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Attorney

Work Product -- BSL/BSI Legal Team Lisbon, 3 September 2010


Revised 6 September 2010

CONFIDENTIAL INTERNAL MINUTES OF THE


LISBON MEETINGS ON 1 & 2 SEPTEMBER 2010
BETWEEN REPRESENTATIVES OF BSL/BSI and ARMSCOR
AT THE MIRANDA LAW FIRM

Introduction

The idea of a face to face meeting between representatives of Plaintiffs, BSL/BSI, and Defendant,
ARMSCOR, grew out of the discussions following an initial call from Adv. Mike Maritz, SC on
behalf of Armscor in early March 2010. Mr Maritz suggested the possibility of transferring the
proceeding between the Parties from the Lisbon Civil Court to an arbitral proceeding in South
Africa. Subsequent phone discussions and correspondence between Wim Cilliers of the Gildenhuys
Law Firm in Pretoria and Dr. David Lawson, of Bonnard Lawson in Geneva continued through
April 2010, in which a number of topics were raised, leading to a proposed meeting in Lisbon in late
May 2010. That meeting was postponed by Mr Cilliers when he indicated his instructions to attend
had been withdrawn; after some delay, the meeting was rescheduled for late August, and then for 1-
2 September 2010, to start at 14h30 on 1 September 2010 at the Miranda Law Firm.

An Agenda for the Lisbon meeting was proposed by Dr. Lawson and after discussed was agreed, as
attached to this Note. In the correspondence prior to the meeting each side indicated the persons it
designated to attend, as follows:

for ARMSCOR: Mr William Cilliers, Gildenhuys, Pretoria


Mr Jos da Silva, Gildenhuys, Pretoria
Mr Willem Roberts, Armscor Legal Department
Mr Meshack Phuti Teffo, Armscor Legal Department
Av Joaquim Sherman de Macedo, RPA, Lisbon
Av. Nuno Pena, RPA Lisbon

for BSL/BSI: Dr David Lawson, Bonnard Lawson, Geneva


Me Pierre Fruhling, FFW, Brussels
Av Nuno Gouveia, Miranda Law Firm, Lisbon
Av. Rui Andrade, Miranda Law Firm, Lisbon
Mr William Humphreys, BSL/BSI representative, London
Ms. Liesl Gottert, BSL/BSI consultant, Cape Town

Prior to the start of the meeting, Mr Cilliers informed Dr. Lawson that ARMSCOR would not
accept the attendance at the Lisbon meeting of Ms Gottert, based on instructions received from the
Chairman of ARMSCOR. Dr. Lawson proposed a pre-meeting to discuss that objection, which
was held at the Miranda offices between himself and Mr Humphreys with Mr Cilliers and Mr da
Silva. During that meeting the BSL/BSI representatives, faced with a unyielding position, accepted
to proceed for discussion of the procedural issues requested by Armscor, without Ms Gottert in
attendance, albeit with objection by Dr. Lawson and Mr Humphreys.

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Attorney Work Product -- BSL/BSI Legal Team Lisbon, 3 September 2010
Revised 6 September 2010

Day 1 Wednesday, 1 September 2010

14h00 - The Pre-meeting

Dr Lawson expressed the concern and disappointment of BSL/BSI and his own disappointment
that Armscor would seek to prevent a duly appointed representative from attending the Lisbon
meeting. He confirmed that Ms Gotterts sole role was to assist the BSL/BSI team understand what
was being said by the South African representatives of Armscor and that she would be fully bound
by the agreed protocol of the meeting. Mr Cilliers stated that his teams instructions were strict and
he could not proceed contrary to them. Mr Humphreys explained the reasons for which Ms Gottert
had been asked to attend the meeting, and noted that prior to accepting to do so, she had sought
and received the agreement of the RSA President for whom she also acts. Mr Humphreys also
explained the larger context in which the investors in BSL/BSI, were working with Ms Gottert for
the benefit of the RSA State, and that it was also in that context that she had been requested to assist
in finding a solution to the BSL/BSI case against Armscor in the Lisbon Civil Court, and why she
had been asked to attend the Lisbon meeting to that end.

