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Chronology and documents re PwC / A340 and documents disclosure - s/lists

7 November 2006 My letter to each of the MAC Directors (doc 2671)

9 November 2006 Magellan Aerospace Corporation (MAC) BOARD meeting (doc 289)

“Claims made under the Whistleblower policy

Mr Dimma reported that two claims or potential claims had been received under the Whistleblower Protection Policy.

The first claim related to concerns outlined in an anonymous letter. This claim was thoroughly investigated and it was concluded that no inappropriate action had taken place and no further action was required.

The second claim was submitted directly to Mr Dimma by Brian Little, former employee of Magellan Aerospace (UK) limited and former Senior Vice President Information Technology, Strategy and Business Development of the Corporation. This claim was thoroughly investigated {by Mr Dimma} and it was concluded that no inappropriate action had taken place and that the issue was a personnel matter that had been appropriately referred to the Vice President, Human Resources.”

14 November 2006 MAC Audit Committee chairman W Dimma letter to Brian Little (doc.2676/7)

“As we know, we met on 24 September 2006 to discuss your concerns. You sought to bring your concerns to my attention, in my capacity as Chairman of the Audit committee. You did so under the provisions of the Company’s “Whistleblower Protection Policy” and/or Code of Ethics.

You provided me with a large number of documents to consider and endeavored to explain to me your concerns, which you believed were contained in the documents.

In accordance with the Company’s “Whistleblower Protection Policy”, the matter was dealt with promptly. Murray Edwards, Chairman of the Board, was able to promptly meet with you on September 19, to discuss it, despite his busy schedule. Arrangements were also made to meet with me at the earliest opportunity, which took place on the following Sunday afternoon (24 September 2006) in my office.

I was satisfied (and remain satisfied) that the issues you raised did not (and do not) warrant further steps or remedy. I considered that the issues you raised were not financial or governance issues that were of concern to me as Chairman of the Audit Committee. They did not, in my view, amount to unethical or unlawful acts on the part of the Company or any of its employees.

The matters you were raising were historic and related to your working relationship with the Company. they do not merit further consideration under the provisions of Magellan’s Protection Policy and /or Code of Ethics.”

4 December 2006 My letter to each of the MAC Directors (doc 2701-2706)

7 December 2006 (A) My meeting with E&Y UK (doc 2709-2719) With the 4 December 2006 Letter to each director the dossier contained DIR44 –UK Times article– 28 Oct. 2006 “End Looms for Airbus A340 as Emirates cancels $4bn orders”. Both E&Y and PwC had too.

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(B) 7 December 2006 Magellan Aerospace Corporation BOARD (doc 297C/D)

“Ernst & Young informed the Audit Committee that they had been contacted by Brian Little who had alleged whistleblower claims. Management will prepare a plan of investigation to be approved by the Audit Committee. The Committee met with management without the external auditors”

and at Whistleblower claim

“Management was then excused from the meeting with exception of Mr Neill, Mr Dekker, Mr Underwood and Mr Vaughan. ………… Mr Underwood advised the Board that he had carefully reviewed the allegations made by Mr Little and was of the opinion that the allegations made by Mr Little were without merit.”

14 December 2006 My meeting with Ernst & Young (Canada) in London (doc 2723–2726)

20 December 2006 Magellan Aerospace Corporation Audit Committee (doc 297F)

Attendees Audit Committee – Dimma , Gowan Apologies Lowe Management President & CEO Neill , CFO Dekker and HR Ball Ernst & Young Linsdell, De Wolf. “The Chairman William A. Dimma took the chair and, with the consent of the meeting John B Dekker acted as Secretary. On Thursday December 14, 2006, Messrs Linsdell and De Wolf attended a meeting in London at the invitation of Mr Brian Little. Mr Little’s employment by the Corporation had been terminated September 18, 2006. Mr Little claimed he was unfairly dismissed because he was preparing to make or had made protected disclosures under the whistleblowing policy.

Participants in the meeting were Mr Little, Ms Clare Pettifer (former Magellan Aerospace (UK) Limited head office accountant), Mr Linsdell and Mr De Wolf.

The Chairman asked Messrs Linsdell and De Wolf to outline the matters that were discussed at the meeting.

Mr Linsdell stated that the purpose of their meeting in the UK was to gain clarification on the allegations being made by Mr Little. Mr Little raised concerns about the following matters:

a) accounting for release of the A380 freighter provision in 2004 and 2005 in the UK b) accounting for engineering overhead costs in the UK; c) accounting for engineering bonuses in the UK; d) valuation of Bournemouth, UK inventory upon acquisition and at 2004 and 2005 year ends; e) accounting for A340 non-recurring costs at Aeronca; and f) accounting for Boeing discounts at Ellanef <BL note:these minutes “deliberately” exclude Doubtful solvency of MALUK and MAC funding /liquidity>

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Messrs Linsdell and De Wolf provided some clarification of the allegations based information provided by Mr Little and a thorough discussion ensued in which the members of the Audit Committee asked Messrs Linsdell and De Wolf a number of questions relating to the meeting with Mr Little The Audit Committee discussed in detail the distinction between the claims Mr Little has lodged with the Employment Tribunal and the claims Mr Little has made before Ernst & Young, the purpose and scope of the investigation to be managed by the Audit committee and whether a third party should be engaged to undertake an investigation.

The members of the Audit committee will join a management call with the company’s UK legal counsel to obtain further clarification as to the whistleblower process.”

21 December 2006 Magellan Aerospace Corporation Audit Committee (doc 297M)

Attendees Audit Committee - Dimma, Gowan Apologies Lowe Management : CEO Neill , CFO Dekker, HR Ball, MALUK - Underwood , Smith PinsentMasons Norman, Rae, Hills Meeting with Pinsent Mason The Audit Committee requested legal counsels clarify the whistleblower process. Mr Kevin Hill stated that, in this case, there are two strands relating to the whistleblower claims process a) Claims lodged with the Employment Tribunal The primary interest of the Employment Tribunal will be to determine if Mr Brain Little was “sacked” because he was preparing to make or had made protected disclosures under the whistleblower policy. They will not be interested whether the disclosures are true or not. b) Claims Mr Little made before Audit Committee and Ernst & Young A process should be established to fully investigate the disclosures made by Mr Little to the Audit Committee and Ernst & Young. Once the Audit Committee is satisfied with the outcome of the investigation and resolution of any findings, and Ernst & Young are satisfied with the process the Audit committee has undertaken, the matter is complete and no further action is required. A thorough discussion ensued in which the members of the audit Committee asked Messrs Norman, Rae and Hills a number of questions relating to whistleblower procedures. BE IT RESOLVED THAT an Audit Committee engage the services of a UK Chartered Accountant to undertake an investigation of the claims (scope to be determined by the Audit Committee) and report findings to the Audit Committee. At the direction of Mr Dimma, Mr Hills will undertake a conflict check on PriceWaterhouse Coopers in the UK. If the check is clear, Mr Hills will brief them locally and request they submit a proposal to the Audit Committee.” 3 January 2007 Magellan Aerospace Corporation Audit Committee (doc 309A)

“Attendees Dimma, Gowan and Lowe Management CEO - Neill and CFO - Dekker Purpose of the Meeting

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The purpose of the meeting was to determine the appropriate professional assistance required to properly address the accounting allegations made by Mr Brian Little. The Chairman clarified that it was the responsibility of the Audit Committee to focus on the accounting allegations made by Mr Little and not the claims made to the Employment Tribunal. a) Appointment of a Forensic Accountant At the December 21, 2006 Audit Committee meeting , Mr Kevin Hills, of PinsentMason, agreed to undertake a conflict check on PriceWaterhouseCoopers (“PWC”) in the UK and, if clear, request PWC submit a proposal to undertake the assignment, Mr Hills reported back favourably to the Chairman and recommended Mr John Tracey, a partner with PWC, as a suitable forensic accountant. The Chairman obtained Mr Tracey’s CV and spoke to him at length to determine his suitability for the assignment. After a thorough discussion and on motion duly made, seconded and unanaimously carried the following resolution was passed. BE IT RESOLVED THAT the Audit Committee engage the services of Mr John Tracey of PWC to undertake an investigation of the accounting claims made by Mr Little and report his findings to the Audit Committee. The Chairman will contact Mr Tracey to confirm the appointment. Mr Tracey wil then submit an engagement letter and fee schedule. Mr Dekker will then work with Mr Tracey to develop a proposed scope for the investigation that will be presented to Audit Committee for approval.” 11 Jan 2007 CMS Cameron McKenna to PinsentMasons (doc.3125)

(A) “We do, however, expect that you will take steps to obtain from Mr Dimma our client’s company issued laptop computer which he left in Mr Dimma’s safe custody. There are documents on that computer to which we wish to have access and which will be best facilitated by your having that computer complete with its intact memory in your possession so that we can access it via you. At the same time we seek assurances that your client is taking the appropriate steps to safeguard electronic as well as paper documentation”

(B) When I followed up with Mr Linsdell of E&Y on 11 January 2007 he left the attached 2 minute voicemail message on my mobile phone .

29 January Meeting in Belfast with John Tracey (PwC Engagement Partner , Ms Samantha Ashfield, Mr Sterl Greenhalgh of PwC UK) My accountant Mr James McCreery also in attendance

Selection of A340 Audio recordings from interview

Airbus A340 series production in Toulouse is complete ;

I warned PwC about Spares & full replacements ;

I told PwC that they should obtain 2/3 external market forecasts (7 available);

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Teal :Aboulafia - "DEAD PLANE FLYING" April 2007 A340 ten year market forecast (total build 139 a/c)

: I even told PwC about the Emirates cancellation of 18 A340 600 in Oct 2006, which they left unadjusted in their Airbus Order Book analysis ;

DIR44 –UK Times article– 28 Oct. 2006 “End Looms for Airbus A340 as Emirates cancels $4bn orders” was also included in the dossiers provided to PwC and E&Y.

“And the fundamental issue here… is that this product is a product that has not only got a cost/price problem but it’s now also got a programme volume one!”

You should also read the BAFO pricing proposals approved by Edwards, Dekker etc with higher losses

30 January 2007 PinsentMasons letter to CMS Cameron McKenna

“In relation to your client’s computer, in accordance with advice from our DR&L team, and having regard to the standard disclosure protocol for evidence retained on computers, my clients are making arrangements to take a copy of the laptop’s hard drive and to that end are to pass the computer to PWC in Canada, in order for PwC’s IT experts to copy the hard drive. Copies of documents relevant to the case that are retrieved can be made available to you and doubtless it should be possible, if Mr Little still so desires, for him to have some form of supervised access to the laptop.”

4 February 2007 My letter to each Director on the MAC Audit Committee (doc 2820-2824)

2/5 February 2007 Engagement letter from Mr Dimma to PwC and proposal (doc 588 – 595)

Mr Dimma’s instructions to PwC and their professional indemnity limitations (doc 588-595) included “PWC should recognize that its engagement and the resulting report is prepared for the purposes of findings of fact relating to existing, contemplated and pending litigation, including the Legal Proceedings.

In substance the investigation is as to whether there is any substance to the “whistleblowing” allegations made by Mr Little for potential use in the existing Legal Proceedings, or potential subsequent proceedings arising out of the whistleblowing disclosures or any future shareholder claims and/or regulatory investigations and not an investigation of the dismissal, which is the subject of the current Legal proceedings.”

And then Limitation of Liability (doc 595) “The limit for the purpose of paragraph 28 (a) of Appendix A will be the lower of £1.0 million and 10 times the amount payable by you in respect of the Engagement at the date of breach of Contract or the commission of the tort.”

