http://www.gulfkeystone.com/ The firms exploration programme in Algeria is going well and "the shares look good value", say the Investors Chronicle. Your comments please. goal.

apparently the iraqis were gazumped .... the russians pulled that arms deal as the israelis offered a better price .... i have it on the best authority

No real burn... just be patient.

Theres only one way this is going.,.

Haven't bothered of late(little point) and just catching up,here's a account from
a respected poster,who was in cpurt on tuesday.


~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

GKP's barrister began by saying that Excalibur's claim is that the
SOLE REASON for the failure by Rex to get funding is because GKP had
failed to provide Excalibur with a document which Excalibur now say
was essential. The barrister explained that Rex had sent Todd a letter
(it was on the Court PCs...I was sitting behind Rex and I was close
enough to just be able to read the PC screens!) to which two drafts
were attached. Rex wanted GKP to work one of these two drafts into a
formal document, so that Excalibur and GKP could both sign it. The
drafts were:

(a) a letter of acknowledgement that Excalibur had introduced GKP and
TKI to the Kurdish Government, in consideration for a 24% stake in
Shaikan

(b) as for (a), but expanded to include "in addition, a 30% stake in
Uzbekistan and Africa or other International opportunities introduced
by Excalibur"

(note: the 24% of Shaikan was the 30% of the 80% i.e. excluding the
KRG 20%, and these drafts clearly post-date the original 30/70
agreement because Shaikan was not under discussion at that earlier
time, and in any case Adnan Samarrai wanted Sangaw and not Shaikan)

The GKP barrister emphasised that Excalibur were saying that GKP's
failure to provide this formal document was the ONLY REASON for
Excalibur not getting funding. (note: the GKP barrister's line of
argument obviously being that, if GKP can show that there was no
requirement to provide such a document, or if it was in any case
irrelevant, the Judge must rule that the Excalibur claim falls)

He then developed two lines of argument to demolish Excalibur's argument.

The first was to show that there was no obligation upon GKP to provide
any such document:

* if GKP was not party to the original Excalibur/TKI agreement, it was
under no obligation to provide anything

* "on any view, the idea that Excalibur had gained 30% was
hypothetical and might not be true. Terms were not mentioned. It might
not be agreed despite good faith on both sides" (note: I think he
meant KRG and GKP) "GKP cannot be expected to sign something that it
was not confident could be delivered"

* "if it WAS clear (the position on the agreement) then Excalibur
could demonstrate its 30% by showing its Collabroration Agreement. But
there is no evidence that it did". (note: the barrister then pursues
this further, see below)

The second line of argument:

* "no basis in factual or expert evidence that a letter in the terms
sought by Excalibur would have no impact" (note: this is what my notes
say...I am not certain what he was implying...he may have said the
opposite to what he meant, or I may have misheard him). "No potential
funder ever asked for such a letter"

* "Investors initially ASSUME that such a document does exist, and
would deal with it" (note: its existence or not) "at Due Diligence
(after Non Disclosure Agreement). These investors would need a more
formal document than the draft. The expert's opinion on the letter
required by Excalibur is that it is 'Unnecessary and Irrelevant'"

* "Rex Wempen wanted the latter as 'credentials' for having 'done a
big deal' ". The GKP barrister then mentioned an email from Eric
Wempen to Rex Wempen, dated 24 November (note: must be 2007, see
below) in which Eric Wempen said: "Think of your future first. So try
to get your Origination letter from Kozel"

* The GKP barrister said that this request for such a document
represented a "False Claim from Wempen in November 2007. But this
claim is still remarkably being made in these (note: High Court,
obviously) proceedings"

* "there was not a hint of suggestion that this was referred to in
contemporaneous documents" (the GKP barrister made some reference to
this being an overarching point and he then goes on further about
this, see below)

* "in any event it fails on the facts"

He then went on to say that, in terms of an Indirect Interest,
Excalibur never raised this until November 2007. Emails in following
weeks were "in language of supplication not denial". Rex Wempen had
said to Eric Wempen "there were countless ways of doing it" i.e. all
kinds of possibilities. The barrister said that "Lack of definition
leads to Excalibur's problem in this case"

He said "there is nothing wrong in Excalibur being flexible BUT they
cannot now say that GKP was wrong in not having provided one of six
possible ways" i.e. six possible ways by which this matter might have
been addressed/dealt with at the time. There was then a short exchange
with the Judge:

Judge: "which one?"
GKP barrister: "you will decide"
Judge: "yes I will" (followed by laughter in the Court)

The GKP barrister then explained that "Excalibur had failed to pay a
large amount of signature bonus and imposed on GKP a liability to
pay." He said "Why should GKP agree anything until Excalibur agreed to
pay?"