Following a lengthy discussion, and given the strict position maintained by Mr Cilliers and Mr da
Silva, Dr Lawson and Mr Humphreys agreed to start the Lisbon meeting on the technical issues
relating to the procedure in the Lisbon Court without Ms Gottert present, on the understanding that
the issue of her attending would be revisited, following this initial session. It was hoped that a good
result in the first day of meeting, might permit Armscor to change its instructions in respect to the
attendance of Ms Gottert for the further discussions envisaged.

15h45 The Meeting

Dr Lawson opened the meeting summarizing the result of the Pre-meeting, and expressing his
disappointment that the meeting could not start as planned, and that the problem with one of
BSL/BSIs representatives had arisen and that the meeting could not proceed unless BSL/BSI
agreed to her exclusion. In order not to lose the opportunity presented by having the Parties
representatives, having traveled so far, BSL/BSI had agreed to start the Lisbon meeting to discuss
the Lisbon procedural issue and arbitration proposal without its South African representative being
present.

Dr Lawson and Mr Cilliers both confirmed, on behalf of their respective teams, the agreed terms of
protocol for the Lisbon meetings, including that everything said in the meetings was fully without
prejudice to each Partys position in the Lisbon Court proceedings, that the meetings were
confidential and would not be recorded, and that no public statement would be made relating to
them.

Mr da Silva suggested a change in the Agenda which had been distributed by Dr. Lawson and as
discussed at the Pre-meeting, to include a discussion of the Arresto de Creditos which had been issued
by a Portuguese Court and served on Armscor by a third party in respect to the claimed debt from
Armscor to BSL/BSI.
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Attorney Work Product -- BSL/BSI Legal Team Lisbon, 3 September 2010
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Mr Humphreys indicated that BSL/BSI were not interested in discussing the Arresto matter, as had
not been mentioned or agreed in the Pre-meeting and since there was nothing for BSL/BSI to
discuss with Armscor about this issue. Dr Lawson stated that BSL/BSI considered the application
to be totally unfounded and wrongfully pursued by the applicant with serious irregularities involving
a number of parties. He also stated that BSL/BSI would be taking all appropriate steps to protect
its interest and those of the BLS/BSI Investors. Mr Humphreys did not agree to have any
discussion on that issue.

Av. Shearman de Macedo then addressed Armcors application (under Art 155, CPC), filed just over
a week ago, (a) to postpone the preliminary hearing before the Lisbon Civil Court scheduled for 28
October 2010 until sometime after 22 November 2010, and (b) to set the hearing for two
consecutive days in order to be sure that all of the factual and legal issues arising could be
considered at the hearing. Av Andrade noted that BSL/BSI had serious concerns about this
postponement and about the suggestion that two days would be required, which concerns were
explained by Mr Humphreys. Following the discussion, Mr Humphreys stated that BSL/BSI were
not at all convinced that any postponement was necessary or appropriate, or that more than one day,
which the Judge had considered adequate, would be required. BSL/BSI requested its Lisbon
counsel to make their position known to the judge in opposition to the requested postponement,
but would of course abide by the decision of the Judge. Av Pena accepted it is a partys right to
oppose such an application.

Mr Cilliers then presented the general principles which Armscor wished to put forward as to the
substitution of an arbitral proceeding for the pending Lisbon Civil Court proceeding, noting that
such a proceeding could be completed in a shorter period and in a language and with rules of
procedure agreed between the parties and their legal counsel. Mr Humphreys observed that
BSL/BSI had already considered this suggestion, had completely ruled out the idea of the all South
African arbitration originally suggested, but was willing to consider whatever Mr Cilliers would say
about it, indicating that it would be an uphill battle to find something acceptable to BSL/BSI. Mr
Lawson observed that Armscors original suggestion to go to arbitration in lieu of the Lisbon Court
proceeding, including Armscor waiving all of its technical exceptions raised before the Lisbon Civil
Court which he agreed would simplify the determination of the BSL/BSI claims.