Mr John F. Tracey a partner in PwC Forensic Services UK led this “independent forensic investigation” engagement, although he had never undertaken any prior civil aerospace assignments. PwC Forensic Services website

16 February 2007 PinsentMasons letter to CMS Cameron McKenna (doc 3130)

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(A) “On the issue of documents, I fully anticipate that the tribunal will, at the CMD, make an order as to the disclosure and exchange of documents, including a suitable timetable.

For the record, my clients have made it clear to me that they intend to fully and properly comply with any order for the disclosure and exchange of all relevant documents. I have had sight of the documents that are referred to in the Responses, but they are not assembled in such a way that they can simply be run through a copier and sent to you. I do not believe that it is in accordance with the overriding objective that my clients should incur the time and costs of my firm compiling and sending to you documents in advance of the CMD. Such piecemeal disclosure only serves to increase costs. The documents referred to in my clients’ Responses will form part of my client’s overall disclosure in compliance with the anticipated Order.”

(B) On the same day Magellan prepared a crucial schedule as part of their A340 audit representation to E&Y and PwC. This schedule was not disclosed until a Court Order required it in December 2008.

Quantities specified in the updated “Q4.2006 gross margin breakeven” as the A340:Summary of Best Information Available for Production and Spares/Repairs at 31 December 2006. The column on the right are the quantities (and prices) used in the Q4.2006 EAC. whilst the reader will observe in Mr Dekker’s schedule under the left hand column heading % of Units Justification the “identical” quantities information from FY2007-FY2021 for Trent 500/A340 Production of 60 + 661 = Sub-total = 721 and Spares and Repairs = 6 +166 = Sub-total = 172 to that contained and submitted to PwC and E&Y in the Aeronca document 3605 dated 16 February 2007 referred to above was then to appear in May 2009.

This page is replicated below

This page (document 3605A) was disclosed on 5 May 2009 and is replicated below

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Final PwC report . A340 para 8.61 - August 2007

Both PwC and E&Y were also provided with the Customer delivery projections of approx 40 units p.a

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1 March 2007 Then on 1 March 2007 Magellan increased its total production aircraft build projections for A340 – 500/600 Document 3605B-D to E&Y and document 3605E -3605G to PwC

MAC Projected sales and build of almost 300 production A340 -500/600 aircraft through to FY2016: of which the MAC Production Plan for 2010 = 29 aircraft or 116 engine exhaust systems) . The lower schedule (1831A) is the representation made by MAC to E&Y in the Q4.FY2006 Estimate at Completion (EAC). As per the PwC report para 8.61 “The Q4 FY2006 EAC was also used by EY for year-end audit testing purposes.” The Estimate at Completion (EAC) process/documents are the MAC management “most reasoned view and likely outcome – oral evidence :Dekker” and showed in this Q4.2006 EAC submission to the auditors E&Y and PwC an improvement over Q2.2006 to a miniscule $0.1m gross profit on $250m program revenues.

A340 Engine forecasts on 1 March 2007 (doc 3605C) to E&Y (FY2006 audit) and PwC (“independent forensic investigation”) for Production (291 a/c) and Spares and Repairs

2 March 2007 PinsentMasons letter to CMS Cameron McKenna (doc 3142)

“Finally on the question of the laptop, I have of course already relayed to you that my client accepts in principle that Mr Little may access the laptop under appropriate supervision. I have to say, however, that I was taken aback by the suggestion that Mr

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Little considers that this process wll take 10 – 15 hours. Bearing in mind that any relevant documents retrieved from the laptop will be disclosed in the Employment Tribunal proceedings, my clients wish to know why Mr Little requires access to the laptop for so long?

As regards to the practicalities of making it available I am awaiting my clients’ instructions. ”

5 March 2007 CMS Cameron Mc Kenna to PinsentMasons (doc 3149)

“Laptop computer We first requested access to this computer on 11 January and we are therefore frustrated that you are stalling on affording the relevant access.

I look forward to hearing from you by return if at all possible.”

and then on 14 March 2007 an email to PinsentMasons (doc 3160A)

“And on the subject of discovery, don’t forget the laptop PC as a source of relevant documents for your discovery exercise. The ball is now in your court given that you have not made it available to our client to find the relevant documents for both sides benefit. We still expect access to check through on the dates previously suggested”

7 March 2007 EMPLOYMENT TRIBUNAL CASE MANAGEMENT DISCUSSION (doc 56-58)

The Chairman Mrs O R Harper gave the following directions 4. BY 4 April 2007 the parties are to mutually exchange lists of documents

13 March 2007 Magellan Aerospace Corporation BOARD meeting (doc 309G) “Mr Edwards stated that since December 2006, much activity has taken place in response

to Mr Brian Little’s allegations. The audit committee has undertaken a detailed process to address these allegations. He then asked Mr William Dimma, chairman of the audit committee, to provide an update.

Mr Dimma stated that the audit committee had engaged the firm of PricewaterhouseCoopers (“PwC”) to perform a forensic accounting investigation of the allegations made by Mr Little. The audit committee is meeting regularly with PwC to monitor the status of the process. The audit committee has also engaged the legal firm of Torys to provide the audit committee with independent legal advice in this matter,

Mr Dimma reported that Ernst & Young (“E&Y”) attended the last meeting with PwC and had indicated that they were prepared to sign off on the 2006 financial statements even if the PwC final report was not available, assuming they received a verbal report that indicated no issues affecting the financial statements.

Mr Edwards summarized the allegations and PwC findings to date. Six allegations were made, two in North America and four in the UK. ………… In North America , the allegation concerning accounting for the A340 program appears to be without substance……

Board members expressed concerns at the cost of the PwC effort and were anxious to have the process completed in as efficient and effective manner as possible.”

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14 March 2007

PwC put to Magellan scenarios which would show the cessation of production at the end of 2009 (at 135 aircraft – which is what I told them in January 2007 as in my view by the time I had further downgraded by view from a total A340 build of 150 a/c to 135 aircraft – and cessation based on no further orders based on the Airbus website.” This schedule can be accessed here and was only disclosed on 27 August 2009.

MAC A340 forecasts - Aeronca Inc Aircelle A340 Program - Actual / Estimated Quantities 14 March 2007 with inflated spares prediction (PwC for "forensic" investigation - 3605H

MAC projections of a likely minimum of 886 “spares” (replacement parts) - based on 40,000 flying hours exhaust useful life, which was to provide a margin of safety in those estimates by Mr Neill , the current Vice Chairman- through to FY2021: of which the MAC Spares Plan for 2010 = further 81 engine exhaust systems

<BL Observation – Despite their centrality neither of these documents are Exhibits in the PwC report. Based on these crucial March 2007 documents therefore the manufacturing volumes projected for 2010 in Magellan’s plant Aeronca Inc was now for some 116 production (reduced from 127 as at 31 Dec.2006/page 3) and 81 spares (was 8)= 197 engine units (or almost 50 aircraft sets). As the contracted pricing was identical for production and spare engine exhaust systems the A340 program revenue projections for 2010 would be for some C$47m–C$50m with the attendant NRC and cash recoveries in the MAC strategic planning and financial budgeting/reporting processes.

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I believe it was predictable then, and will actually be now, some 90%+ lower i.e less than C$4m. MAC publicly reports these Revenues through its Aeronca facility and the United States line in their quarterly earnings statements - see example extract in the Q4.2009 from MAC Earnings statement.

16 March 2007

Mr Linsdell briefed the MAC Audit Committee on E&Y view – the minutes record

“Mr Linsdell reported that although some audit procedures are not complete, he does not anticipate the results will change the financial statements as presented to the Committee and that he expected to provide an unqualified opinion on the financial statements, subject to any adverse findings by PricewaterhouseCoopers that might affect the numbers or disclosure in the Corporation’s financial statements.”

22 March 2007 Email from Rich Neill (former MAC CEO/MAC Vice Chairman) responding to

Seven Questions put by PwC

Reminder – R Neill definition

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As a result of the Q&A above on 28 March 2007 PWC had a further telecom with Mr Neill which resulted in the following email response the day before the MAC Board meeting on 30 March 2007 and the publication of the MAC FY2006 Financials.

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29 March 2007 Crucial email to PwC following a telecon with PwC and the days before MAC Board

Document 3597 : an email from Mr Neill (former CEO / now Vice Chairman) to PwC just hours before the MAC Board resolution was passed for the approval and public release of the MAC FY2006 Financial statements.

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And later in evidence

Note:Email from Mr Neill (3597/8) refers to “This analysis showed that the likely spares requirement was in excess of 800 units over the period FY2007 to FY2021 so to achieve a volume of 190 units was an extremely safe number to use in the EAC analysis. This data was sent to you on the 14th March”. This MAC document (3605H) was disclosed by the Respondents solicitors PinsentMasons on 27 Aug 2009 and used a total production build of 135 aircraft and “886” spares”.

Mr Neill oral evidence in UK Employment Tribunal in July 2009

Mr Little : Document 3597 and 98. (Pause). Mr Neill : This is a memo from me to Pricewaterhouse. Mr Little : That's correct, and I'm just going to let the tribunal read it first of all, and yourself, to

remind you, and then I have four or five questions I want to ask. (Pause). ( BL :This email is at C.1. page 67 for the reader)

Mr Little : All right? Chairman : Yes. Mr Little : So this is from yourself, copied to John Furbay, noted at the end of March, essentially, as

distinct from what we saw earlier. Mr Neill : Yes. Mr Little : And this is coming off the back of what Dr Thamburaj has done in the middle of March

2007 for yourself, on the useful life. Mr Neill : Correct. Mr Little : And this refers to a spares requirement in excess of 800 units from 2007 to 2021 as

opposed to the 1572 calculated by PwC? (BL–this MAC schedule for 800+ units from Mr Furbay/Mr Neill -3605H- dated 14 March 2007 was then disclosed by the Respondents solicitors, after my request, on 27 August 2009. MAC had sent it to PwC. PwC’s false calculation of expected Spares and Repairs demand of 1572 units by FY2021 Mr Neill : If you make the assumptions for the forecast that we've just agreed on, then the numbers

will generate whatever the numbers are, and if it's 800, it's 800. Mr Little : Okay. Oil' now -- Mr Neill : We're not building -- go ahead. Mr Little : No, you go ahead? Mr Neill : I was going to suggest that the 800 was likely over the life of the programme, and it was

well in excess of the numbers that, at that point in time, we needed to recover all of the costs.

Mr Little : Can you then go to the beginning of the second paragraph? Mr Neill : Yes. Mr Little : You refer there that generally when an exhaust achieves its recommended and predicted

life it will be taken out of service and a new one will replace it. Mr Neill : Yes. Mr Little : What do you think that would normally mean? Mr Neill : Well, what happens when -- Mr Lynch : Tribunal – CHAIRMAN : Sorry --

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Mr Lynch : So sorry to interrupt, this seems perhaps to be, it may be my mistake, and if it is I very much apologise, but if we look at questions -- the only questions that were permitted on question 17, aren't they just the two about disclosure.

Mr Little : No, I've said (reads) CHAIRMAN : We were not asked to arbitrate on 17. Mr Little : No, there's a series of specific questions to some of the detail in paragraph 1 or 2, I expect

five or so questions and that's what I'm doing now. CHAIRMAN : We were not asked to arbitrate on 17, as far as I recall. Mr Lynch : Okay. Mr Little : I'm now on my second question. Mr Lynch: Okay. Mr Little : But the question essentially is, this then implies to anybody, like a PwC, that after 40

thousand hours, it's going to take them out of service and a new one is going to replace it. That's what that language implies?