He then said that, if an Indirect Interest were given to Excalibur via
equity in GKP "A shareholders' agreement would have taken months. But
the clock was ticking" i.e. on the Shaikan licence award with the KRG.
"Not GKP's fault"

He then said "should at 3.12.07 GKP have given a confirmed agreement?
But Rex Wempen abandoned the 30% claim in exchange for a buy-out by
GKP (and probably MOL)"

In May 2008, "Eric Wempen picked up on GKP's seismic being positive on
Shaikan. Excalibur wrote on 26 June 2008" (note: I think to GKP's
lawyers?) "But it was too late because of the PSC duration time of 90
days"

The GKP barrister then said that *if* GKP were requited to follow the
agreement (Note: I assume the original Excalibur/TKI one, but it might
be the non-existent Excalibur/GKP one...he was covering so many
angles) *then* they were NOT required to do so if Excalibur had paid
no money. He then said:

1. "what are the "dependent covenants" on Excalibur?". He said there
was an obligation to tender the sums due from them for the Shaikan
sigature bonus. (note: I was told in the coffee bar that the Shaikan
signature bonus was $25m)

2. "there is no evidence that the absence of the level of
documentation put off any potential investors. In those rare cases
where Excalibur got to the stage of submitting a 'teaser', Excalibur
claimed a "participatory ownership".

He then said "Let's look at the teaser sent to UBS and others. Wempen
called it an NDA. It claimed 'A unique opportunity to invest alongside
three competent international partners, one UK based, one a US
Independent, and one a European state oil company' "

He explained that Excalibur had said "a 10% OWNERSHIP of the field is
available in return for a $40 million payment to Excalibur who
initiated the deal"

(note: this was news to me! So having purportedly got a 30% stake in
Shaikan for no cost at that time, i.e. having not paid anything to
GKP, Excalibur were then seeking to dispose of one-third of that
purported stake for $40 million, thereby valuing the 80% non-KRG
percentage of Shaikan as 8 x $40m = $320 million, though GKP had paid
only $25 million for it. No such calculations were given in Court)

The GKP barrister then said "The notion that Excalibur UNDERSOLD its
title, when it OVERSOLD on everything else, is seriously open to
question". He then quoted the expert evidence from Mr. Wilkinson that
an Indirect Interest would be much less interesting to an investor
than a Direct Interest.

He said that "My last point is to remind his Lordship that it is wrong
for Excalibur to claim that this (note: referring to the alleged
failure to provide the requested document) was the ONLY obstacle to
not getting funding. GKP claims that Excalibur could not get funding
for other reasons"

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

There was then some discussion, in closing the business for the day,
between the two barristers about expert reports.

BUT as part of that, there (was my notes indicate coming from
Excalibur's barrister) a statement that in one of the two reports
provided by the expert Mr. Wilkinson, Credit Suisse is mentioned as
having provided some funding to Excalibur. What this funding was about
was left unexplained.

Excalibur's barrister said to the Judge "Something of a barrage of
information has been coming our way" and he said "there was an
important discovery last Friday. Memery Crystal wrote to Clifford
Chance about it and they need a reply. I am mentioning it now"

(note: I assume that this refers to the emails that GKP/TKI have
apparently successfully forced out of someone...the GKP team have
apparently been working through the weekend on this matter, and wrote
a letter (the above mentioned one?) to Clifford Chance at about 11pm
last night)

The Judge said "I am going to go away and read the material. I hope to
start the case again on Monday"

According to my notes, the last material statement was from the
Excalibur barrister, who said "If these questions result in
disclosure, it will involve release of documents already in Clifford
Chance's possession" and he added that "they relate to UBS".

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

but in my humble opinion, do your own research etc. as always

pinion.financialpost.com/2012/10/26/lawrence-solomon-oil-majors-back-kurdistan/

Tuesday the next day in court.

Not much feed back from thr CC,this is i've come across.



Wempen on stand. Getting hammered for being vague and long-winded. Going back in after short break now. Showing that Excalibur had no employees bar brief spell in 2004 and no salaries paid. More later

17:43
My thoughts
chantry chanters
24UP

I was only able to attend court upto the lunch break due to work however I would like to just put down my thoughts. I know other members of the BB will put their own thougths down and Im certain they will do so in more detail.

Rex took the stand around 10.40 after the first 40 minutes was taken up with a request for a small number of files (around 100) which may or not be relavent to the case along with our QC saying how a technical report which had been promised to the court for today would now not be available until the 5th November. Exc QC apologised for the lateness (2200 on Monday night) that it would not be available but the author of the piece had a very busy schedule. The judge was not impressed and made an order that it was to be available my the 5th Nov.

After a harty slap on the back to his brother, Rex too the stand. Once his QC took him through the rigours of confirming his name, address and signatures on witness statments Our man took over.

He asked Rex when he left the service and the circumstances of his leaving. He then went
of to ask what were the cercumstances of his leaving the reserves. On both occasions Rex stated that he resigned. I got the distinct impression from our QC that this is not necessarily the whole answer but for the moment he moved on.