Mr Cilliers then listed four principles which would have to be agreed by BSL/BSI in the Agreement
to Arbitrate for such an arbitration to be accepted by Armscor. In summary, these included:
(a) it will not be a documents-only arbitration, as witness testimony is required;
(b) the forum will be in an internationally accepted place, such as the LCIA;
(c) testimony of witnesses located in South Africa can be taken in that country by one means
or another; and
(d) the exceptions on jurisdiction and sovereign immunity would be dropped (by means of
entering into the Agreement to Arbitrate), but the other Armscor exceptions filed in the
Lisbon proceedings, including as to the applicable law, would be maintained in the Arbitral
proceedings.

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Attorney Work Product -- BSL/BSI Legal Team Lisbon, 3 September 2010
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In response to a question from Dr. Lawson, Mr Cilliers added that the normal rules on
appointment of arbitrators and on payment of advances on costs could be accepted by Armscor, but
that Armscor would seek to assure security for its costs in the arbitral proceeding.

Following a caucus of the BSL/BSI representatives, Dr. Lawson stated that while BSL/BSI were not
now saying no to the arbitration alternative, his team members were highly disappointed in the
proposal made by Mr Cilliers and it did not seem possible to consider arbitration under such
principles which had been set forth. For the sake of clarity, Mr. Humphreys made it clear at that
point that he had heard nothing on the arbitration ideas of Armscor which moved him from a
position of outright rejection thereto nor was he willing to consider the involvement of a mediator.

It was agreed that the first day of the Lisbon meeting would be adjourned, having made no progress
on any of the issues agreed. Dr. Lawson suggested that the second day should start with a review of
Armscors legal exception of illegality, insofar as BSL/BSIs aviation legal expert, Me Fruhling, had
travelled to Lisbon for the purpose of presenting the matter to the Armscor representatives. He
added that, subject to an agreement as to the presence of Ms Gottert, BSL/BSI would plan to
present its ideas on the concept of a global settlement of the litigated matter also in the next session
of the Lisbon meeting.

Dr Lawson informed Mr Cilliers that he would take instructions on whether or not BSL/BSI would
be willing to proceed on the basis of the continued exclusion of Ms Gottert, now that the technical
procedural issues had been discussed. If necessary, he would send a text message to Mr Cilliers on
that subject prior to the meeting

The first days meeting ended at about 19h00. It was agreed to meet at 10am the following day at
the same venue.

Day 2 Thursday, 2 September 2010

10h30 Pre-meeting Discussion

The Armscor team arrived late, with apology.

Prior to the start of the 2nd days meeting, Dr. Lawson requested Mr Cilliers and Mr de Silva to step
out of the meeting room for a private meeting with him and Ms Gottert, so that she could inform
them personally of her overnight discussions with the RSA President. The short separate meeting
amongst these four persons was held in a separate room at the Miranda Law Firm. Ms Gottert
requested Mr Cilliers to confirm to her personally that she was not welcome to attend the continued
Lisbon meeting amongst the Parties representatives. She confirmed to the him and Mr da Silva that
she had spoken to the RSA President who asked her to attend any part of the Lisbon meeting at
which settlement of the Lisbon Court matter would be discussed. Mr Cilliers stated to Ms Gottert
that the instructions he and Mr da Silva had received from their principals had not changed and that
they could not accept that she attend any part of the Lisbon meeting. Ms Gottert replied that she
regretted that position being taken, which she would have to report it back to the RSA President.

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Attorney Work Product -- BSL/BSI Legal Team Lisbon, 3 September 2010
Revised 6 September 2010

She said that under such circumstances she would not attend the Lisbon meeting, although she
believed it would be in everyones interest if she would do so as she had been requested and agreed
to do, at the direction of the RSA President.

10h45 - The 2nd days Meeting -- first session

The meeting opened with Dr. Lawson noting the disappointment of BSL/BSI and its team that Ms
Gottert was still being excluded from the meeting. He asked Mr Cilliers to confirm that the
protocol for the meeting agreed on 1 September would apply also to the continued meeting, which
Mr Cilliers accepted.