Mr Neill Well first of all, I don't -- I don't entirely agree with you. The recommended life is a way of describing a service life for a period of service, and I think I'd go on further here to talk about these decisions about replace or repair, that has to be made by the overhaul base or the overhaul centre, and I would assume that that decision is made and when that decision is made, and that becomes the recommended life of the component. Let me also say that in the engine repair and overhaul business, it is traditional that when the whole nozzle unit is returned to service that a detailed report is written on its condition and on the basis of that condition, the air worthiness authorities approve the service life. And if it's in good condition, they will extend the service life, if it is in poor condition, they will reduce it and that then becomes the recommended life of that component.

Mr Little : Mr Neill, this very specifically is to PwC, it's all about Thamburaj's report, and it says, "Generally if an exhaust achieves its predicted recommended life it will be taken out of service and a new one will replace it." If that is not basically saying a replacement at 40 thousand hours, to everybody, other than those within the industry, what is it saying? It could not be any clearer.

Mr Neill : It doesn't use 40 thousand hour life, it doesn't use the repair mandated regulatory life, it uses the term recommended life because that is not a known number, per se.

Mr Little : But Rich, you've related it to the 800 units up above between 2007 and 2021 and I can tell you it is about 800 units on that basis.

Mr LYNCH : No, no. CHAIRMAN : Just put a question to him, rather than comments. Mr Little : Well, it's quite explicit, the English language says to somebody in PwC that "an exhaust

achieves its predicted and recommended life it will be taken out of service and a new one will replace it” and just above that “to provide a margin of safety John Furbay’s analysis used 40000 hours as the useful life” -- and is equivalent to 800 units, as calculated. And I would concur with that calculation on that basis, as I have done in case 4B.

Mr Neill : I would, sorry, I would, in response, I would suggest that we're in a new paragraph in this email, we're talking about spares and repairs and we're talking about life in relation to spares and repairs. I don't know how PwC interpreted this, but I have assumed that they segregated these two paragraphs to come up with the conclusions that they did.

Mr Little: Rich, with respect -- Mr Neill : Beyond that, you're asking me to testify what they understood but it and I can't.

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Mr Little No, I'm suggesting to you you're lying, because that says to anybody, a replacement. The calculation of 800 stacks together with that, it only makes sense in that context. It can't mean anything else, and they then go off and say that's how they've done their calculations, but can't even get the maths right.

(overspeaking) CHAIRMAN : Wait, please. You're suggesting he's lied in the email? Mr Little: Yes, he's deliberately lied and given that impression. CHAIRMAN : In the email. Mr Little: In the email relating to the 800 and he then conditions -- CHAIRMAN : No. Mr Lynch : Wait. CHAIRMAN : In the email, what you're suggesting is that he's lying to PwC. Mr Little: He's deliberately given the impression of that 40,000 hours replacement. CHAIRMAN: I hear what you say but I want to make a note of it. I suggest that you are lying in the

email. Not anywhere else, but in that email. That's what's been suggested to you, I think that that's a lie.

Mr Little: Okay, the EAC then chooses to ignore – your fourth point, just the end of that paragraph? Mr Neill : The spares. Mr Little: Yes. Mr Neill : Yes. Mr Little : So your point here is, we ignore repairs, irrespective of the size, and for the EAC we have

purely done replacement products which we think are around 800 units. That's what that's saying. That's what you've told PwC?

Mr Neill : Is that a question? Mr Little : I think so, isn't it? You've said, we're ignoring -- Mr Neill : Are you asking me -- CHAIRMAN: Well, the question is, really (overspeaking) Mr Neill, the question really is, is that an

accurate statement? Mr Neill : I ... hindsight is 20/20 and you look at language today, and it could be clearer, but the point

I was trying to make, when units are repaired in overhaul ... are on the line and people buy spare parts to support that we don't normally include that in the EAC calculations. But major repairs and the sale of major spares, like whole new nozzles and plugs we do.

Mr Little : And that‟s consistent with what the PwC people said, that the EAC is predicated on the

basis of replacement spares? And what you‟re also saying Mr Neill : Yes. Mr Little : So we're back to the 800 units, effectively. Okay, is that correct? Mr Neill : You keep saying that, I assume you're saying on the basis that that's your belief. Mr Little : No, my presumption is, I'm asking you, that's how PwC have interpreted what you said and

got a mathematical calculation wrong, but the rest of it is on that basis? Mr Neill : I think you want me through the ... to show you that there was an error in the second line

of their calculations which would reduce the number, so on the basis of that's what they did, you've interpreted it that way and I would have to agree with you right now, but it still doesn't change the overall basis of the EAC, that we had more than the necessary 1250 or whatever the number was mentioned in this email to get all the amortization completed.

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Mr Little : Rich, just so we're both on the same wavelength, the evidence you've given is that the table, you didn't correct, and both of us believe that it's probably wrong. You've said independently in this email that you've done a calculation that suggests 800 units on a replacement basis on 40 thousand hours is what is in the EAC (Note: MAC disclosed document 3605h dated 14 March 2007 and sent to PwC after his evidence on 27 August 2009) and what I'm saying is, if that is true and everything has changed at 40,000 hours, purely for spares, that would meet the 1247, which is your point, but it's only in that situation that everything is getting replaced at 40 thousand hours without exception. No repairs, nothing, straightforward replacement. That's what your emails are saying??

Mr Neill : I think we're losing sight of the purpose of this email. The numbers stacked up to justify

us getting more than 1247 units that had been used at that time in the EAC. I must admit I didn't go back and check in detail every calculation that followed that. All I was saying was that if you took Dr Thamburaj's 40 thousand hours it would generate a significant number which, on top of the production, would easily exceed the 1247 numbers needed to amortise out the recurring costs. That's what I was trying to say in the opening paragraph.

Mr Mark Bobbi Aerospace Consultant oral evidence from Cross-examination on 8 June 2009. Mr Lynch QC We have Mr Neill's email to Mr Moore of PricewaterhouseCoopers. I know it's a bit

compressed in its typescript. Tribunal, of course there is a bigger version in the bundle, if that's a bit small to read. (Pause).

Mr Bobbi, you can see, can't you, looking at the two substantive paragraphs -- it actually is a feature of both those paragraphs -- that Mr Neill makes it expressly clear that Magellan is simply basing its calculations for accountancy purposes on spares or replacements, he's not included anything to do with repairs.

Mr Bobbi . That's right. Mr Lynch QC Good. And then again shortly later

Mr Lynch QC But do you agree that it is certainly right that if Magellan sells a new unit, whether as part of a new aircraft or as a new replacement unit, a spare, then they would all count for EAC purposes?

Mr Bobbi Of course. Mr Lynch QC Right. And that information would indeed, because it related to lifespan, that information

would indeed provide the basis on which PwC could rightly conclude that indeed these would involve new units that would be sold, that's right, isn't it?

Mr Bobbi No, that's not. Because a component has a "lifespan" does not mean necessarily it will be replaced by something new, it can be repaired.

Mr Lynch QC Yes. Well, no, I think the whole point is this, it's not, Dr Thamburaj's point was not a question that they will need repairs after that period, Dr Thamburaj's point was that around 40,000 flying hours was indeed the lifespan of the unit. That after that,its lifespan was spent and should be replaced. That was the point.

Mr Bobbi Well, and if that was the case, he should have informed the customers. Mr Lynch QC Well, whether or not AIRCELLE was aware of that is another matter. Mr Bobbi I think it's an absolutely incredibly important matter, if he believed that.

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Note After this 8 June cross-examination Mr Bobbi was sufficiently concerned from all of his research about the line of questioning / position taken by Mr Lynch QC / Magellan to write to Magellan’s customer Aircelle “As you probably now know, I have been working on behalf of Brian Little, ex of Magellan and engaged in a lawsuit against Magellan over his firing. My job was to provide insight into the forecasts of the A340-500/600, estimate spares/repair consumption for the Magellan assembly, and validate or dispute Magellan's spares forecast. In my work, I contacted several A340 customer airlines inquiring whether or not Magellan and/or Aircelie have ever informed them that their was a 40,000 hour or less "replacement requirement" for the Trent 500 nozzle assembly. They were unanimous in stating there was no such information provided to them nor had they any other technical concerns with the A340-500/500 nacelle nozzle. Now, I can formally ask you if Magellan had ever informed Aircell that their component would require replacement at 40,000 hours or less. Mark A. Bobbi dba MB Strategy Consulting 104 Hammock Circle Saint Augustine, FL 32084” From: gary.ives@aircelle.com Date : June 24, 2009 6:44:55 AM EDT To WaldoBobbi@aol.com Subject: RE Magellan Mark, Sorry for the late reply, I was on holiday when you sent the mail and its taken some time for it to come to the top of the pile again. We have no knowledge of any life limt for this component and we're the vendor. We believe the whole thing is a hoax...but its getting around. You got any more info? Gary Ives Head of Customer Support Managers, Aircelle.” From: Werner Rothenbaecher – Etihad airlines (20000 flight cycles = 160,000+ flight hours) Sent: 23 June 2009 12:31 To: Brian Little Subject: RE: Trent 500 - Paris Airshow follow up We have raised the T500 exhaust system Life to Aircell and this is the reply we have from them: There is no specific life limitation for the T500 exhaust system. The exhaust system, as the whole Nacelle, is certified for 20 OOO FC If you need further information, please do not hesitate to contact me. Best regards Gilles COQUELIN T500 Nacelle Customer Support Engineering Leader Customer Support Division Aircelle - SAFRAN Group

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30 March 2007:

MAC Board approved the MD& A and financial statements for FY2006 – those minutes record

“Mr Linsdell provided the Audit Committee with a status update in respect of the audit since the last Audit Committee meeting on 16 March 2007. Mr Linsdell reported that Ernst & Young were comfortable with the PWC report and that although there were some outstanding audit issues with management , he was prepared to provide an unqualified opinion on the financial statements.”

I would ask you to note, while reading these, that the Board resolution approved Magellan Aerospace Corporation Annual Report for FY2006 at page 14 (MD&A/AIF.p12) states

"The Corporation relies on customers' delivery projections as well as external market forecasts to determine the number of units over which to amortize non-recurring costs. Should deliveries not reach the number projected, any unamortized balance that remains would then need to be charged to cost of revenues which could have a material adverse impact on the Corporation."