Our man then went on to discuss Exc management. He must have spent 10 minutes trying
to get Rex to tell him if Exc had shares or a unit whereby it could be shown who owned what.
Rex went into a long story about how it was a family kinda run thing and that his mother had a share until her death and then his brother had a share but he could not remember exactly what the company structure was. . It was so wishy woshy as to be as clear as mud what the whole situation was. Throughout the morning Rex failed to respond to simple questions and on one particular occasion our QC who showed amazing patience said I have asked this question four times and still dont have an answer.. Let me try one last time. I must say I thought the judge also showed great patience and only after Rex had had plenty of time to get to the point did he jump in to stop the record and reset Rex on track.

I believe I understood that Exc had not produced financial reports from 2004 onwards as it had not made any money. Im sure someone will pick up more on this.

As stated our man spent the morning showing that not only did Exc, Rex and his brother have any real money to invest Rex himself thought he would be unable to raise 10,000 (I presume dollers) or £6,200 on a personal credit card.

Rex loves to name drop, this would have been ideal for Hello Magazine but in answer to simple questions just showed him a real life walter mittly. Rex found it particularly hard to differentiate between what is true and what is a fact .... Having 100 million to invest NOW and perhaps the potential to raise 100 million to invest.. What is fact and what you would LIKE to be the facts.

Closing I would like to say that this is just my simple impression of the morning session. I was partly disapointed that Rex was not the nemesis I was expecting to see but just a chancer who tried to have his fingers in lots of pies in the hope that something could come good.

carpetbaggers!

Here goes with the caveats:
Everything I report on below is subject to my own fallibility. Taking notes, whilst listening and not being legally trained could lead to any number of mistakes in my account below both in the essence and my understanding of the events in court today. Where it’s my own opinion I’ve included this in asterisks. I’ve also tried to include some exchanges word for word verbatim to give you a flavour of proceedings – again these may not be exactly correct, only the court transcript could be used for that purpose. I have also made no attempt to capture absolutely everything covered – particularly the afternoon session, I listened much more than I wrote. Finally, a lot of it I have documented ‘as it happened’ rather than my reflections from the day – hopefully some rich material to pick over.

Anyway, I hope that the notes are helpful for the majority of shareholders who weren’t present today. I’ve really appreciated all of the notes shared to date from other posters and hope that this spirit of sharing is continued for the rest of the trial. I've posted this on the uvva board as well (stormyrider)

Court 15, Tuesday October 30th

Chantry Chanters (post 17.43 iii) captured very well the first section of court time this morning about delays in a report from Clifford Chance. Only thing to add is that the judge suggested that if the report was not available by 5th November he may consider it as non-admissible.
*The judge noted that there had been a lot of delays and suggested that he was keen to avoid more*
I think it was Simon Pickens who suggested that the broad timeline for the next few weeks was:
- 10 days of cross-examination of Wempens which in reality would take 3 weeks (*I assume due to days off from court each week*)
- Further 3 weeks of cross-examination of *TKI/GKP/Todd etc.*
- Then on to expert witnesses

Rex took to the stand giving a big strong theatrical pat on his brothers back. It was established he left the army in 1999 resigning to pursue his MBA. He then joined a joint military reserve unit. His reserve career ended when he resigned in 2002. Voluntarily.

Jonathan Gaisman (JG) “That’s the whole truth is it”
Rex Wempen (RW) “Yes”
JG “We’ll come back to that later”

A number of exchanges took place to try to establish if Excalibur had shares or membership units. Rex seemed evasive or ignorant about the set-up. Regardless JG pursued it as the distinction seemed not important to establish.
Rex had been the original manager/owner. Then Eric came in. Then Eric switched with their mother and finally Eric came back in.

The structure was (RW) “Not that of a Fortune 500 Company. It was informal. Changed up a bit”
JG: “Was Eric a shareholder Oct-Dec 2007?”
RW: “Mother had just passed away so not sure at that point” “Paperwork may not have caught up until Jan 2008”
JG: “Was Eric always regarded as your partner?”
RW: “Yes. Always”
JG: “Could Eric have ever rightly been referred by you *Rex* as ‘Outside Counsel’”?

*Rex then got a bit of a telling off over very convoluted answers, dropping all sorts of names along the way. This was a bit of a theme throughout the day.*

JG made a couple of points:
- Lack of corporate records for Excalibur
- No formal management team
- No investment team
RW stated that they had planned to bring in an investment bank to raise funds for our part of the venture.

*It took about 15 minutes to get Rex to agree to what seemed to me some pretty incontrovertible and simple points*:
1. Excalibur had no Board of Directors
2. Excalibur had no investment Team.

JG only got RW to concede this when he was shown his own (RWs) witness statement!*

Excalibur’s company constitution was then shown and discussed, particularly the point that unaudited accounts should be provided each year. This was being questioned as there were no accounts available or provided since 2004. RW did suggest that many records were lost and had to be abandoned in Baghdad.