Mr Humphreys noted that overnight the BSL/BSI representatives had discussed the matter of the
approach to the pending litigation, and requested Av Andrade to explain the results of those
discussions, which BSL/BSI hoped could become a useful basis on which the parties could address
resolving the current dispute before the Lisbon court.

Av Andrade observed that he has only recently become involved on BSL/BSIs behalf in this
matter. From his initial review of the file, it is clear that the resolution of the dispute currently
before the Lisbon court could be based on either cooperation or on continued confrontation.

In considering these alternatives it was very important to realize that the real dispute was not
between BSL/BSI and Armscor but rather with the financial institutions who had caused BSL/BSI
to lose its commission payment, and who at the same time had caused substantial harm to others,
including in the end the South African state and even Armscor itself. The aim should be to recover
the losses incurred from the true bad actors, the banks that assisted in these diversions of funds,
including the funds due to BSL/BSI.

The reason that BSL/BSI are in court against Armscor in Lisbon is because, at least so far, Armscor
has been unwilling to consider cooperating with BSL/BSI in this recovery. In such a case BSL/BSI
has no choice but to bring its claims formally against Armscor in a jurisdiction where it has a chance
to succeed. That was certainly not the case in the prior actions.

Now that the current case is filed, as he sees it, Armscor has two clear options. The first is to find a
way to cooperate with BSL/BSI to seek recovery from those truly responsible, recognizing that the
current Armscor management and owners are not at all the same as those who participated with the
responsible financial institutions to cause the harm. The second is to continue to do battle with
BSL/BSI and its advisors and experts, in which case it is certainly possible that Armscor will have a
serious bill to pay at the end of the proceedings. In addition, by continuing to support the old
managements position and style, Armscor risks having a serious reputational price to pay by
continuing to oppose BSL/BSI. [In this respect, the article in Noseweek, relating to the SARBs
continued misconduct started in the Apartheid era was mentioned by Mr Humphreys]

Av Andrade stressed that what is really in dispute is not the small commercial matter between
BSL/BSI and Armscor as to the unpaid commission, but the very important dispute with the
financial institutions, in particular those involved with the BSL/BSI matter, who were involved in
the diversion of millions of dollars (and more) not only from BSL/BSI, whose account was opened

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Attorney Work Product -- BSL/BSI Legal Team Lisbon, 3 September 2010
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at KBL to receive the commission never paid, but also from the South African state itself. This
money went in many directions, some of which included corrupt former Armscor executives, which
the current management should not want to be seen to be protecting.

In short, Av Andrade suggested that Armscor should carefully consider participating in the proper
fight, not in the smaller and less important commercial dispute with BSL/BSI.

Mr Humphreys thanked Av Andrade for his observations, stating that BSL/BSI were fully in
agreement with them. He noted that while Armscor today is the same legal entity as the Armscor
which did not respect its obligation to BSL/BSI, doing the bidding of a corrupt South African
government of the time, and against the interests of the South African State and its people, the new
management of Armscor should recognized it does not have to follow in the same wrongful
manner.

Moreover, the BSL/BSI claim against Armscor pales in comparison with the real claims which arise
out of this disreputable conduct of the prior management and its governmental leaders. In
particular the Khulamani claims in the U.S. court and the South African Sta-te reparation claims,
which can be assisted by a cooperation between Armscor and those advising BSL/BSI, involved
hundreds of billions of dollars which could benefit the South African State and its people
dramatically. The misdeeds of the former Armscor management, such as those disclosed about P.C.
Smith in the Cameron report, have been well documented. Even former Foreign Minister Botha,
came to the conclusion that for the good of South African the BSL/BSI claim should be recognized
and settled by Armscor, as was confirmed by the South African ambassador to Lisbon after his
separate enquiry into the matter.