There was an addition to the PwC Final Report in August 2007 at para 8.61 {691} which stated that E&Y $137K gross profit assessment / representation reliance – The Q4 FY2006 EAC was also used by EY for year-end audit testing purposes.” The Estimate at Completion (EAC) process/documents are the MAC management “most reasoned view and likely outcome – oral evidence :Dekker” and showed in this Q4.2006 EAC submission to the auditors E&Y and PwC an improvement over Q2.2006 to a miniscule $0.1m gross profit on $250m program revenues which was unsupported by the pricing assumptions and quantities mathematical calculations. Pricing / Quantity calculations and management assertions which appear to never have been mathematically checked, never mind verified, by E&Y as well as PwC. See these links

9.1 A340 500/600 Pricing - numeracy and logic

9.2 A340 500/600 Volumes/ Quantities - numeracy and logic

Accountancy/Auditors – perceptions of “independent forensic accountants” - A340 “Forensic deceit”

I understand from other people within Big 4 audit firms that Forensic accounting people consider themselves to be amongst the “elite” members in their accounting/audit profession. I also believe from my research that most lay people would attribute such roles in such people and firms as having the following characteristics:

8A Numeracy / finance skills – basic logic and mathematics – see paragraphs 9.1 and 9.2

8B Reliance on them – comprehensive/thorough = truth / trust underpinned by independence / Objectivity –see paragraphs 9.3, 9.4 and 9.5

8C Access to information – global knowledge management / other audit clients and public information underpinned by technology in access to documents and records – see paragraphs 9.6, 9.7 and 9.8

8D Professional scepticism , checking and validity:audit testing and deep technical skills – paragraphs 9.9 & 9.10

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In simple terms these characteristics were not displayed (indeed the opposite) by both E&Y and PwC

As you can read in each of the factual analysis paragraphs below in a comprehensive analysis

Some of the PwC steps in their act of A340 “Forensic deceit”

9.1 A340 500/600 Pricing - numeracy and logic

9.2 A340 500/600 Volumes/ Quantities - numeracy and logic

9.3 A340 Customer delivery projections from Airbus – totally excluded in PwC analysis / assessment

9.4 A340 External Market forecasts from third parties – PwC not comprehensive / thorough

9.5 Independence/Objectivity – professionally compromised

9.6 A340 500/600 External market forecasts - failure to access global information

9.7 A340 500/600 Data from other Publications – including the file provided by MAC CEO, Mr Neill

9.8 Airbus Aircraft A340-500/600 “Website” Order Book - wrong analysis / assessment

9.9 Airbus A340-500/600 Unit Delivery projections - failure to check and audit testing validity

9.10 A340-500/600 pricing projections – failure to check and audit testing validity

4 April 2007 Email from PinsentMasons to CMS Cameron Mc Kenna (doc 3178) CMD1 ORDER

Reminder : The Chairman Mrs O R Harper gave the following directions (doc 56 – 58)

4. BY 4 April 2007 the parties are to mutually exchange lists of documents

“You will note that no PWC documents are listed in the index. You have previously requested documents relating to the decision to appoint external investigators i.e. PWC and in particular any reports (final or interim) produced by PWC. Your previous requests were premature because no report was in existence, quite apart from the fact that the disclosure exercise had not at that time been undertaken, but we did say that we would comment on this issue when supplying the list of documents.

We have carefully considered your request bearing in mind our client’s disclosure obligations in the Employment Tribunal. We comment as follows:-

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* We understand that PWC’s investigations are still on going. We are informed that there are no written PWC reports, either interim more final, in existence. The issue of disclosure remains premature.

* Having said that, we understand that PWC were instructed to look at certain financial and accounting issues, relating to the capitalisation of certain engineering costs, the reversal of a provision for certain engineering bonuses, the reversal of a provision related to the A380 contract, the rate of write-off of certain non-recoverable costs in connection with the A340 contract and the treatment of certain discounts in recording revenues from the Boeing 737 contract. For the avoidance of doubt, we are instructed that PWC have not investigated and will thus not report on the circumstances surrounding Mr Little’s dismissal and/or whether it was the result of him making alleged whistleblowing disclosures.

* Further, the documents you have requested are not in our view, relevant to the facts and matters in issue in the Tribunal proceedings. In particular, the documents are irrelevant by reason of the fact that the investigation and report was commissioned by the Audit Committee after Mr Little’s dismissal. Further, the Tribunal is not of course concerned with determining whether the alleged disclosures made by Mr Little were/are true, still less to examine and make findings of fact i.e. did Mr Little (to paraphrase the legislation) have a reasonable belief that his alleged disclosure tended to show that certain legal obligations had been (or were likely to be) breached. That will be a matter for the Tribunal to determine by reference to the evidence before it in the form of contemporaneous documents and witness evidence.

* You have failed to explain the relevance of these documents adequately or at all.

For these reasons, Magellan does not propose to disclose these documents in the Tribunal proceedings.”

16 April 2007 CMS Cameron Mc Kenna to PinsentMasons LLP email (doc 3189)

Subject Little v Magellan – Laptop PC DVDs

“I refer to the undertaking you required in your email of 13 April as a condition of my client being given the forensic copy of the content of his laptop PC, which we duly gave, and accordingly received the DVD’s this morning.

My client has a number of requests for information for the purposes of their investigation outstanding from PWC and he believes that at least some of the information needed to satisfy them will be available from the DVD’s. In light of the Undertaking you demanded from us, and having regard to the position you have maintained in correspondence about PWC, I have today to advise my client that he cannot properly use the DVDs to source that material for PWC.

The choice therefore is yours. You can either give permission for this disclosure to me made to PwC or not. I look forward to hearing from you on this.

I am copying this email to our Canadian counsel, Hodgson shields, with the request that they forward a copy of it to Torys LLP who are providing Independent Counsel to the Audit

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Committee who have commissioned PWC, so that Torys and their client can be fully aware of the situation. My client will separately be sending a copy direct to Mr Dimma, who has not been in touch with my client since 2 or 3 March, despite a number of attempted contacts by my client as well as our Canadian counsel, and to PwC. I look forward to hearing from you.”

and then a PinsentMasons reply on 18 April 2007

“Simon , Our clients have no wish to prevent material relevant to PwC’s review and report to the Audit Committee being made available to PwC.

Our clients are willing to allow you/Mr Little to disclose such relevant documents from the DVD’s to PWC (it is of course the case that these documents are on a forensic image already in PwC’s possession).

However, we ask that this is on condition that ;-

1. disclosure is only to be made to PwC re their investigation on behalf of the Audit Committee; and

2. the Undertaking contained in our email of 13 April 2007 otherwise remains in full force and effect.

Please let me know if the above is agreed, whereupon we will separately email PwC to advise them of the basis of such agreement.”

and then CMS Cameron McKenna reply (doc.3188)

“That is agreed, but may I remind you that you are maintaining their investigation is not in the terms that we understand it is – in order to maintain your argument the eventual report, their working papers, etc are not relevant to and not discoverable in the litigation against our demand for them – and you have so far failed to us the written brief they have from the Audit Committee, despite our request for it for clarification. Therefore you cannot hold our client or us to account of PwC are given documents that you maintain are outside the scope of PwC’s investigation.”

19 April 2007 EMPLOYMENT TRIBUNAL CASE MANAGEMENT DISCUSSION (CMD2)

CMD2 Order (doc 62)

(b) The respondents will indicate in writing to the Tribunal and to the claimant within 7 days of this Case Management Discussion the date by which the report commissioned by them in January 2007 from PWC will be available to them.

(c ) The respondents will confirm in writing to the tribunal and to the claimant, within 7 days of receipt by them of the PwC report, what their position is in relation to the discoverability of the document.

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24 April 2007 Email from W Dimma to Brian Little (doc 2918)

“Hi, Brian : The PWC report is nearing completion and should be available to the Magellan Board meeting of May 10. Re distribution, it is my belief, based on discussions with Torys, that, at this point, this is neither clear nor decided. Regards Bill”

26 April 2007 PinsentMasons letter dated 26 April 2007 (re CMD3 ORDER) – doc 3195

(A) “At the CMD on Thursday 19 April 2007, the Tribunal ordered the Respondent to advise the Tribunal and the Claimant’s solicitor of the date on which it envisages the PWC report being completed. We have been informed by our client that it is anticipated that the report will be completed in mid May. Unfortunately, at this time we are unable to be more precise than this.”

(B) Email from John Tracey of PwC to Brian Little (doc 2917)

“Thank you for copying me in on your note. I do recall telling you that we have extensive experience of whistleblowing cases but I do not recall saying that I expected to be called as a witness to the Employment tribunal. For the record, I have no view as to whether I or other members of the PwC team would , or would not, be called to the Tribunal.”

3 May 2007 (A) Pinsent Masons letter to CMS Cameron McKenna dated 3 May 2007 (doc 3196) “The situation is that, at present, there is no issue that arises as to “reasonable belief” (B) MAC Audit Committee meeting (doc 324A)

Attendees - Audit Committee – Dimma, Gowan , Lowe. Management – Vice Chairman Neill and CFO Dekker PwC - Mr John Tracey , Ms Samantha Ashfield

“The purpose of the meeting was to provide John Tracey with comments regarding factual corrections on the portion of the draft Pricewaterhouse Coopers (“PwC”) report he had circulated. The Committee and management made a number of comments regarding factual corrections to the portion of the draft report reviewed. Management undertook to provide PwC with additional documentation to support several of the factual corrections.”

4 May 2007 MAC Audit Committee (doc342A), Attendees - Audit Committee Dimma, Gowan Apologies Lowe

Management : Neill, Dekker and Ms Ball Canadian lawyers : Jewett of TORYS The purpose of the meeting was to seek TORYS advice on the following: (a) direction to provide to PricewaterhouseCoopers (“PwC”) as to how their report should

deal with out of scope items;

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(b) appropriate disclosure of the PwC investigation and related costs in the financial statement; and

(c ) appropriate disclosure of the PwC investigation and related costs at the annual meeting

The Committee asked TORYS to advise as to how PwC should address in their report any matters mentioned by Mr Brian Little that were not included within the scope agreed to with the Committee. Mr Jewett (TORYS) advised that PwC should not make any reference in their report to items outside of the agreed scope of investigation.

With respect to disclosure of this matter in the first quarter 2007 financial statements , Mr Jewett advised the Corporation to state that concerns were raised , a thorough investigation of the concerns took place and the investigation has not lead to any concern about the integrity of the financial statements .

Mr Jewett advised the Corporation to use the same text in the annual meeting as used in the first quarter financial statements and should any specific questions come up from the floor, repeat the position.

Mr Jewett undertook to provide draft disclosure to be used for both the first quarter 2007 financial statements as well as at the annual meeting.

8 May 2007 Letter to John Tracey at PwC from my solicitors CMS Cameron McKenna (which included a further copy of CD2 – and extract of relevant information from my PC)

“I have just spoken to Brian Little who asked me to update you on the package sent on Friday. Our post room has received confirmation that the package, (tracking number TKACZUUK) which was sent by UPS, arrived at the Birmingham office and was signed for this morning.” followed by email from Ms Samantha Ashfield of PwC on 9 May 2009 at 19.42 “Hi Karen Whilst the post room has confirmed receipt of the file, I am struggling to locate it (although I am continuing to try). To expedite the matter, I would be very grateful if you could resend the file.” and then CMS Cameron McKenna reply on 9 May 2009 at 19.49 “Samantha Thankyou for your email. I will arrange for a copy file to be sent via courier first thing in the morning. If you locate the file in the interim then please let me know”

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9 May 2007 - PwC Final Draft Investigation Report – PDF document properties 9 May 2007

10 May 2007 Magellan Aerospace Corporation Board meeting (doc 324G)

Board minutes “Mr Dimma advised that the Committee had agreed to retain Ernst & Young to conduct an quarterly review of the Company’s financial statements. Mr Dimma advised the Board that PricewaterhouseCoopers (“PwC”) had completed its investigation in respect of the allegations raised by Brian Little and had issued a draft report. Based upon the draft report and discussions with PwC, the Company’s legal counsel has advised that PwC had found nothing that would undermine the integrity or the accuracy of the Corporation’s financial statements” –

The Magellan Annual General meeting was held that afternoon (doc 325)

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11 May 2007 Magellan Aerospace Press Release and circulation to Toronto Stock Exchange (TSC) Magellan Aerospace Corporation (MAC) - Q1/2007 Earnings release (public - 11 May 2007) and FY2007 Annual Report (public- 31 March 2008) “In addition, administrative and general expenses also contain legal and accounting fees of approximately $3.5m incurred by the Corporation in relation to a wrongful dismissal claim by a former employee and as a result a detailed investigation of concerns raised by a former employee regarding certain accounting issues. The concerns were thoroughly investigated by PricewaterhouseCoopers (“PWC”) who, under the direction of the Corporation’s audit committee, prepared a report for the audit committee on their findings. The Corporation’s legal counsel has advised the Board of Directors that PWC met with the audit committee and the Corporation’s external auditors, and based on the report prepared by PWC, PWC has advised the audit committee that they had not found anything that would undermine the integrity or accuracy of the Corporation’s financial statements.” 13 May 2007 CMS Cameron McKenna email to Pinsent Masons (doc 3201) “I have just seen the Second Respondent’s “First Quarter Report – 31 March 2007”

published last Friday, 11 May.