JG pursued the question as to why accounts hadn’t been provided since 2004:
JG: “Why hasn’t this been done?” “One reason there’s no accounts since 2004 is because there’s been no income since 2004”
RW: “Used other entities, consultant to the Pentagon…”
RW: “Yes, no income since 2004, possibly some income into spring 2005”
JG summarised that Excalibur had started off as a consultancy business…

RW was told off again comprising his modest income to that of a CEO Aim listed company.
JG suggested that he concentrate on the questions rather than these kinds of comparisons that “don’t help anyone”

RW finally agreed that there was “No cash” and “No working capital” in Excalibur. JG stated that you could summarise and say that the assets of the company were “effectively non-existent”. RW replied that he agreed that they were negligible. When looking at the accounts JG pointed out that expenses out-stripped income from consultancy and that the trading loss was $6000 for the period of accounts.

JG then made the point that there was no provision for salaries in the accounts.
RW “In 2004 we had 100 employees for the National Economic Survey of Iraq”
JG made the distinction between employees and contractors.
RW argued that it was informal, country under occupation etc. *so effectively normal distinctions don’t come into play* “We treated them as employees”
JG “Leaving that aside there were no salaries, and no employees then”
RW: “2 drivers, 4 Peshmerga bodyguards, 2 secretaries
JG: “All in 2004”
JG established this was a one off for the National Economic Survey of Iraq in 2004.

JG then stated that as there were no accounts since 2004, the next glimpse was in 2006. JG checked that his assumption that Excalibur had no income from 2006 with Rex who confirmed that to be the case although he stated he had income from the Pentagon

JG took a moment to point out that he was not asking questions to belittle him, that there was “no shame in not having any money”. JG explained that he wanted to establish the lack of assets in Excalibur as it was important for many elements of this case.

JG referred to an email that suggested Excalibur may not pay their lawyers back in 2006 but thought it best to keep them on side in case we sue Gulf *GKP*. RW stated he didn’t know what the problem was as they were “paid in full”.

April 2008:
JG made a point that Maxim Private Equity had wanted Excalibur to put in $1.3m to help raise a total of $10m for a ‘River Resources’ investment idea. RW & Dan Franchie (sp?) could only raise $100,000 themselves. *Looked like conditioning for a point that JG will make later in the trial*. JG: “Financier needed 13% contribution” thus showing that Excalibur couldn’t partake due to funding.

JG made some points that no investment bank had signed a non-disclosure agreement. RW agreed and stated that this was as Excalibur didn’t have an equity stake they weren’t interested.
*I assume they were talking about TK/GKP at this stage but may be mistaken*

JG then pointed out a number of funds that Excalibur had proposed at various stages but had never launched: “Excalibur 1”, “Iraq Recovery Fund”, and “Thames Chesapeake”. All funds that Excal. Had wanted to launch but never did.
They then examined the Iraq Recovery Fund Executive Summary.

RW “Yes we were quite ambitious”
JG: “It was castles in the air if you understand the expression”
RW “We were not experts in any of these areas but felt we could bring in project teams of experts”
JG “Making statements about Excalibur that purported to show expertise or funding that Excal didn’t have…”
JG “…Paint rosier pictures of things than are justified…”
JG “…frequently sold yourself in a far more positive light than was appropriate”
JG “Going to be a theme of the cross-examination”
...
JG “You were black-listed by Iraq”
RW “Not true...can only assume that the confusion was due to fog-of-war. I was not blacklisted and still hold security clearance to this day.”
JG “We’ll come back to that”
RW “Sure we will”
.......
JG pointed to an email that suggested Excalibur were involved in too many different projects. Summarised by industry: Telecoms & Infrastructure, Oil revenue securitisation, sugar trading transaction (late 2004), Import Wheat (Had introduced a company to the ministry of agriculture – they were unsuccessful), Power plant projects (Algeria, Jordan), Data Network, and Tuna (RW: “Simply a side show” – didn’t work)
…
JG “Can’t you see the difference between stating something as a fact and something that you will hope come about?”
RW “I’m not sure I’m comfortable agreeing with some kind of negative connotation…”
JG “I’m asking a general question”
RW “Can you repeat
JG repeats
RW started to reply and was interrupted by the judge as went off topic.
Judge repeated the question
RW “I can see the difference”
……….
Relating to the Iraq Recovery Fund, a letter stated that
“Kellogg-Brown are the lead contractor”. JG pointed out that they weren’t even a contractor.

