Lotus leakage

Supremo bloggo-journo Datuk Rocky scooped this story about then Lotus Ltd CEO Danny Bahar’s leadership where Lotus had some monies missing. That was three months ago. It was during the weeks before ownership of Proton changed hands.

A few days ago, BBC reported that Bahar has been suspended.

29 May 2012 Last updated at 23:01 GMT

Lotus in limbo after chief executive Dany Bahar’s suspension

Jorn Madslien

By Jorn MadslienBusiness reporter, BBC News, Hethel, Norfolk

Lotus models in the factory
Production levels have not been affected by the uncertainty about Lotus’ long-term future

Signs of prosperity and progress are everywhere at the Lotus headquarters in Hethel.

The sportscar maker’s test track has just been spruced up, ready to receive a string of new models scheduled by chief executive Dany Bahar to be launched over the next few years.

In the factory alongside the track, workers who are used to building an array of Smarties-coloured cars by hand are preparing to make the transition to a partially automated production line.

An extension of the carmaker’s factory is being erected to make room for production to double to about 6,000 per year by 2015, creating some 1,000 jobs in the process.

However, the initial impression of healthy growth is deceptive, belying the chaos behind the scene.

Lotus factory
Lotus is extending its factory to make space for a sharp increase in output

Persistent fears

The sportscar maker and engineering group’s difficulties came to a head over the weekend, with the shock announcement that Mr Bahar had been suspended pending the outcome of a two-week investigation into “his conduct”.

As yet, no one has said why the former Ferrari and Red Bull executive has been forced to step aside, nor indeed has it been made clear whether or not he is expected to return.

Dany Bahar
Dany Bahar’s suspension means no one can say what will happen next at Lotus

But the plight of the group’s chief is perhaps not at the forefront of the minds of Lotus’ 1,200-strong workforce, who worry a great deal more about the conduct of DRB-Hicom Berhad.

Ever since January, when the Malaysian holding company acquired a controlling stake in Lotus’ parent company Proton, repeated assurances have failed to alleviate their concerns.

The persistent worry is that DRB-Hicom might see the consistently loss-making UK subsidiary as a non-core Proton asset that could simply be hived off.

Many here have been jolted by waves of rumours that DRB-Hicom is considering a string of options that could include anything from filing for administration, to shifting production out of the UK, to an outright sale.

The uncertainty has been broadly dismissed by DRB-Hicom, yet the government has responded by putting plans for £10.4m of funding on hold until a clearer picture emerges.

Concerned Malaysian financiers, which have lent some £270m to Lotus in exchange for guarantees from Proton, have also responded by imposing restrictions, according to press reports there.

Credible rival?

In Hethel, the workers’ concerns are matched only by their pride in the cars they produce; cars such as the supercharged Exige S, the fastest accelerating production car yet to leave the factory.

The Exige S could be seen as a potent symbol of all that is right, as well as of all that is wrong, with Lotus.

Jorn Madslien drives the Lotus Exige S
The Exige S is well equipped for a Lotus, though it appears primitive when compared with upmarket models from Ferrari or Porsche

Taking it for a spin on the track, the car’s pedigree becomes evident. It is an outstanding specimen of Lotus engineering, delivering performance that has earned it favourable comparisons with the almost twice-as-expensive Porsche GT3.

Out on the open road, meanwhile, the Exige S comes across as extraordinarily well kitted-out, at least by Lotus standards, coming as it does complete with airbags, orthopaedic seats and a switch that activates the touring mode.

There are even patches of superfluous suede leather in the centre of the doors.

But compare it to the considerably more expensive and sophisticated rivals that have long been on Mr Bahar’s radar, and the Exige S comes across as terribly crude.

And as such, it does little to vindicate Mr Bahar’s ambitious vision of transforming Lotus from a niche player into an upmarket sportscar company.

Committed workforce

On the factory floor, production continues uninterrupted in spite of the turbulent rumour mill.

Skilled workers are painstakingly bonding together lightweight glass fibre panels, making complete car bodies that are bolted onto lightweight aluminium and composite chassis.

John Vigar, manager in charge of continuous improvement, development and training, Lotus Cars
Lotus workers are incredibly loyal and highly skilled, insists Mr Vigar

The company’s owners, meanwhile, have been eager to mollify all those concerned.

DRB-Hicom has put four of its own people in charge of the day-to-day business, and Proton’s executive chairman Sri Haji Muhammad Khamil Jamil has reiterated that Lotus is not being sold “despite recent media reports based purely on speculation and rumours”.

“Lotus is an iconic brand with global presence and positioning, coupled with unsurpassed engineering expertise and a talented workforce,” he says.

Not much more can be said until the outcome of the operations and legal audit has been concluded and Mr Bahar’s future has been determined.

But whatever its owners and executives end up doing, there is no doubting the commitment of its staff, according to John Vigar, manager in charge of continuous improvement, development and training.

“They are, I think, the cream of the workforce in Norfolk,” he says.

“If you cut the wrist of a Lotus employee, you get yellow and green blood.”


He was said to have not delivered what he had promised when the Proton BOD hired him a few years ago.