Accepting Av Andrades premise that cooperation in resolution of the pending Lisbon dispute
between BSL/BSI and Armscor could come to the aid of South African, Mr Humphreys explained
briefly the manner in which the failure to disclose potential liabilities of KBL in the wider claims
mentioned above, could result in a substantial modification to the terms of the planned sale of that
bank following the EU Competition Commissions ruling on State Aid to the KBC Group and
thereby to a substantial payment to South Africa. In this regard the position of the HINDUJA
GROUP and dialogue with them was described so that the ARMSCOR team would clearly
understand the linkage thereto.

In summary, Mr Humphreys stated his hope, that Armscors management could see the advantages
of cooperating with BSL/BSI and its advisors to put the current dispute behind us, so that the
information, knowledge, archives and standing of Armscor could be used to positive purposes for
the benefit of the companys owner, the State; and not wasted for years to come on a potentially
unsuccessful attempt to win the pending Lisbon proceedings brought by BSL/BSI for loss of its
commission.

Mr Humphreys then introduced Me Pierre Fruhling, recalling the expertise in aviation and aviation
law previously explained by Dr. Lawson, to discuss the BSL/BSI position as to nullity of the
commission contract, one of the main exceptions raised by Armscor in the Lisbon proceedings.

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Me Fruhling explained the scope of the study he had conducted for BSL in the context of the
Brussels proceeding in 2009 confirming the conclusion that the Oryx helicopters, delivered to
Armscor in Project Adenia, did not fall under the prohibitions arising from the U.N. Embargo
against South Africa in effect from 1977 to 1994, as well as the further study recently undertaken
and still being completed on the various categories of helicopters, which clearly confirms the
conclusions reached in the initial study. He noted that a copy of each of these studies, in the French
language, had been sent to Mr Cilliers by Dr. Lawson, on a without prejudice basis, for the purposes
of the present meeting and discussion.

Following the general outline of the first study, Me Fruhling explained the prohibits arising under
the subject U.N. Resolutions starting with Resolution No. 418 in 1997 and continuing with
Resolutions 558 and 591 in 1984 and 1986, as well as the definition of the term attack helicopters
as established by the U.N. Secretary General in the Register of Classical Arms published in 1992,
three years prior to the end in the U.N. Embargoes against South Africa. This analysis established
that on a conceptual basis the Oryx helicopters, which were conceived as transport helicopters
cannot be considered in any manner as attack helicopters which would have fallen within the
scope of the Embargo.

To confirm this conclusion Me Fruhling referred to the detailed study currently being completed
describing the various categories of helicopters, explaining the conceptual requirements and
important differences in military, combat and attack helicopters from search and rescue helicopters
which is where the Oryx and its predecessor the Puma and Super-Puma helicopters are found. He
discussed the origin of the different categories of helicopters and how conceptually the design of
each category was otherwise based on the different requirements which were being addressed.

Me Fruhling, using references to his two studies, discussed the confusion which arose in prior BSL
proceedings, and arose again in the Brussels proceedings, from the South African Rooikvalk
attack helicopters which had the same foundation on a Puma frame, but were constructed in an
entirely different manner, with totally different equipment, including its layout, its various systems,
electronic controls, radars, etc.

Me Fruhling then turned to the separate criteria which establishes independently and beyond doubt
that the Oryx helicopters were not military, combat or attack helicopters covered by the U.N.
Embargo, that of their use or mission. While the Oryx were registered with the South African Air
Force, which is perfectly normal for civil search and rescue helicopters, they were not assigned to or
used by any Air Force squadrons other than those involved in civilian search and rescue operations
(both in the mountains and over the sea), those involved in supporting humanitarian work, such as
supporting U.N. peacekeeping missions and Antarctic programmes, or training. He reviewed the
work of each of the squadrons of the South African Air Force which maintains Oryx helicopters to
demonstrate this point. He noted that any need to consider using the Oryx in any other capacity
had ended by 1988 when the South African colonial wars were concluded, and troop transportation
was no longer a relevant requirement when the initial Oryxs were delivered from France to South
Africa through the Portuguese channel starting in 1989 or 1990.