“Excalibur Ventures, a worldwide developer of IPP projects” in letter for Algerian 500 MW IPP project.
JG “Completely untrue wasn’t it”
RW “Matter of interpretation”
JG “Thoroughly misleading in any normal use of English”
JG “Sheer variety and number of projects proposed to KRG was seen as too many”
RW “[They} Suggested focussed on most…”
JG “Ministers of KRG are not stupid were they”
RW “No”
JG “They could tell the difference between someone who just talked the talk vs. manpower, resources, skills”. “We will examine the letters in more detail in due course”

…
RW “We brought partners in” *and then finally agreed that “Agree no resources, funding or track record”

Afternoon Session
Document shared “Excalibur Ventures Corporate Profile – Petroleum June 2005”
Document or content in it was confirmed to be used with third parties.
RW agreed that “Excalibur was not a petroleum company”
RW “We brought in experienced professionals…”
JG “We’ll come back to what ‘brought in’ means”
…
Judge interrupted another long to and fro over a small point between RW and JG to clarify that “Expertise was not in Excalibur IE RW, EW or mother”
Mike Farrell was used as an example of one of the professionals ‘brought in’. Letter from Mike Farrell showed how this assertion was dubious at best and how this was:
JG “All talk and no results approach to business”
RW “Got a good result at Shaikan”
JG “Any others you care to draw to the court’s attention?”
RW “That’s sufficient”
JG “Is that a ‘no’?”
RW “That’s a ‘no’”
….
JG “If you and Mr Franchie agreed that he be referred to as CFO [in correspondence to third parties] then it’s as misleading to a third party as if you had had no agreement”
RW “Well people were free to ask questions if they had any” *this sounded like a very weak answer and there were some muted gasps from the well behaved public gallery*
JG ”In a letter to Dr George Yaku in June 2005 you mentioned the ‘Excalibur Board of Directors’”… “There is no Board of Directors”
RW “Dr Yaku knew us…”
JG “Did he know that you didn’t have a Board of Directors”
JG then got RW to agree he probably wouldn’t have told him verbally as this wouldn’t have been the best way to sell himself but that due to how well they got to know each other Dr Yaku would have known. RW said that they had spent a week together in the ‘palace’ in Kurdistan.

Lots of letters back from the KRG probing Excalibur’s expertise according to JG. Multiple emails then shown to try to demonstrate that RW thought there was a lot of country & geological risk in Kurdistan. *IE that Oil may well not be there, or there may not be much of it*
The KRG letter to Excalibur in July 2005 went unanswered until Feb 2006. It took a long time to get an American company back to Kurdistan.
…
RW referred to “my friend Todd Kozel” several times. “I liked him when I first met him”
RW agreed that he was disappointed that GKP was not a US firm as that’s what was wanted by the KRG.

Some of the final bit was vague for me as I think I lost some of the context in a post-lunch dip in concentration (!):
Lots of focus around OPIC Insurance (Overseas Private Investment Corporation – A US Government Agency) and whether in RW’s opinion this would be suitable for an oil drilling project even in non-US led consortium situations. RW thought it was.
RW argued that Todd had control of the TKI/GKP split involvement.
RW quote from witness statement “The involvement of Texas was purely cosmetic”
Cue lots of discussion of “in what way cosmetic or ‘optical’”. I think this line of enquiry will be concluded tomorrow.

Some more from testerday,


I hope Slow Eddie on 3eye won't mind me re-posting his account of part of the RW cross-examination today.
--------------------------------

My favourite bit was when Rex was being questioned about the " Optics" as his brother had called it.

The apparent illusion that Rex had brought in an American Company ie. Texas Keystone as the KRG had demanded rather than GKP ( not American). The apparent fact that this was in fact only a tiny percentage of the whole that could be called American not seeming to matter as long as the illusion the "Optic" of it being American was there.
The QC tried to work out who this illusion was actually for... over quite a long time ...as Rex insisted that the KRG was fully aware of the reality... ie that GKP was not American. " So who was this illusion or Optic as Eric called it actually for?"
... till finally

Rex ( exasperated):"Look as for this Optics... I have a masters in Business Admin from Cornell University (or somewhere), I have a degree in (something) from (some other college), and I have a third degree from (yet some other college)
...but I do NOT have a degree in English!

A long pause.

Judge: ( drily) But it IS a language that you speak?

Laughter in court

and today,


From iii:--

11:52
Court
Dingledangle
48UP

Unfortunately I could only stay for an hour, but RW under heavy cross examination from JG.
JG quotes to RW "you're making this up aren't you?"
"That's not an answer"
"Untruthful"
"Empty boast"
RW in response saying it was "positive salesmanship"
And the judge at one point saying to RW
"You don't need to tell us the Republicans are a political party in the United States"
-------------------

Rudy09 on iii

-------

I have just come out. The judge has not suggested he is losing patience as a whole, but did have to intervene a couple of times when RW had taken us round the houses a dozen times by not giving a straight answer.

JG is excellent, and is giving RW the feeling like patience is running out, but he would, he wants to win the case.

That said, RW's responses were IMO, embarrassing, farcical, evasive, vague, non-sensical, and disjointed, and on a scale of 1-10 if Todd were only half as evasive (not suggesting or expecting that he will be at all) when he takes the stand then we will be in very good shape, as Todd will be a 5.