According to this report, PwC have prepared and delivered their report. I would therefore be pleased to receive a full copy of the PWC report (and any supporting documentation necessary for proper understanding , such a letters of instruction and the like) , no later than noon time on Tuesday, to allow us a little time before the CMD for consideration.

and then PinsentMasons reply on 14 May 2007 (doc 3200)

“Simon I have checked this with our clients who inform me that although PWC have orally indicated to the Audit Committee what the report is likely to say, the report has not been produced to our clients yet. In any event, your email ignores the fact that at the previous CMD the Tribunal made a formal direction about how our clients are to deal with the PwC report (i.e. they have 7 days from receipt of it to advise whether or not they will disclose it voluntarily).”

and then CMS Cameron McKenna reply

“Thank you. You are of course right about the terms of the order, but I hardly think you can have it both ways. As your client apparently knows enough to put out a public statement to inform its shareholders and the market generally, I hardly think you can claim the 7 days is not running and we will at the very least expect you to be able to make a full report to the ET and us in writing before the forthcoming CMD.”

and then PinsentMasons reply

“Simon We disagree. The whole point is that the Tribunal did not consider it appropriate to deal with the issue of the report before it came into existence and that must remain the case.”

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and then CMS Cameron McKenna reply (doc 3202)

“The 31.3.07 quarter’s report states that PWC has prepared a report for the audit committee on their findings” and that “The Corporation’s legal counsel has advised the Board of Directors that PwC , met with the audit committee and the Corporation’s external auditor , and based on the report prepared by PWC, PWC has advised the audit committee that they have not found anything which would undermine the integrity or accuracy of the Corporation’s financial statements. ‘

I do not know whether you have had the chance to read the exact wording of the report – you can find it as we did on the CNW Group website, www.newswire.ca – but I find it very hard to reconcile the first sentence of your email below @ 17.52 that a mere verbal indication has been given, with the words I have extracted from page 3 (as printed) of the quarter’s report and quoted above.

Please will you take precise and urgent instructions in this point”

16 May 2007 PinsentMasons email to CMS Cameron Mc Kenna (doc 3202)

A. “Simon Those are my client’s instructions. My clients have advised me they are awaiting delivery of the report. Although PWC have orally given an indication as to what it will say, the report is not in existence. Once it is, my clients will comply with the terms of the Tribunal Order”.

and then CMS Cameron McKenna reply

“Thank you. I note what you say, but maintain that what you clients have said in the quarterly report is hard to reconcile with this and note that you/your client have made no effort to give any detailed explanation of his key issue at all. We will be pursuing this at the CMD and Leading Counsel’s Skeleton (which you will receive later today ) will state our position. “

17 May 2007 EMPLOYMENT TRIBUNAL CASE MANAGEMENT DISCUSSION (CMD3) (doc 63) At a Case Management discussion held by telephone on 17 May 2007, and having heard Mr Stafford QC for the claimant and Mr Lynch QC for the respondent , the Chairman Mr C G Toomer gave the following directions 2. There is to be a Case Management Discussion to determine outstanding issues as to disclosure, and to give any other appropriate direction, on 6 June 2007 at 10.30 am. One day has been set aside for the discussions which will be in person. Skeleton arguments are to be exchanged and copied to the tribunal by 10 am on 4 June 2007.

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31 May 2007 CMS Cameron McKenna to PinsentMasons email (doc 3208)

“On the subject of PwC, I note that I have not had any reply from you in answer to my letters of 22 and 24 may requiring you to explain the position clearly and precisely. I assume you would wish to take the opportunity to explain in good time before the CMD next week and so that we can include your answer in the bundle we are preparing for the CMD. Therefore please may I hear from you on this today.”

and then PinsentMasons reply “Simon The position on the PwC report hasn’t changed since you last asked us. My

clients are aware that once it is published the Tribunal Order means that we have to inform you of this. When I last spoke it had not been issued. If this changes I will let you know, but to be clear my clients intend to comply with the terms of the Tribunal Order.

and then CMS Cameron Mc Kenna reply

“Thank you , but with respect there is no answer here to our question about exactly what is going on here , as this looks very fishy to us”.

6 June 2007 Employment Tribunal CASE MANAGEMENT DISCUSSION (CMD4) - one day Bristol

Paragraphs 28 and 29 in Andrew Stafford QC’s Claimant Skeleton for CMD4 stated

"It will be for the Respondents to persuade the tribunal at this CMD that there is no document in existence which could answer to the description of a PwC report. It is submitted that the Respondents are on the horns of a dilemma. Either no PWC report exists, in which case the quarterly report contains a serious misstatement made to shareholders. Or, if the representation made to shareholders is indeed true, then the statements made by Pinsent Masons (let there be no doubt - on instructions) must be untrue.

It is striking, of course, that no affidavit or witness statement from an authorised director of the Second Respondent has been served by the Respondents explaining, under cover of a statement of truth, the accurate position."

Whilst Mr Lynch QC in his CMD 4 skeleton at paragraphs 22 and 23 (1) stated

Paragraph 22 "The issue of the PWC Report was raised by the Claimant at the CMD of 19th April 2007. Any request for disclosure of the Report at that CMD was, of course, premature because the Report did not exist: PWC had not provided its final Report. The Respondents would respectfully add here that it is clearly right, sensible and proportionate to await the completion of the final Report By PwC before any question of disclosure should be considered, because it is only that document which will reveal (if relevant) PWC's views.

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Paragraph 23 Reference has just been made to the question mark in regard to the relevance of the Report. That follows, first, from the fact that, obviously, its relevance cannot be determined until the Report is completed and studied. That question mark also arises because, as has already been emphasised , it is respectfully submitted that: -

(1) at present there is no challenge made by the Respondents in regard to the

"reasonableness" of any beliefs of the Claimant. If that is not a live issue between the parties, ordering disclosure in connection with that non-issue would , with respect, be inconsistent with the overriding objective and would not be necessary for the fair disposal of the case;

(2) these proceedings do not concern the details of the conduct o f the Respondents

business Paragraph 24 Naturally the issues in litigation can shift. Further, if , say the issue of reasonable belief became a live issue between the parties, that would be relevant to considerations of whether the PWC Report was a relevant document for disclosure. However, until such time as the final Report exists, the above cannot be determined. Paragraph 25 In the light of all of the above the Respondents respectfully commend to the Employment Tribunal the Order made at the CMD of the 19th April 2007 by Mrs Christensen. That Order (at page 68)provided that (1) within 7 days the Respondents solicitors would state when it understaood the PWC Report would likely to be available; (2) within 7 days of the Respondents Solicitors being provided with the Report, they would make clear whether or not they considered it is to be disclosable. It is respectfully submitted that the references by Mrs Christensen to “the Report” were references to the final Report published by PwC. Paragraph 26 The Respondents’ Solicitors have met the responsibility set out at paragraph 25 (1) above. The current position in regard to the completion of the Report is that it is not yet published (that is, not yet produced in its final form) although it is expected very shortly. Paragraph 27 prior to the CMD of 17th may 2007 the Claimant had seen the Respondents’ quarterly report, which made reference to the PWC report. This matter is dealt with in the Skeleton Arguments prepared by the parties for the CMD of 17th May 2007 at pages 272-274 and 262- 264, and will not be repeated here. In short, the Respondents made clear that PWC had not produced its final Report. The current situation is, in regard to the Report, as described at paragraph 26 above i.e. the final Report has not yet been published , but is expected to be so very shortly. In those circumstances it is respectfully submitted that :-

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(1) it would be wrong to alter the effect of the Order made by Mrs Christensen on 19th April 2007;

(2) it follows that, within 7 days of the Respondents solicitors receiving a copy of the

final PwC report, they will give notice of whether that Report is or is not considered to be disclosable

(3) it would be wholly inconsistent with the principles of disclosure , the overriding

objective and, with respect, the appropriate case management of these proceedings to order disclosure of “satellite” documents to the Report, for example the working papers of PwC. It is PWC’s final view and analysis as set out in its final Report that is relevant to determining the question of disclosure. In regard to PwC’s analysis, that will be determined by its relevance in terms of the issues raised in these proceedings and the necessity for disclosure for the fair disposal of the proceedings. Determination of that must await the completion of the Report.”

JOHN DEKKER WITNESS STATEMENT

11 June 2007 My email to John Tracey at PwC (attaching CMD4 Order and Notice of CMD 5) “John Please find info below. I understand Sterl has now moved on to be a partner

elsewhere. My understanding is that the UK solvency dimension – PwC phase 2 has never been done – can you please advise me on this. Give me a call if you wish.

Following the provision of the “PwC report” by June 20 my legal team will assess what

more we need to do and I will keep you advised re same Kind regards Brian” and his reply on 12 June 2007

“Thank you for your note and for the update. I would prefer that you route any enquiries concerning the investigation through Bill Dimma and Torys. Regards John”

20 June 2007 CMD4 Disclosure (A) Pinsent Masons email to CMS Cameron Mc Kenna at 16.20 (doc 2973) “In accordance with the Tribunal Order dated 6 June 2007, please find attached the PWC draft report dated 9 May 2007 with appendices, referred to in the Q1

announcement of 11 May 2007. Also attached are the accompanying letters of engagement/ instruction. It should be noted that this is a draft report and not the final report, which is expected shortly. Please confirm safe receipt.

(B ) and then my email to John Tracey of PwC at 23.55 (doc 2973) “John I have just arrived home. Further to our conversation whilst I was on the ferry

CD2 was provided to Mr Dimma for onwards transmission to yourselves on 1 May 2007.

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I assume this is the “correct draft report at 9 May” and will now read closely with Deloittes vis-a vis the information/documentation etc available to us. Are we permitted any comments ???? / references to documentation ? - I do not know whether we will choose to do so. I would also confirm again my comments in our telecom and we will press again for the doubtful solvency review as this was central to my concerns / Grounds of Complaint and the “behind the scenes” coverup leading to my dismissal – certainly the Bristol ET will be “astonished” that this has not yet been done was not done given its comprehensive coverage in the Grounds of Complaint. I have not read anything yet and obviously need time to review this tomorrow etc. Many thanks and kind regards brian

(C ) Disclosed the letter below from Mr John Tracey dated 20 June 2007 to Mr Bill

Dimma by PinsentMasons on 4 May 2011 at 19.20 following the Daily Telegraph article published on the front page of the Business Section that day

PwC reported to accounting regulator after taking out criticism from report This included …….. PWC insists that the changes between the reports do not affect its

conclusions. A spokesman said “We refute entirely the suggestion that a change to a PwC report was made in order to render some advantage, or favour, to Magellan or that such was made to the detriment of any individual. The paragraph [referred to] was removed at the request of the Audit Committee, as it did not address the accounting matters which PwC were instructed to review. However, the same points were included in PwC’s covering letter accompanying the report.” This PDF file was created on Sunday 1 May 2011 at 13.40 as per PDF file document properties below by xxxxx.

