Lotte Duty Free believes turning over the documents will reveal the company’s “secret sauce” to success.
Guam – A judge will ultimately decide whether a subpoena for Lotte Duty Free’s records should be granted to their competitor DFS. DFS is seeking certain documents to prove their allegation that Lotte consultant Tony Sgro was paid a success fee but Lotte says turning over those documents could end up revealing the “secret sauce” to the success of their business.
Lotte Duty Free calls the documents DFS is seeking “innocent” but private enough that their main competitor DFS should not be given unfettered access to them. DFS is seeking documents that pertain to a consulting agreement that DFS believes will prove that Lotte paid their consultant “under the table” and further agreed to pay him $5 million over the life of the contract as a success fee.
The issue stems from a lucrative concession contract at the Guam airport that was awarded to Lotte Duty Free through and RFP. The previous concessionaire and losing bidder, DFS protested the awarding of the contract on grounds that Airport officials and board members were bribed by Lotte during a trip to Korea.
In court last week, DFS and Lotte presented oral arguments on the matter. Lotte legal counsel Cesar Cabot accused DFS of publicly disclosing their documents “in not so innocent ways.” Cabot points to an email issued by DFS from 2013, just a few days after the contract was awarded to Lotte in which DFS calls for an investigation into how Lotte won and DFS lost, specifically to “understand all our legal options to change the outcome and postpone the handover moment” as well as to “define strategy for minimizing future success of Lotte in Guam.”
Furthermore, Cabot notes that the documents DFS seek have nothing to do with the contract since they are documents produced years after the fact.
But DFS legal counsel William Blair countered that the email Cabot refers to is nothing more than DFS wanting to learn where they went wrong and how they can improve in the future.
“What wrong with that?” he asked.
He also pointed out that the requested documents will naturally be “after the fact.” He said “Obviously you won’t get a success fee unless you succeed. You won the contract so, duh, it’s after the fact.”
Blair argued that DFS has the right to know whether Lotte paid a success fee to Tony Sgro or what the contract is for. He said, “$5 million over 10 years for doing what? We don’t know what he does. He’s not a duty free expert.”
In addition, he noted that they’re not after Lotte’s financial records or “secret sauce” since those documents are made available every month since it is a government contract. But in response Cabot pointed out that turning over those documents could reveal what new markets Lotte is trying to develop.
Judge Arthur Barcinas took the matter under advisement.