It was fascinating watching the body language and postage notes being handed back and forth, and I will certainly be returning. I was in awe of Judge Christopher Clarke, who is of senior years but is the sharpest of tools.

Will certainly be going back for TK's shift. Can't be missed in fact....

certainly sounds more fun than watching corrie and the like :-)

scaramouches court report....thanks to him.






Hi everyone,

It has been a very long day but after much deliberation this is my summary of today’s session of the Excalibur court case.

Please note though that ALL CAVEATS APPLY as the following is only my RECOLLECTION of events, as discussed on the train home with my friend Steve who went with me today. I did not take detailed notes, like some do, preferring to try to take in the gist of what was being discussed, and these are only the points that I found particularly pertinent. My apologies if I have missed anything others might regard as especially important, or if my recollection is imperfect. There was a great deal to take in!

First, for those that have not been, going to Commercial Court is a fascinating experience. Court 15 has around 40 spectator seats at the back and side of the room. Those on the left were behind Team Excalibur and those on the right were behind Team GKP. There is however no indicative affiliation to one team or the other. You just sit wherever you please.

The vast majority of spectator seats were filled, predominantly with GKP investors I would imagine, and in front of us were a large array of computer screens at which members of each legal team were sat. This of course leads to some sight limitations wherever you are seated.

On the left, where we were, we had a clear view of Rex and the Judge, but only a small glimpse of Jonathan Gaisman (JG), the GKP QC. JG spent the day cross-examining Rex with only the occasional interruption by Simon Picken for Excalibur. I must say that JG was excellent and his stamina extraordinary (nearly 3 hours in the morning with only a short break, and 2 hours in the afternoon also with a short break at half time). I very quickly felt that GKP’s defence was in great hands.

From the word go, JG dissected Rex’s evidence and frequently put him under intense pressure. But, contrary to my expectations, Rex was actually very resilient and certainly not daft as is frequently portrayed, although somewhat inclined to go off at a tangent, elaborate unnecessarily, or seemingly avoid answering the question he had been asked. As an example, the Judge did have to point out to him that we were all aware that the Republicans were an American party! (cue laughter from the cheap seats).

In the morning session, JG began by challenging Rex’s contention that it would be easy to gain funding. Rex confidently maintained that, although Shaikan was originally a wild-cat exploration well in an unexplored new frontier, it would have been relatively easy to raise “billions of dollars” to finance it, since GKP was a listed company. He also maintained that he had a number of funders lined up, but was only able to mention a few names of people he had conversed with over the years who had been ‘interested’.

He ultimately declared that, although the potential pool of funders might be small, it would be easy to attract large investment if the asset was good enough as Shaikan had proved to be, at one point stating “well, that’s what they are doing now”. IMO there was a clear demonstration that this was a serious case of being wise after the event!

JG then proceeded to pull apart Rex’s claims regarding the Collaboration agreement.

The 2nd draft of this document was discussed, which showed only an agreement between Excalibur and Texas Keystone. Rex contended that, although he had reviewed it with Counsel (by which he meant his attorney brother Eric), it did not occur to him that the fact Gulf Keystone was NOT mentioned meant that they were not party to the agreement. His repeated phrase throughout the day was that he always understood that “all 3 were in it together”.

Much the same comments were applied to the final signed agreement in which it was highlighted that the wording showed that Texas Keystone had “the right to introduce Gulf Keystone” (i.e. at a later date) so could not have been party to the original collaboration agreement. Rex continued to assert that he always took it that Gulf Keystone were in fact party to the agreement even if not directly referred to on it.

A series of emails were also discussed which repeatedly showed Texas Keystone as the sole party to the Collaboration agreement with Excalibur, including one with a Texas Keystone heading which referred to an offer of an 80/20 split having been referred to the “Directors and Shareholders of the Company” (singular). Rex contended that he always believed that the letter in fact implied that it had been agreed with “Gulf Keystone’s thousands of shareholders” (JG) as Todd wore both hats. Naturally, JG contended that this could not possibly be true.

At the end of this passage of play, the Judge made a very pertinent comment. He asked why, as an experienced business person (Rex said he had an MBA) he would believe that “an agreement which was actually between three parties on a document would refer to only two”. Rex simply repeated his contention that “all three had always been in it together”.

The morning session ended and, to me, Rex showed the body language and demeanour of someone who had been seriously very much under the cosh. But at the beginning of the afternoon session he appeared to have recovered much of his composure.

The cross-examination then focused on Rex’s concept of his responsibilities and obligations if hypothetically Excalibur had either 30% of the Shaikan PSC, or an indirect interest in 30% of it.

With GKP required to pay a signature fee of $25 million on 6 December 2007, JG pointed out that this would hypothetically surely have entailed Rex coming up with his share of the cost, despite not having funds avaialable to do so. However, although agreeing that he would have been obliged to provide the funds, Rex categorically stated that he would not have been dictated to by ‘Gulf’ regarding when the payment was required.

