In a court filing provided to Business Insider, Al Jazeera America flatly denies fraud claims made in a lawsuit led by former Vice President Al Gore over the network’s $US500 million purchase of Current TV. Al Jazeera goes as far as calling Gore’s lawsuit a “sham.”
Gore and Joel Hyatt — both major shareholders in Current TV — claim Al Jazeera breached the terms of a contract to buy the network by withholding millions of dollars held in escrow related to the sale.
According to the Wall Street Journal, roughly $US85 million of the sale price was held in escrow. Gore and Hyatt claim Al Jazeera illicitly kept $US75 million of that money.
“Al Jazeera America wants to give itself a discount on the purchase price that was agreed to nearly two years ago,” Gore’s lawyer, David Boies, said in a statement last month. “We are asking the court to order Al Jazeera America to stop wrongfully withholding the escrow funds that belong to Current’s former shareholders.”
In its filing, Al Jazeera claims it has a “clear right” to the money under the contract because Current agreed to shoulder some of the costs Al Jazeera incurred by renegotiating with its distributors. Al Jazeera accuses Gore and others of mounting a “sham lawsuit, larded with vituperative and irrelevant accusations.”
Al Jazeera slams the suit as a “rambling, largely incomprehensible 143-page, 361-paragraph rant” which was “intended to grab headlines.” Al Jazeera says it came after legal threats amounting to “an attempted shakedown.”
In their lawsuit, Gore and Hyatt bring up Al Jazeera America’s “dismal ratings” and claim they had reservations about selling the apparently successful Current channel to the Qatari network.
Gore and Hyatt claim they ultimately relented because they had been convinced by unnamed former senior US officials that the acquisition could help deepen understandings between the US and the Arab World.
Al Jazeera, however, rejects that Gore and Hyatt had any serious reservations at all, claiming the pair were looking to “cash out” of a network “on the brink of failing.”
The network claims Gore and Hyatt were “desperately negotiating” to sell to Al Jazeera, were in a rush to avoid “millions of dollars in taxes,” and had “gloated to each other about the ‘windfall’ they were to receive from the sale.”
They say Current suffered from “rampant mismanagement” and “only got off the ground, and obtained distribution contracts, because of Gore’s political celebrity and clout.”
Al Jazeera estimates that Gore made between $US70 and $US100 million from the sale.
AP / Bebeto Matthews
Al Jazeera CEO Ehab Al Shihabi, mentioned as a negotiating partner in the document, is interviewed above Al Jazeera’s newsroom.
Al Jazeera further claims that Gore and Hyatt attempted to cut an exclusive side deal for themselves, under which they would be paid “millions of dollars” for serving on a specially created advisory board.
The network says, “It was not clear that either Gore or Hyatt would actually perform any services” under the deal.
Al Jazeera claims it repeatedly raised questions on the legality of such a deal, and on numerous occasions “informed Gore, Hyatt and their lawyers that it was extremely uncomfortable with this proposal because it smacked of self-dealing.”
“Gore and Hyatt’s proposed side deal would necessarily mean that some of the purchase price would be diverted from other members to Gore and Hyatt,” the network states.
Al Jazeera says it declined to make such a deal. However, representatives of Hyatt and Gore told us, “it was Al Jazeera that proposed the side deal described in its court filing, which Gore and Hyatt rejected.”
“After trying to block our clients’ request that their entire complaint be made public, Al Jazeera has now responded by making false claims to defend its behaviour. We are confident that we will prevail when the court hears our case,” Gore’s lawyer, David Boies, told us in a statement.
Gore’s original claim revolves around a contract under which Current owners agreed to pay part of the costs that Al Jazeera would encounter in potential re-negotiations with its distributors.
Current claims the costs were far higher than Al Jazeera led them to believe, saying the network made “financially disastrous” business decisions and was trying to make the Current owners foot the bill — a claim Al Jazeera flatly denies.
Al Jazeera says distributors began to challenge their contracts after they took over, with the companies citing inconsistencies in the distribution deals. Al Jazeera claims Current assured them this wouldn’t happen, and had backed it up by placing funds in escrow for the purpose of any necessary re-negotiations.
Al Jazeera says it made the necessary changes in accordance with the contract, and was thus eligible to draw on the funds in escrow.
In their filing, Al Jazeera claims both parties knew the only reason it was interested in Current was for the distribution deals, and that is why the company made sure the deals were protected under a contract. Al Jazeera says the claims it defrauded Current owners are “entirely without merit” and that inconsistencies in the contracts negotiated by Current were the reason for the added costs.
A spokesperson for Hyatt and Gore said, “News is about trust, and their filing, which we can demonstrably prove is built on factual misrepresentations and contains outright falsehoods, will further degrade whatever levels of trust Qatar’s Al Jazeera has as a respectable news organisation in the US.”
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