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Full text of two page letter follows

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Full text of two page letter follows

“ For the attention of: Mr William A Dimma 20 June 2007 Our ref: JT/Magellan/amjt100v.doc Dear Sirs Investigation into matters raised by Mr Brian Little Further to our engagement letter of 2 February 2007 we enclose our final report into certain areas of concern raised by Mr Brian Little. Certain matters arose in the conduct of our work that we wish to draw to your attention. Financial control within MAC and MALUK in relation to the areas we have examined is poor and needs to be improved; this need is particularly acute given that MAC is a public company. Examples of poor financial control that we identified during our work include: (a) Accounting adjustments made with insufficient supporting analysis or

documentation; (b) Inadequate understanding or documentation of balance sheet provisions and

insufficient documentation of the decision to release certain provisions; (c) A lack of awareness of the program accounting requirements under either Canadian

GAAP or UK GAAP. The accounting rules and guidelines are complex and our impression is that the principles are not well understood throughout all of the finance community within the MAC group;

(d) Poor control over individual projects from an accounting perspective. Project sales

volumes, revenues and costs are not reviewed with sufficient frequency or rigour. In particular, EAC calculations require many estimates by management. Our experience with accounting practices and governance in the aerospace industry is that these estimates and key assumptions should be reviewed on at least a quarterly basis.

We understand that there has been some discussion as to how financial control might be improved. We would be happy to help the Audit Committee review any plan developed by management of MAC to address these issues. Yours faithfully John Tracey Partner Forensic Services Enclosure”

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From my March 2009 evidence to the UK Employment Tribunal It is significant that neither PwC nor E&Y were presented as witnesses by Magellan Aerospace, although at one point on 10 March 2009 Mr Lynch told the Tribunal as you can read below “we can call them”. This oral exchange at the Tribunal was later denied by PinsentMasons and PwC or E&Y never appeared in the UK proceedings as witnesses in support of the Respondents or to face any cross examination by us. Mr Little “ Next doc is p3891, vol 10 it should contain a comparison of the draft/final PwC report. Provided to the Respondents three times and PwC to confirm validity. Independent solicitors and Deloitte have verified the differences. Colour coded. Red is deleted between final draft and Bold Black is added during May and disclosure Aug 07……………. <This includes the COMPLETE REMOVAL at page 3/7 of PwC para 2.40 “Financial control within MAC and MALUK in relation to the areas we have examined is poor and needs to be improved; this need is particularly acute given that MAC is a public company. Examples of poor financial control that we identified during our work include: (a) Accounting adjustments made with insufficient supporting analysis or documentation, (b) Inadequate understanding or documentation of balance sheet provisions and insufficient documentation of the decision to release certain provisions: (c) A lack of awareness of the program accounting requirements under either Canadian GAAP or UK GAAP. The accounting rules and guidelines are complex, and our impression is that the principles are not well understood throughout all of the finance community within the MAC Group; (d) Poor control over individual projects from an accounting perspective. Project sales volumes, revenues and costs are not reviewed with sufficient frequency or rigour.” > All the other changes are made by Magellan – more specifically Mr Dimma, Mr Neill, Mr Dekker and Mr Smith as the central characters. Judge So PwC would’ve seen a request to make changes by those individuals and PwC, without

forming their own view, acceded to those requests. That’s a pretty grave accusation to make against PwC…

Mr Lynch We can call them Mr Little But they are paid by you! Judge It is a pretty grave accusation. Mr Little I know and I don’t do this lightly Judge I’ve recorded that Mr Lynch Do we want to hear untested suggestions made? It is unfair to the Respondents. We say the

accusation is ungrounded. Judge We’re all experienced enough to make allowances and the stress and difficulties Mr Little

faces in what is an enormous case and he can be forgiven for muttering under his breath.

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21 June 2007 Email from CMS Cameron McKenna to PinsentMasons

“I note with concern that you have not sent us any of the documents comprised in the list of exhibits contained within the PWC Report, which you sent to us yesterday afternoon. The exhibit list at pages 5 to 11 of the Report runs to some 7 pages and some 106 documents.

It is therefore our position that you have not complied with the Tribunal's order of 7 June 2007, and we expressly reserve all our client's rights to apply to the Tribunal under the penal notice provisions contained within that order.”

22 June 2007 Email from PinsentMasons to CMS Cameron McKenna

“I refer to the query you raised yesterday concerning the exhibits to the draft report of PWC which we disclosed to you on Wednesday. I explained yesterday, on instructions from my client, that the exhibits were not attached to the draft report. That is correct. It has subsequently been clarified to me that the exhibits were provided later the same day as the draft report. I am instructed that the exhibits were not reviewed by the Audit Committee at that time. Rather than debate the point further, I am instructed to release the exhibits to you. I am out of the office today and therefore have asked Rebecca to send this email. She will also arrange for the documents to be emailed to you shortly.”

25 June 2007 Email from Brian Little to Bill Dimma (doc 2974) (A) Dear Bill,

My lawyers have now passed a copy of the PwC report (including on Friday the exhibits) to myself and my financials team at Deloittes , titled

“Final Draft Investigation Report into Areas of Concern raised by Mr Brian Little May 2007 While I acknowledge this appears to be a Final draft report, there appears to be no intent to provide the report to E&Y (UK) / E&Y Canada or myself to provide any comments on it in a similar way to MAC’s apparent reviews of earlier drafts. This si inconsistent with our expectation and requests since early February to the Audit Committee. Please advise whether it is the MAC audit committee/ PwC “independent investigation” plan to invite me to submit my comments before the report is finalised. If it is then I will make myself available to support same. (B) and my email to John Tracey (doc 2977) “Canada – I was led to believe in late March 2007 (by Sterl/Samantha) that a follow up meeting with PwC Canada was needed and indeed checked my availability following

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my Easter holiday. I certainly consider that still to be both appropriate and relevant as a minimum on the Airbus A340 concerns”

28 June 2007 PwC Report Letter from PinsentMasons to CMS Cameron McKenna (doc 3208C) Point 1.4 “I am instructed that the completed PWC report is expected to be provided to the audit

committee within the next 10 days, although I am awaiting an update and will keep you informed accordingly.”

2 July 2007 CMS Cameron McKenna letter to PinsentMasons (doc 3209) – reply to 28 June 2007 (A) PwC report Point 1.1 “As neither of us was present at CMD4 I do not personally propose to debate this issue

with you. Our Leading Counsel will be attending the CMD this afternoon and I assume that yours will be also. the matter can be discussed then.

Point 1.2 I can well understand your embarrassment about the exhibits, but while I attribute no

blame to your firm or your counsel , there is every reason why your clients through you and/or counsel should be offering the fullest explanation and apology for this. With great regret we are forced to conclude that your clients have deliberately not complied with their disclosure obligation. This is a matter which we will be pressing with the utmost vigour at this afternoon’s CMD. “

Point 1.3 Noted, As a consequence it is obvious that the fullest further disclosure will be required of

your clients in respect of all matters in the grounds of complaint not covered by the existing report. We will in any event need further material to supplement the PWC report in respect of the matters it does cover.

Point 1.4 Noted. I trust that your clients will be more candid with you this time than they appear

to have been before.”

It seems to us that the key issue here is to discuss constructively the matters raised in my letter of 15 June. The debate this schedule should, have produced was the debate I sought to start in my letter of 9 March about knocking the corners off the defence. Your client’s apparent obstruction of the discovery process and no doubt their instructions to you have prevented this process from taking place. I note also that your clients have presumably been aware of Pricewaterhouse’s findings since early May at the latest, another 6 weeks has passed without any effort on your side’s part to address the defence notwithstanding that the PWC Report covers 7 out of the 24 protected disclosures pleaded in the Grounds of Complaint, finding for him on the majority of those matters and moreover at paragraph 2.40 of the Report “financial control within MAC and MAL UK in elations to the areas we examined is poor and needs to be improved and needs to be improved; this need is particularly acute given that MAC is a public company”. That paragraph goes on to identify particular examples of poor financial control that were identified by PWC…. etc

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(B) Afternoon - Employment Tribunal CASE MANAGEMENT DISCUSSION (CMD5)

Claimants Skeleton Argument for the fifth CMD of 2 July 2007-Mr Andrew Stafford QC

Paragraph 2

2. The Tribunal ordered:

(a) That the PwC report referred to at p.232 of the Case Management Discussion bundle together with the letter or letters of instruction from the Second and/or First Respondent be disclosed on or before 20th June 2007.

<p232 refers to the MAC Press release on 11 May 2007 to the TSE>

3. It will be recalled that disclosure of the PwC report had ben the subject of argument on two previous occasions. On each of these occasions, the Respondents had resisted disclosure on the bases that the report had not bee completed and the report was not relevant to any of the issues raised in the litigation. At the hearing on the 6th June 2007, the Respondents produced a witness statement in which it was asserted that the report was only in draft and was not ready for production. This aws a position which was difficult to reconcile with a public statement made by the 2nd Respondent which was distributed to the financial press and published on an official website related to the Toronto Stock Exchange on 11 May.

4. The PWC report was eventually disclosed on 2oth June 2007. It comprised a narrative , a list of about 100 “exhibits” and a series of appendices. When disclosing the report, only the narrative and appendices were made available to the Claimant. It was necessary for the Respondents solicitors to press the Respondents in order to secure disclosure of the exhibits. The exhibits were only disclosed on 22 June 2007. 89 of these exhibits related to issues raised by the Claimant in his Grounds of Complaint.

5. There are a number of important points which emerge from the report and from the process which the Claimant has been obliged to pursue in order to secure its disclosure.

a. the report was prepared expressly for the purposes of investigating the concerns raised by the Claimant. For that purpose, PwC was provided with documents which were relevant to its investigation. Those documents are listed within the body of the report. The majority of the documents considered relevant to the preparation of the PWC report had not previously been disclosed by the Repondents. This is both highly surprising and highly significant.

b. the report largely supports the Claimant’s case. Having regard to its contents one can well understand why, were they not under a disclosure obligation, the Respondents would not wish to reveal this document.

c. The PWC report is confined to a number of specific issues of whistleblowing but does not cover 13 of the 24 instances of Protected Disclosures pleaded by the

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Claimant in the Grounds of Complaint. It has now been requested by the Audit Committee of the Second Respondent to defer investigation on the issues of solvency and the whistleblowing process which were also part of the Claimant’s whistleblowing concerns (paragraph 4.11 at p.30 of the PWC report) In the light of subsequent correspondence between the parties’ solicitors it is highly likely that a PWC report on solvency will be produced, or will be produced in time for the hearing of this matter. In response to a specific query as to when PWC would be investigating and reporting on deferred matters, PinsentMasons responded on 28th June 2007 “I understand that PWC will not be carrying out any further substantive investigation beyond those matters of which you are currently aware.” It also seems that the Claimant will not be given any opportunity by PwC to contribute any comments on the draft before the report is made final, although the Second Respondents have had the opportunity to do so before the draft of 9 May was produced.

d. The exhibits to the Report fill a lever arch file. Whilst the precise number of documents which will be needed at the hearing of this matter remains uncertain , nevertheless these exhibits provide strong evidence that it is likely to be a far larger figure than most cases would justify.

6 The significance of the first point will be obvious. The disclosure which the tribunal ordered at the first CMD required the Respondents to list and produce all documents relevant to the issues raised by the Claimant. The documents produced to PWC were those relevant to the whistleblowing allegations which are in issue. Indeed, the first document produced to PWC was the ET1.

7 In relation to whistleblowing , the two lists should have been identical. There should have been no document produced to PWC which had not been listed and produced on disclosure to the Claimant. The difference between the two lists is striking. There are some 60 out of the 89 relevant documents produced to PWC which have never been listed or produced in these proceedings.