Rex made reference to relations between himself and Todd having soured in November 2007, which probably contributed to this comment, but JG spent some time dismembering this aspect of a supposed commercial agreement.

Indeed, JG made reference to the fact that Rex was clearly intent on “hanging on to the coat tails” of the key player, and suggested that the reality was that he simply expected to have a free carry.

Throughout the session, JG continued to demonstrate how the contention that Excalibur always believed they were really dealing with GKP rather than TKI made no sense. This included a letter from Excalibur to the KRG which referred to a meeting to which “the president of Texas Keystone and some technical staff” would be going. It did not mention GKP at all. Rex maintained that GKP (the key player) was implicitly covered by the term “some technical staff”. JG said that surely the main participant would have been specifically mentioned.

Near the end of the afternoon session came perhaps the most intriguing point of the day. JG referred to a series of emails that had been found in which Eric (a tax attorney) and Rex had discussed how to avoid paying tax that year to the IRS. This included the declared dates of acquisition and disposal of their interests in Shaikan, for which ownership for one full year before disposal would somehow change the tax situation. JG contended that this was evidence of an intention to defraud the IRS, which Rex categorically denied.

While I cannot profess to understand the full implications of this ‘find’, there is no question that it added some spice to the day’s events, and appeared to throw further doubt upon the credibility of Rex’s and Eric’s claims. As the session closed, Rex went up to greet someone who looked like Eric who had been seated just in front of me, with the look of someone who had only just avoided being eaten alive.

It is ONLY my impression, but Eric (?) too looked decidedly uncomfortable, and Rex quickly wandered off saying audibly to his legal team “I cannot talk to you guys”.

In conclusion, I can only say that in some ways I admired Rex’s resilience under what had been a very intensive all-day cross examination. But, while it is still only relatively early days and I fully acknowledge my natural GKP bias, I got the clear impression that JG had successfully dismantled many of Excalibur’s arguments against GKP, and succeeded in painting Rex and Eric as being far from reliable witnesses.

The repeated reference to Rex “bigging himself up” and making claims which could not be substantiated came from JG – it was hard to disagree, but then I suppose I would say that, wouldn’t I!

Finally, if anyone does get the chance to go in the next few days, I would thoroughly recommend it. It was an experience I won’t forget in a hurry, and it has definitely given me a much clearer understanding of some of the key players in this EXTREMELY compelling drama.

AIMHO and please DYOR
GLA, scaramouche

court report by, the old trout, on iii.....thanks tot.


JG started by stating that he wanted to explore the tax treatment by the US Government of any buy out of Excal's interest. He referred to an e-mail from EW to RW in December 2007, in which Eric advised that ''If and when you agree a deal you must make sure that the document states that they are buying your share in the Agreement and not the Shaikan field.'' He pointed out that CGT tax in the USA was much more favourable where an interest had existed for more than one year and clearly any direct interest in Shaikan would be short lived.


Rex was extremely evasive under cross examination of the issue so JG went on to refer to another e-mail containing a draft letter for Rex to send to David Williams of Cadwalladers, who were his lawyers at the time. This to the effect that: ''It looks like we need two letters, one for settlement and one for origination. The 'settlement' letter must make it clear that you have held an interest for more than one year, with no mention of a Shaikan sale. However the 'origination' letter should acknowledge the closing of an agreement to buy out Excalibur's interest in Shaikan.''

JG then stated that ''In other words you wanted to establish your interest in Shaikan for the purpose of selling it, but wanted to diddle the IRS?'' Rex said he did not want to comment as it was a matter for tax lawyers.

JG then indicated that Eric came back with an improved draft and stated to Rex that '' You clearly worked hand in glove with your brother on this scam.'' Rex responded that he thought it was all above board and legal.

JG then referred to EW's revised draft including the words ''sale of the Shaikan partnership, which I currently have no interest in'' and a 'memo to self' from EW: ''Draft submission to US tax authorities: 'Excalibur sold all its contractual rights to Gulf Keystone and never owned a share in the Shaikan block'. '' Another e-mail from EW stated that Rex needed two documents, one for legal purposes, another for tax, and included a draft letter to the effect that ''Gulf Keystone acknowledges that it has purchased all contractual rights in the Shaikan block''.

JG said that it was very clear that the tax authorities were to be sold a different story, so there was a clear intention to defraud and put Rex through the hoop under cross examination of this issue. All Rex could really say was ''Sounds like I need to refer to tax counsel ''

So there you have it. They must be very worried men now IMHO. Painful shoes or what?

Now I know that at least one of our court attendees has had enough of posting on here, owing to the attitude of some on this board, but I hope that at least some of those attending today will be able to keep us informed of the latest development and that others will be encouraged to go along and do their bit for the cause.

