HP to appeal over potentially massive BSkyB ruling
Judge delivers verdict in '£700m' contract case
Posted in Management, 26th January 2010 17:49 GMT
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BSkyB has claimed victory in its long-running contract dispute with EDS, the services giant now owned by HP.
A ruling was delivered to the firms today, and it is believed that the ruling accepts one of BSkyB's five claims, while rejecting the other four.
However, British TV firm BSkyB sees this as a vindication of its claims, and the company reportedly expects to receive in excess of £200m when damages are assessed at a hearing next month.
HP has said it intends to appeal the ruling.
The firms fell out over the customer management system deal, inked in 2000, which was meant to cost the broadcaster £48m. The installation eventually took six years to complete and cost £265m. BSkyB and EDS parted company in 2002.
BSkyB had claimed EDS had secured the deal fraudulently - specifically on the issue of liabilities - and failed to deliver on its promises. It originally claimed £700m from EDS, which was taken over by HP in the first half of the 2000s.
HP argued during the trial that the contract had always been problematic and broadcaster had constantly changed the specs on the deal. It also argued that with tens of people working on the bid, it was inconceivable that any individual could have fraudulently influenced the deal.
HP said in a statement: “This is a legacy issue, dating back to the EDS business in 2000, which HP inherited when it acquired EDS in 2008. We are pleased the Court dismissed the majority of the allegations made. While we accept that the contract was problematic, HP strongly maintains EDS did nothing to deceive BSkyB. HP will be seeking permission to appeal.
"As the world’s largest technology company, HP has built a solid reputation based on strong governance and adherence to the highest ethical standards.”
BSkyB said: "Mr Justice Ramsey found that EDS had lied to Sky in order to secure a contract as part of the company’s investment in a new customer relationship management system.
It added: "Sky anticipates that EDS will be liable to pay Sky an amount of at least £200m."
The case is thought to be the most expensive in British legal history. Hearings ended in 2008. The judgement runs to more than 500 pages, and is expected to be released tomorrow.®
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COMMENTS
But EDS had such a "great management team".
From the judge's transcript:
Joe Galloway, former managing director of EDS's CRM practice, who was closely involved in EDS's bid to supply a CRM system to BSkyB, claimed in evidence that he held an MBA from Concordia College, St Johns (1995-1996).
But the degree was not genuine and was not obtained by study in 1995 to 1996, Sir Vivian Ramsey says in a judgment issued last night.
As soon as EDS discovered Joe Galloway lied in court it dismissed him, the judgment reveals.
One of BSkyB's QCs, Mark Howard, obtained a degree for his dog Lulu to prove the point that degrees from Condordia College could be gained with ease.
"Without any difficulty the dog was able to obtain a degree certificate and transcripts which were in identical form to those later produced by Joe Galloway but with marks which, in fact, were better than those given to him," the judgment says.
and later on:
"In my judgment, Joe Galloway's credibility was completely destroyed by his perjured evidence over a prolonged period.
"It is simply not possible to distinguish between evidence which he gave on this aspect and on other aspects of the case.
"My general approach to his evidence has therefore to be that I cannot rely on the truth of his evidence unless it is supported by other evidence or there is some other reason to accept it, such as it being inherently liable to be true.
"Having observed him over the period he gave his evidence and heard his answers to questions put in cross-examination and by me, which have been shown to be dishonest, I also consider that this reflects upon his propensity to be dishonest whenever he sees it in his interest, in his business dealings.
"Whilst, of course, this does not prove that Joe Galloway made dishonest representations, it is a significant factor which I have to take into account in assessing whether he was dishonest in his dealings with Sky."
I can just imagine that HP were delighted to find all this out, after they'd bought EDS. I wonder who negotiated the, now, infamous US Navy deal?
Now if only..
Some British local and national governmental departments were so eager to take on suppliers.
Pedant II
Actually "the first half of the 2000s" can be interpreted in many ways. I would consider any year up to 2449 to be in the first half of the 2000s, the 2000s as far as I can see would refer to the entire millenium.
Anyhoo why do people get into these contractual problems with suppliers? If I want my central heating system fixing then I ask for a quote to get it working properly again. If the supplier comes back with a simple itemised quote of parts and labour the I'm not interested, unless it clearly states that it is to fix a specific problem - for example "To: Rectifying low pressure in central heating system." Otherwise if the quoted work did not fix the problem I could end up getting charged for further work. Likewise why do these companies not write up a good solid spec and get the supplier to quote for a system to meet that document? Probably because they don't know what they want in the first place.
On the payroll
Interestingly enough Mark Hurd, HP's CEO, also finds time to serve on Murdoch's Board in the US. He does this because running HP isn't a full time job. Well it won't be by the time he's decimated the workforce completely anyway.
Knowing him he'll get the fine back in travel expenses and meal allowances.
Go ? Well it's a subliminal mesage to Marky boy innit?
<Chuckles>
Well, I suppose I shouldn't be laughing. I'd like to believe that some actuary or legal beagle at hp knew about this pre-purchase, did the research and assessed the risk, and then the management took it all into consideration, set aside a contingency fund, and then went ahead with the purchase. Then again, there might be some actuary or legal beagle currently being kicked around Amen Corner by a not-so-chuffed manager! I wonder what the legal bills are on top of the payout, and how high those legal costs could go in an appeal?
It's amazing what companies do miss during takeovers. A company I worked for bought a company in India and assumed they could move into their New Dehli building as a new Asian HQ. Unfortunately, no-one did their homework, and it turned out the building had not been built with the right paperwork and was scheduled for demolition. Our VIP for Asia turned up for his grand opening about ten minutes before the bulldozers arrived!
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