8 It can be seen, therefore, that the Respondents deliberately decided to exclude from heir list of documents a large number of documents which they knew were relevant to the fair disposal of these proceedings. It will be recalled that, at the last CMD, counsel for the Respondents told the tribunal that neither he nor his instructing solicitors had seen a copy of the PWC report. That is entirely credible, because no reputable lawyer would have considered the documents listed in the PWC report and then concluded that they should not be disclosed to the Claimant. This also needs to be seen in the context of the history of non-co-operation by the Respondents over discovery which have previously been an unfortunate feature of this case.

9. There has been no explanation or apology from the Respondents either for the delay in providing the draft report, given that it was dated 9 May by PWC, or as to the non-disclosure of the documents.

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Verification of the Respondents Disclosure

10. In the light of the history of this matter, and in particular in the light of the Respondents clear and deliberate failure to disclose to the Claimant the same documents as had been produced to PWC, it is submitted that the Respondents are clearly in breach of the tribunal’s orders for disclosure.

11. The Claimant does not apply on this occasion for an order debarring the Respondents ‘ from defending the claim. The Claimant reserves the right to do so in the future. However, on this occasion, the Claimant seeks direction from the Tribunal under its case management powers requiring a director of each of the Respondents to make and serve an affidavit

a. Listing all of the documents in its possession or control which are relevant to the issues in the proceedings:

b. Identifying the steps which have been taken to ensure that compliance with the obligation has been secured;

Verifying that the Respondent has undertaken appropriate inquiries and has disclosed all documents relevant to the issues raised in the present proceedings

12. Underlying this application are the following considerations:

a. The fair disposal of the litigation depends upon compliance with disclosure obligations

b. Disclosure is a continuing duty,

c. Disclosure places upon a party a duty to make all necessary inquiries and searches

d The Respondents have demonstrably failed to comply with the obligation of disclosure.

e. The Respondents have attempted to maintain the non-doscloure of relevant disclosure.

f. The Respondents have not placed their English lawyers in a position to advise on the disclosability of the documents provided to PWC.

g. the tribunal can attempt to secure compliance the disclosure obligation by placing directors personal responsibility for verifying disclosure.

13. The verification process which the Claimant seeks is especially important in relation to issues of solvency. This issues has not been addressed by PWC and, in all probability, it will not be addressed by PWC prior to the hearing if at all. On the occasion of the last CMD, the tribunal declined to make an order in relation to documents which were connected with the issue of solvency. The Claimant invites the Tribunal to make plain that the disclosure which

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must be checked and verified should extend to documents relevant to the issue of solvency.

14. The affidavits which the Claimant seeks should be made within 14 days of today, thereby allowing the Respondents to conduct a proper search before committing themselves on oath.”

CMD 5 ADRIAN LYNCH QC skeleton - document

CMD 5 Case Management Order

(b) No order is made for a director of either Respondent to serve an Affidavit in relation to their disclosure requirements.

My solicitors CMS Cameron McKenna minuted from the CMD5 that

“1. Application to make affidavits

No order was made. Mrs Christensen was not satisfied that it would be of any particular assistance. It may create satellite problems, which could occur if the directors breached the sworn affidavits. Mrs Christensen felt it was best to keep the parties focused on a fair hearing and believes that active case management by the tribunal was the way to proceed. If problems continue then there can be further case management.”

3 July 2007 (doc 3215 – 3216) CMS Cameron McKenna letter to PinsentMasons

“At yesterday’s CMD your Leading Counsel made remarks about the relevance of the exhibits to the PWC report to the issues in the case. In particular he maintained that in the main they were highly technical accounting documents which the Tribunal would get stuck in. Our Leading Counsel disagreed with this characterization, pointing out that most in fact were emails. We write to confirm our side’s position and, with the greatest respect to your Leading Counsel, to record our view that he is mistaken.

Next Steps regarding PWC report

We note from your correspondence at the end of last week and from comments made by Leading Counsel on your behalf at yesterday’s CMD that the PWC report is expected to be finalised very soon and perhaps within the next week or so. In that regard we have two points to make.

First, we note that our client has received no response to his enquiry by email of Mr Dimma, the Chair of the Second Respondents Audit Committee, dated 25 June, as to whether or not he would be afforded a similar opportunity to that which was afforded to your client’s management as noted in paragraph 3.12 of the PWC report, to comment on its factual accuracy. Our client has a number of such comments that he wishes to bring forward.

Second, please confirm that we will be provided with a copy of the final report as soon as it is received by your client. We would not wish to be in the position of having to wait some

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time to receive it from the date of receipt by your client. In that regard we note that although the current report was apparently dated 9 May by Pricewaterhouse and we assume delivered to your client shortly thereafter, you or your Leading Counsel were unable to give any explanation as to its particular status at the CMD on 6 June as you plainly lacked the timely and proper instruction from your clients which should have been given to you. Indeed it was not until a further 14 days later, the very last day permitted under the terms of the Order for its discovery, that a copy was sent to us. That copy was not of course complete because the exhibits to the report had also not been disclosed.

We still await an explanation from you as to the process of its delivery to your clients having regard to the dating of the document and indeed to the matters set out in paragraph 3.12, in regard to the various accounts given to us and the Tribunal about it. These are matters which are of serious concern and on which proper explanation is manifestly due.”

12 July 2007 MAC Audit Committee lawyers (TORYS) letter to Brian Little (doc 3002)

“With respect to your reviewing and discussing the report with PwC, PwC interviewed and otherwise communicated with you on a number of occasions before and during the preparation of its report, and received a great deal of information from you. PwC reported to the Audit Committee that it felt that it had a thorough understanding of your concerns, your views about the matters in question and the information you had that might be relevant. PwC has stopped responding to you because it is confident that it has received from you all the information you have that is relevant to its investigation, assuming you have not withheld any relevant information. PwC is of the view that further contact with you will not add to its investigation or conclusions and the Audit Committee has accepted this view.

The Audit Committee and Magellan have spent a great deal of time and money on your concerns which they have taken very seriously. After this very thorough investigation, the Audit Committee is satisfied that it has a full understanding of the concerns raised and is satisfied that it has responded appropriately to them. It is evident that you may not agree with everything in PwC’s report but the Audit Committee is confident that PwC’s investigation was thorough and competent, and is prepared to rely on PwC’s conclusions.“

23 July 2007 PinsentMasons letter to CMS Cameron Mc Kenna (doc 3221)

Next steps – PwC report

“As to the final version of the PwC report, as mentioned above, my instructions are that my clients do propose to disclose this to your side after it has been made available to them.”

24 July 2007 CMS Cameron Mc Kenna to Pinsent Masons (doc 3227)

“As the PWC report is a key document, I will, expect it to be copied to us swiftly after your clients have received it and you have had an opportunity to look at it, which should take no more than 7 days from receipt at most”.

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8 August 2007 (doc 3247) Email from TORYS (Audit Committee lawyers) to my Canadian lawyers

“…. I am still trying to determine the timing of the production of the final PwC report.”

10 August 2007 CMS Cameron McKenna to EMPLOYMENT TRIBUNAL (doc 3233)

(A) “As yet, we have not received any update from PinsentMasons as to the final version of the PWC report. We are concerned that there may be some significant further delay in its finalization. The Tribunal will recall the final draft was dated just over 3 months ago on 9 May 2007 so we find it difficult to understand what good reason there could be for such a long delay in its finalization and the absence of any explanation of this delay, so far, by PinsentMasons. We anticipate this may unfortunately be another matter on which we have to return to the Tribunal.

For the record, while our client asked the audit committee of the Second Respondents if PWC would afford him the same opportunity of commenting on the draft as had been given to the audit committee and, in certain respects senior management of the Second Respondent, he was informed by independent counsel for the audit committee that he would not be afforded that opportunity. We would be grateful if you would acknowledge this letter”

(B) Email from Audit Committee/TORYS to my Canadian lawyers(doc 3247)

“The last copy the audit committee received was the “final draft”. The final report is expected next week. Upon receipt it will be released to Mr Little’s cnsel including yourself”.

14 August 2007 (doc 3247) Email from my Canadian lawyers to TORYS

“Can you tell me when I can expect to receive the final report?”

reply from MAC Audit Committee - Peter Jewett (TORYS) lawyers to my Canadian lawyers

“Subject Re PwC report

My understanding is that the Audit Committee will receive the final report this wek after which a copy will be provided.”

reply from my Canadian lawyers to Peter Jewett

“Does that me I will get a copy this week as well?”

reply from Peter Jewett (TORYS) to my Canadian lawyers

“Hopefully”

Email from CMS Cameron Mc Kenna to PinsentMasons when forwarding email trail above.

“News from your clients Canadian counsel about the receipt of the final PwC report”

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21 August 2007 CMS Cameron McKenna to PinsentMasons email (forward of 14 August) doc.3245

(A) Email exchange at 10.16 . “Do you have any update for me as to when the final PwC report will be ready? This really is dragging on ridiculously and accordingly I expect a clear answer by 5 pm today.”

reply from PinsentMasons at 11.16

“Simon I will ask my client if there is any update and will let you know. Is there any specific reason why you need a response by 5 PM? Regards Charles”

reply from Cameron McKenna to PinsentMasons at 11.32 (doc 3244)

“Because this has been dragging on for so long, without any response from you on this subject since 1 August and despite the news from your clients Canadian counsel , Torys that it was expected last week (see my email to you on 14 august) and the absecnce of any news or disclosure since then, I am instructed to seek an order if we do not receive a satisfactory answer today. As it seems we must therefore give 10 days notice, I need to get this process underway.”

reply from PinsentMasons at 11.37

“Simon The reason I have not emailed you on the subject is because I do not have anything new to tell you. I have asked my client for an update and if I have any news for you before 5 pm I will of course let you know”

reply from CMS Cameron McKenna at 11.43

“Then if there is nothing more you can tell me by 5 pm which is reasonably satisfactory to us, I shall proceed to make the application, which will be for disclosure of whatever is the latest version of the document and disclosure of the final document, and when it emerges, within 3 working days of its delivery to the second respondent.”

reply from PinsentMasons at 11.47

“Noted. Regards Charles”

(B) CMS Cameron Mc Kenna letter to EMPLOYMENT TRIBUNAL (doc 3248 – 3250)

After setting out some of the above…..

“This morning we raised the matter again with PinsentMasons by email, giving them until 5 pm today to update us and notifying them, that failing a satisfactory answer, we would apply to the Tribunal for an appropriate order. I regret to inform the Tribunal that we have not received any substantive answer from Pinsent Masons on this matter at all today in response to our ultimatum.

Time is pressing in this case, with a 15-day hearing scheduled to begin at the end of October, and all parties seemingly agreed the report is to be disclosed. For the avoidance of doubt , lest the Respondents seek still to argue the report is not disclosable, it is the Claimant’s position that this report is disclosable under the terms of the original order for

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disclosure, as being a relevant document as set out variously in our counsel’s skeletons of 17 May 2007 and 4 June 2007 and that this was accepted by the Tribunal, at the latest at the CMD on 6 June 2007.

Accordingly, we submit that there is (continuing) prevarication here by the Respondents on a highly material disclosure obligation. Therefore we seek an order that the second Respondent disclose forthwith the latest version of the PWC report, along with and further letters of instruction, in their possession custody or control and if that is not the very “final” version, they disclose the very final version within 3 working days of its delivery. For the avoidance of doubt, the Claimant’s position is that the Audit Committee of the Board of directors of the Second Respondents, has no separate legal standing from the Second Respondent, of which it can be no more than a part of its governance and oversight, such that possession etc by the Committee is possession by the Second Respondent and that there is no reason for delaying or argument for not giving, disclosure accordingly.