GLA,

Tot

i assume that final comment applies to iii board ...... it really has been a fascinating little drama and the reports never fail to show that the EXC boys are just carpetbaggers - now where have i heard that word used before? :-) - who look likely to get their comeuppance with a bonanza if IRS starts getting its teeth into them

Two significant pieces of news today from CC. First one on the IRS/tax posted earlier from 'The Old Trout' on iii ...

.... and now this from iii :--

17:53
Court Notes Pm
dgfrog

Finished job interview early and caughth the PM session

I was hoping we would get past the Nov 2007 bust up and into what TK did or didnt do to try buying out Rex. We had gone back to 2006 and the relationship with oil minister Hamrawi.
JG scored points big time with email evidence and questions about meetings with H where Rex was essentially ignored. The issue with having a US company in front of the consortium became a non -issue in summer 2006. The KRG had their O&GL up and running in about 6 months!

Quite a bit about an advisor Franckies? who was doing some freebie work for Rex during 2006 and doubted whether a sensible investment case could be made. Shows Rex to be a bit of a bully but a weak point coz Rex did nothing during this period ( aug- nov 2006) . Very boring -- had 5 min kipp

Just before the break, JG had recent email from H saying the Rex had no credibility as he had not delivered and had poss. been involved in some shady deals in 2006. Rex had no reply to this. Dynamite , i think

Session cut short at 4:00 pm -- We may not have any hearings next week
---------------------------------------------------

Many thanks to dgfrog and all who report from CC



EDIT:--
Immediately following the post above on iii, Radetzky1 added this to the post on H email:--
"Rex responded that the email content was not how it read and inferred that it was CODED to which Justice Clarke invited him to decode it................deep gulp, M'lud it's not code as such to which he withdrew the remark, and accepted that Excal was barred from any future deals as it stands."


That is priceless !

Before everyone gets too excited, it's worth remembering that our QCs cross examination of Rex is going to be the high point of our case.

A very good post from a solicitor on iii the other day.


"A few general points intended as general guidance.

1) As a general rule the high point (i.e. strength) of ones case is at the conclusion of cross examination (by ones counsel) of the principal witnesses of ones opponents. Equally the lowest point of ones case is at the conclusion of cross examination of ones own principal witnesses. This is especially so, in cases such as this where the credibility of these witnesses is central to many of the main issues to be determined by the court.

2) It follows, that if witnesses (of ones opponents) have not been discredited during cross examination, it is a very difficult position from which to recover. This is because when ones own witnesses give evidence they are vulnerable and open to attack, and unless significant gains have already been made during one's opponents weak / vulnerable periods it is unlikely that they will when our witnesses give evidence.

It is therefore very encouraging that successes are being made at this stage by our cxx of RW and long may it continue. The more important the issues that these relate to the stronger our case will be at the conclusion of the plaintiffs evidence, and the more we can afford the odd, (relatively speaking) hick up when TK gives evidence.

But please be under no illusion, that the above is tantamount to victory. Be prepared, and brace yourselves for a hammering of TK during cxx. Expect plenty of difficult questions and ammunition to be thrown at him for this will be the low point of our case. Let us hope that our low is not as low as that of Excalibur. Moreover, let us hope that TK is aware of this and does not conduct himself (towards SP) in the same manner as he apparently did to shareholders during the last AGM.If there is one thing guaranteed to turn a judge against you, its arrogance. At the end of the day victory (judgement) will be bestowed on the party least injured and respect and humility whilst answering questions under pressure of cross examination goes a long way.

As an important aside and indirectly related to what I have said in the preceding paragraph, (assuming the accuracy of what was recently reported) it was (for obvious reasons) unwise of TK to apparently ask members of the public gallery if they were enjoying the show, but it was the height of foolishness of whoever reported it on this forum, to have done so.

I do not understand some people. Was it not obvious to you that this was really foolish....talk about scoring an own goal. PLEASE do NOT ever report again anything said by TK (or for that matter anyone else connected to GKP) to members of the public gallery, especially when you know that the opposing legal team are closely monitoring this forum.

I can only hope that our team are also monitoring it and have already had words with TK (and other witnesses) about any further contact with members of the public.

If you really care about our investment, and you really want us to succeed, please do not do that again and also do not report any conversations you have had with any member of the GKP legal team.

If anyone connected to our legal team has given advice (e.g. not to report certain matters) and you want to pass it on to this forum, there is absolutely no need to attribute that request to a specific (i.e identified.) person. After all there is always the possibility that you have misunderstood the true nature of that request. Attributing that misunderstanding to a specific person might cause needless complications. Always remember that as a general principle, the more detail you report (matters not in the public domain) the stronger the potential ammunition you give the other side.

There is an important distinction between faithfully reporting your recollections of court proceedings which are inalready in the public domain, and which assist those of us unable to attend (thank you!) and reporting private converstaions between you and our witnesses or legal team on a public forum....you don't have to be a lawyer to understand that ....surely you can see that distinction and the potential damage the latter can do.

Elikkos"

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3669 -what an excellent and intelligently constructed post