired and know that there were/are some excellent blokes there.
The wiping out of the debt explains the jump into profitability, which it would have been nice to continue. However the hole that Dany Boy has dug is so very much deeper now, that to write it off again seems very unlikely.
Wow, Anthony, this sentence of yours rocks:
“When people feel threatened or take credit for things that they shouldn’t they often use litigation, and misdirection as an answer to their own shortcomings.”
Calling that out because years of expensive pain could be explained by just what you wrote. Not my mistake, but when you buy things you didn’t create (copyrights) people allege you did just that.
Can you take the time maybe to contact Nik Coleman, who is working on a documentary about this Lotus problem? He is easy to find on the net, has put this email contact up before, so I think I’ll get away with repeating it: nik@nikcoleman.com
I’m biased, because Nik is going all out to get that done, and all I can do at the moment is add perspective. Rather amateur perspective, at that. Just the story needs analysis like yours. Are you in already? Believe me, this will be very cool. I’m busting a gut to work him out a easier time, from the sidelines. As Nik coined it, JS Blog United, versus ROW. Or something like that.
Ignore me, pass on the knowledge. yours ~ j
sorry, P.S. the bad apple in my case is someone who did naff all, so I was not eating someone else’s lunch. Just they have some big name friends.
Aren’t Lotus sponsoring Rebellion in LMP1………
4th OA and 1st petrol at Le Mans
Just heard that Ansar Ali has left Caterham – wonder if he’s moving to another motor manufacturer ?
Talking of Lotus and that which was for a season bit is no more…
Does Tony’s new CEO of Air Asia, Aireen Omar (congratulations) have any significance for Caterham F1, ie will it give him more time for F1 or will he squander it on football?
I hope I’m wrong but, this seems to be going to be ‘death by a thousand cuts’. I really can’t see the cars surviving, only the engineering side. Unless the cars surface as Caterham. A silent prayer for the workers!.
More and more it looks like TF is uniquely placed to save Lotus Cars, if anyone can. It may be that his automotive ambitions may have moved in another direction after the Caterham purchase, but Lotus is unfinished business, now that his auld adversary has been thrown to the wolves. If it comes off TF will have built a much stronger automotive brand than Caterham alone — to say nothing of the thanks and respect of millions of Lotus enthusiasts, preventing large chunks of the Norfolk economy from disappearing, strengthened UK-Malaysian trade links, and probably (another) gong for him. Hethel ain’t too far from Sandringham, I believe…
I thought you were supposed to be a writer on Formula One rather than speculator on a rival car company, (as you are a director of Caterham Cars). Appreciate that you and Dany Bahar had your slight differences, but why isn’t your blog sticking to Formula One?
It is my blog. I write what I like. Don’t like it? Get lost.
Lotus’ demise long ago was a sad chapter in automobile history. Its return from hell with malaysian taxpayer money was bewildering! Now Bahar has used that money to make a pool with a view in his private home. And he claims now he got fired without just cause and is sueing the company. Boring stuff. Couldn’t care less! And Colin Chapman must be left wanting to turn upside down in his grave. Ron Dennis beware! Making great cars is no insurance policy for perennial success.
Let me state upfront that like many people, I am a Lotus fanatic. I love their cars, creativity, styling, people and above all engineering genius. Have I driven faster cars – yes, have I driven more enjoyable cars – never. I am lucky to have 4 of them. I personally think Bahar is the sacrificial lamb and I am very sorry to see him go. He recognised immediately that there will never be enough margin in £ 30k cars to go around. Doesn’t matter if you love £20-£35k Exiges, Elises, 340Rs etc (as I do !) this is a fact. So he took a bold, risky step and now suddenly “everyone knows how to save Lotus”, but noone has put forward how that would work from a margin perspective. I thought he would never be able to get Lotus QA good enough to compete however in the £ 60k – £ 120k league, but I was wrong. I have a 2010 Evora (which I love) but recently saw a new 2012 model. The difference in the build quality is truly staggering when you look closely. Has this happened magically after never being achieved for 30 years ? Don’t think so …..it was Bahar. Next everyone said he could never sell a £120k car (yes, including me). Wrong ! He sold 120 immediately to China. I was lucky enough to see a £120k Evora recently at the factory and it is staggering.Finally the brand has never been as vibrant or it’s CEO more charasmatic than with Bahar. The TV programme, the clothing stores, F1 (the name is now on the podium HOWEVER much you want to downplay that with “nothing to do with them” crap). Dany Bahar was a game changer, but DRB just want Proton and not Lotus and it seems with industry backing, it is easy to screw him. Lotus has survived worse and it will do again.
Paul, I hope your right. Its about time Lotus moved up the food chain.
Good luck to them.
John Mansfield
Joe,
you should consider writing an( obviously unofficcial) biography on Dany Bahar.
In it you could write alot of the stuff that is unknown to many, Im sure it would be a real entertaining read, and how ironic would it be If said book became a best seller and you got wealthy from it.
You could then have your own executive jet to fly to the Grand Prixs.
Wayne