Disclosure of whatever exists now appear necessary given the apparent prevarication in finalization of the report, which would frustrate the Overriding Objective , otherwise the parties will not be on an equal footing , as the Claimant will not know what changes if any are proposed to the draft final report though the Second Respondent may be fully aware orally; the case will not be dealt with proportionately as the report will (judging by the final draft which has been disclosed) help simplify the case and make findings which are highly material to key issues in the case; and for both sets of reasons , help to ensure the case is dealt with expeditiously and fairly and hopefully save expense through reducing the need for evidence and argument around the issues it covers (again we are guided by the final draft report on this) .

We are copying this letter to Pinsent Masons and will provide them in writing with the information required by regulation 11 94) of the 2004 regulations.

We hope that they will agree to submit to an order in these terms, but failing that we would be obliged if the Tribunal staff would liaise with us (and Pinsent Masons) about the date and time of a hearing as both sides have retained Leading counsel.”

(C ) Letter B was copied to Mr Rae at PinsentMasons ( doc 3251)

Within minutes at 17.04 (that is after the 5pm deadline) PinsentMasons wrote in their email (doc.3252)

“Simon . I expect to be in a position very shortly to give you an update on the PWC report. There are just a couple of points that need to be confirmed to me before I can do so. I expect to be able to give you specific information later today or tomorrow morning. With that in mind, I trust you will be prepared to grant a short extension to you stated 5 pm deadline. Regards Charles”

the following morning CMS Cameron Mc Kenna reply in an email (doc 3252)

“This did not get to me before I left last night and that was well after our deadline and the application has gone in. we will of course withdraw it if you deliver the report , but to be frank this is the sort of message we have had repeatedly with no actual bearing out in actuality later. “

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later that morning PinsentMasons replied

“Simon I have received the copy of your application to the Tribunal and I note your comment that it will only be withdrawn upon delivery of the report. You mention that my email was received by you well after your deadline, but please note that it was sent at 5.04 pm.”

24 August 2007 - Mr Rae in his letter dated 4 September 2007 stated

“ I understand that the PWC report was finalised on Friday 24 August 2007”

Document 3035 on 31 August 2007 confirms in an automated email reply that Mr Tracey the Engagement partner, was out of the office from 20 August 2007 – 4 September 2007

29 August 2007 CMS Cameron Mc Kenna to PinsentMasons email (3257)

“How is the PWC report copying coming along and will you give me a copy of your letter of your letter to the ET about it, so I can call off the application.”

and PinsentMasons reply later that day

“Simon I will be sending the PwC Report to you in tonight’s DX. You should therefore receive it tomorrow or Friday. I would be grateful if you could confirm receipt when you do. I will copy you in the fax that I send to Bristol ET.” - letter doc 3259

30 August 2007 CMS Cameron Mc Kenna letter to the EMPLOYMENT TRIBUNAL ( 3263)

“ PwC report

We confirm that we had been informed by Pinsent Masons that they are sending to us by DX on 29th August the final PWC report together with its Exhibits. Of course we have yet to receive this document and have not been advised of its date. We note however that the final draft report which was previously disclosed to us was dated 9th May and it would sem therefore to have taken nearly 3 months for the report to be “finalised”. And, in the intervening period since disclosure to us we have received either ourselves or by the Respondents’ Canadian counsel to our client’s Canadian counsel several updates that the report was about to be finalised only for us to then receive no report and yet more news that put off the date.

We expect therefore that it will not be necessary for us to proceed with the application we have made, but to the extent that there are significant differences between the final draft of 9th of May and this latest report we may require further disclosure to help understand these changes.

We will obviously give the report most careful scrutiny and we hope that the Respondents’ solicitors will do the same as it may be, as suggested in the preceding section, that the report could lead to significant simplification and/or narrowing of the issues for trial.

Of course it is also noteworthy that until CMD4, the Respondents resisted disclosure, claiming the report was not relevant.

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We ask the tribunal to note that our client was not given the opportunity of contributing his comments to PWC during the long drawn out finalization process and that he hopes that the report will have an expanded list of exhibits as well as more informed analysis in certain areas in both an accounting and business perspective.”

31 August 2007 My email to John Tracey at PwC (doc 3036) (Out Office reply 20 Aug – 4 Sept)

John - My legal team (in UK and Canada) have now been provided with a copy of the Final PwC report – August 2007. In turn they have passed to the rest of the professional team and myself last night.

…….

The final content /expected exhibits and delay in finalization of the report by some three months is somewhat surprising. Perhaps I may see you and Mr Dimma in due course as the hearing (s) move ever closer.

Kind regards

Brian

1 September 2007 My email to John Tracey at PwC (doc 3036)

“John – I have attached my summary of what I understand to be the detailed “comparison” differences between the PwC “independent investigation” report documents of 9 may 2007 and 20+ August 2007, as I understand from my lawyers yesterday that we have not been provided with any electronic means of comparison.

I would be grateful if you could confirm this is a correct representation in the work / report differences in the last three months, or alternatively provide some alternative basis to the Respondents lawyers / TORYS. I note that the two comments in my email to Mr Jewett to pass to PwC have not been recorded in the changes.

Our team will be using this as the basis of their final analysis of the investigation outcomes / case so a prompt response would be appreciated. Kind regards and many thanks in anticipation. Brian”

4 September 2007 PinsentMasons letter to the EMPLOYMENT TRIBUNAL (doc 3264B)

“(A) “Although in their letter dated 30 August 2007, the Claimant’s solicitors explained to the Tribunal that they were being (and have now been) provided with a copy of the final report of PwC into various financial and accounting matters concerning the |Respondents, we are concerned at some of the comments made in this letter and previous correspondence which in our view present a misleading picture to the Tribunal.

The Claimant has complained about prevarication by the Respondents in producing the PwC report. With respect, the Respondents could only produce the final report when it was available and whilst we acknowledge that the release of that final report has taken considerably longer than expected, it on initial analysis , very similar to the draft report which was produced to the Claimant about three months ago. Moreover, we have

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responded to queries raised as to the status of the final report after having made suitable enquiries of our client. They have therefore not been ignored and there has been no prevarication. There has simply been a delay in the final report being produced.”

(B) PinsentMasons letter to CMS Cameron McKenna (doc 3267) – 4 September 2007

“ 2.1 PWC has not provided our client with a list of differences between the final report and the 9 May draft, or indeed any other draft. I am not sure that it would be a simple task for our clients to ask PWC to list all the changes to the particular draft you refer to and I do not propose to ask them to do so.

2.2 I understand that the PWC report was finalised on Friday 24 August.

(C ) John Tracey (PwC) email to Brian Little at 14.31 – 4 September 2007

“Brian

Thankyou for your emails of 31 August 2007 and 1 September 2007. given that PwC’s final report has been submitted, I would prefer if you would direct any requests for further documents, meetings or other matters concerning the PwC report in the first instance to Magellan and its legal advisors.

Kind regards

John Tracey

(D) My Oral evidence in March 2009

Judge So PwC would’ve seen a request to make changes by those individuals and PwC, without forming their own view, acceded to those requests. That’s a pretty grave accusation to make against PwC…

Mr Lynch We can call them Mr Little But they are paid by you! Judge It is a pretty grave accusation. Mr Little I know and I don’t do this lightly Judge I’ve recorded that Mr Lynch Do we want to hear untested suggestions made? It is unfair to the Respondents. We say the

accusation is ungrounded. Judge We’re all experienced enough to make allowances and the stress and difficulties Mr Little

faces in what is an enormous case and he can be forgiven for muttering under his breath.

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11 September 2007 My email to Murray Edwards and Bill Dimma (doc 3038)

“Gents based on the Final PwC report dated 24 August 2007, provided to us last week, it would appear that CD2 – 17 April 2007, provided to Mr Dimma by me in early May 2007 was either not given , or certainly some of the documents/parts of the interviews have not informed the PwC analysis / conclusions.

In particular in section 8, despite the CS40 m+ NRC/inventory on the MAC Balance Sheet. the latest Exhibits do not even contain the Airbus production programmes (most recent internal document now 20 August 2007 for 2008 , 2009 and 2010 (speculative) , the Airbus O&D update post Paris / Boeing 777 orders or a proper analysis of either the Q4.206 EAC or indeed a Q2.2007 (6). All of this of course combined with no financial analysis / business judgment against my shopping list request 16 on 24 April 2007. As a result we are now updating all of this ourselves.

Based on the most recent Document listing updates received from PinsentMasons (August 2007) it is also clear that the CD2 copy provided to Mr Murray Edwards in late April 2007, for onwards transmission to PinsentMasons, has not been disclosed to PinsentMasons by the Respondents. It contains relevant materials/emails for both items. My UK lawyers are arranging to provide the CD2 to PinsentMasons directly now, as they have just recently requested same.

The forthcoming replacement of the C$70m of 8.5% convertible unsecured subordinated

debentures ( John Dekker / Rich Neill webcast comments in q4.2006 and Q2.2007) adds further impetus on these matters as I also sought professionally address,(particularly on August 8, 9,10 and September 14 2006) and outside of a public situation, the MAC Balance Sheet item through the appropriate MAC management and governance structures during the last 12/18 months”.

28 September 2007 PinsentMasons letter to CMS Cameron Mc Kenna - doc 3271

PWC Report

In regard to the document you sent us concerning the differences between the draft and final PWC report, I made our position on this clear in our previous letter. We do not consider the draft PWC report to be relevant nor that it will help the tribunal. We will not be commenting on your comparison document for this reason and we do not agree to its inclusion in the bundle.

Your explanation as to why the draft report is relevant is in our view unsatisfactory. Whether or not our client made an announcement based on what PWC had told it up to that point (both verbally and in various drafts) does not turn it into a relevant document. We disagree that it should be included, doing so will only serve to unnecessarily inflate the size of the bundle.”

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Oral evidence in March 2009 Mr Little “ Next doc is p3891, vol 10 it should contain a comparison of the draft/final PwC report.

Provided to the Respondents three times and PwC to confirm validity. Independent solicitors and Deloitte have verified the differences. Colour coded. Red is deleted between final draft and Bold Black is added during May and disclosure Aug 07…………….

<This includes the COMPLETE REMOVAL at page 3/7 of PwC para 2.40 “Financial control within MAC and MALUK in relation to the areas we have examined is poor and needs to be improved; this need is particularly acute given that MAC is a public company. Examples of poor financial control that we identified during our work include: (a) Accounting adjustments made with insufficient supporting analysis or documentation, (b) Inadequate understanding or documentation of balance sheet provisions and insufficient documentation of the decision to release certain provisions: (c) A lack of awareness of the program accounting requirements under either Canadian GAAP or UK GAAP. The accounting rules and guidelines are complex, and our impression is that the principles are not well understood throughout all of the finance community within the MAC Group; (d) Poor control over individual projects from an accounting perspective. Project sales volumes, revenues and costs are not reviewed with sufficient frequency or rigour.” >

4 October 2007 CMS Cameron McKenna to PinsentMasons (doc 3274)

“PWC report

We note your position on the document identifying the differences between the draft and final versions of the PWC Report that have been provided to us. We do not agree with it, but will let the matter rest there for the time being.

Whether or not you regard our explanation as to the relevance of the final draft PWC Report as unsatisfactory is itself irrelevant. We do not. The fact is that it is a document in the case and is material in our submission and we propose to include the executive summary in the trial bundle. We do not propose that the entire draft report should be in that bundle.”

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