Then there is this report about Bahar The Big Spender. Now, the story on Bahar is about the ostentatious lifestyle:

The high-living Lotus boss and a row over £1m flying expenses

PUBLISHED: 20:11 GMT, 2 June 2012 | UPDATED: 20:11 GMT, 2 June 2012

There could hardly be a greater clash of cultures. Straight-laced Malaysian executives from one of the country’s leading manufacturing conglomerates, and Dany Bahar, the millionaire boss of British sports and racing cars group Lotus – a man with film star looks and a lifestyle to match.

Malaysian group DRB-Hicom bought Lotus earlier this year but chief executive Bahar was suspended two weeks ago amid allegations of irregularities with his expenses and other misuses of company money.

Financial Mail has established that the accusations centre on hundreds of thousands of pounds spent refurbishing his rented home, and more than £1million on private aircraft, including jets and helicopters to fly Bahar to Formula 1 races and other events around the world.

Friends: Dany Bahar, left, with singer Alicia Keys and her husband, rapper Swizz Beatz, who was given a job with Lotus

Friends: Dany Bahar, left, with singer Alicia Keys and her husband, rapper Swizz Beatz, who was given a job with Lotus

Bahar does not contest any of this, but according to friends he insists the spending was all part of his employment contract and entirely appropriate for the boss of a luxury car brand involved in Formula 1.

What appears to have infuriated DRB is that while Bahar enjoyed the lifestyle of successful luxury products company boss, Norfolk-based Lotus lost more than £1million in 2011 and has debts of £200 million.

Bahar, 41, who was born in Turkey but is now a Swiss citizen, was paid £1.2million for his job and mixed with stars such as singer Alicia Keys and her husband, New York rapper Swizz Beatz.

Bahar appointed Beatz as Lotus’s vice-president of creative design and global marketing.

A month after the Malaysians bought Lotus, they began investigating the running of the company and how it was performing. It was this examination by accountancy giant Ernst & Young and a team from financial adviser Rothschild Group that resulted in Bahar’s suspension on May 25 while an investigation was launched into a complaint about his conduct.

Refurbished: Dany Bahar's rented home

Refurbished: Dany Bahar’s rented home

The company and Bahar have refused to comment on the affair, or even to go into the reasons for the suspension of Bahar, who was appointed to the role only in October 2009 having been recruited from Ferrari by previous owner Proton, another Malaysian company.

But Financial Mail understands that the accusations concern Bahar’s alleged extravagant use of company money and an interpretation of his contract, which was drawn up with Proton.

According to industry sources, the charges relate to the contract itself as well as expenditure on a rented home in Norfolk, company spending beyond agreed limits and using company money to travel excessively by helicopter and business jets, something said to have astonished the new owners.

But Bahar’s friends insist that all expenditure was specifically written into his contract. They also say he had permission to use helicopters and jets because this was the way that business was done in the supercharged world of Formula 1.

It was part of his job to represent Lotus all over the world where the cars were racing and where its engines were being used.

It is also claimed by his friends that Bahar had permission in his contract to approve expenditure up to £5 million and to do up his rented house for about £35,000.

Bahar’s friends insist the issue of his home is typical of the way he is being smeared. ‘When he was headhunted by Lotus, they agreed to rent him a small house until he found a more suitable home,’ said one.

‘He did find a house and a deal was reached with the landlord that for no rent for a while the home would be refurbished. The bill for this work, which was around £35,0000, was paid for initially by Lotus, but the key thing is, he is paying the company back through his monthly pay packet on a regular basis.’

There should have been no surprise when he was appointed that he was a man who lived a glamorous lifestyle.

But his private life remains just that. Very private. He married Anne Johansson, daughter of a leading Swiss headhunter, and they have two children.

Bahar was born in Istanbul, where his mother was a cleaner and his father an electrician. When he was a child, the family moved to Switzerland. The beginnings of his career are shrouded in mystery but he became a senior executive at Red Bull, the Austrian drinks company with a racing team and large sporting interests.

From there it was off to Ferrari, where he was headhunted by Proton to rescue Lotus, where he set about taking on Porsche and Ferrari.

He was happy to tell newspapers about his style preferences. ‘I am a watch lover and I chose the ones that speak to me. This Rolex is the GMT-Master and I have had it for a year. I prefer the classic styles of timepiece for the office and sportier ones for going out.’

Bahar’s solution for Lotus was a £200million revamp to introduce four new models. According to some company sources, it is this project that is not going well – hence the challenge to Bahar’s spending by the owners.

But some in Bahar’s camp believe that the Malaysians want to sell Lotus to the Chinese, something strongly denied by DRB, which insists that it backs Lotus in Britain.

For the time being, Lotus, one of Britain’s most famous brands, is without a chief executive and the road ahead look far from smooth.


House renovation of GBP 5 million is definitely a lot of money. Especially for a salaried executive.

The shareholders and stakeholders should lodge reports with the authorities about Bahar’s watch of the missing millions.  A thorough audit is necessary, to determine whether there was any irregularities and if the was any, who is responsible. According to the story, Bahar was free to sign of a lot of expenditures.

The new shareholders should also ask questions who hired Bahar and agreed to pay him the GBP 1.2 million salary and the deliverables that should have come with it.

Published in: on June 3, 2012 at 20:33  Comments (7)