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Me Fruhling pointed out that while South Africa faced criticism during the period of the U.N.
Embargo for importations of other goods and weapon systems, no criticism can be found
whatsoever, of the Oryx helicopter programme, which was seen at the time as having a purely
civilian purpose, search of rescue, and no possible taint under the Sanctions imposed on the
Apartheid Government of South Africa.

The criteria of use of an aircraft to determine its standing is confirmed by the example of the crash
of the C-130 aircraft of the U.S. Air Force in Croatia, which was at the time it went down, carrying
corporate, diplomatic and media persons on a civil mission. Despite all the indications of being a
military aircraft (the registration, the crew, the ownership of the aircraft), its civilian use was
considered the determining and only factor to be considered in establishing whether it was a military
or civilian aircraft. The same is true for the Oryx helicopters delivered under Project Adenia.

Finally, Me Fruhling discussed the possibility of placing armament on an Oryx helicopter, which has
been alleged by some parties as a ground to consider it as a prohibited military equipment. While
accepting that changes to the Oryx to permit weapons to be installed is in theory possible, it simply
did not happen in the case of the South African Oryx, any more than in the case of the Pumas in
Portugal which were upgraded as part of Project Adenia. The photos of flairs being used in an
Oryx in peacekeeping operations, are part of an antimissile defence system which is not at all an
armament system.

Having completed his presentation to the Armscor team on the concept and the use of the Oryx
helicopters, Me Fruhling turned to the question of the size of the order which Armscor made which
passed through Project Adenia, which address the question of the quantification of the BSL/BSI
claim against Armscor which had been raised by Mr Cilliers to Dr. Lawson prior to the meeting. Dr
Lawson had requested Me Fruhling to cover this issue. Dr Lawson noted that the figures on which
the claim before the Lisbon Civil Court were based were pleaded in some detail in the Statement of
Claim filed with the Court.

Me Fruhling explained how the tag value of the various components acquired by Armscor and by
the Portuguese Air Force in Project Adenia can be established, and that it was known at the time
that Armscor was paying a premium in addition to this normal market indicator in order to acquire
the systems being purchased. The quantities of each of the kits and/or other elements in Project
Adenia were based on the evidence available to BSL/BSI and can undoubtedly be confirmed or
corrected, if necessary, from Armscors own records. He stated that he would be pleased to go
through the actual delivery records to establish with Armscor exactly what had taken place.

Mr Cilliers stated that Armscors position has been pleaded in the Statement of Defence, that even if
BSL/BSI were to establish an entitlement to a commission, which is denied by Armscor, and the
amount of such commission, the entitlement was limited to the items which passed through the
Portuguese Channel, which was a very small fraction of the total goods which were involved in the
acquisition of the Oryx helicopters from France. Hence, the commission due, if any, would be
much smaller than that being claimed by BSL/BSI. He did not, however, offer any details or any
figures in respect to such amounts.

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Me Fruhling noted that if you limit the commission only to what physically went through the
Portuguese channel, and exclude all transfer of technology and other aspects, he believes the total
value of the goods would still exceed 100 million Euro, but Mr Cilliers did not agree with that, again
without providing any detail as to what Armscor would accept as a correct figure.

Mr Humphreys noted that the evidence in BSL/BSIs possession makes clear that the commission
was intended to cover the entire programme which was made possible only by the opening of the
Portuguese Channel. He drew an analogy to the payment due to a party who introduces two
persons to each other for the purpose of doing business, where the payment due to the introducer is
normally calculated not on the first part of the business only, but rather on all the business which is
later conducted. This is completely normal and fair, as but for the introduction, no business would
have been done whatsoever.

Following a further discussion on these issues, Dr Lawson suggested a break for separate caucus be
taken which was accepted by Mr Cilliers. The break lasted about 20 minutes.

12h35 - The 2nd days Meeting -- second session

On resuming the meeting, Dr Lawson proposed that the Parties meet in the afternoon in order to
explore the concept of cooperation proposed by Av Andrade as well as the general idea which Mr
Humphreys had mentioned on several occasions of BSL/BSI being willing to accept a discounted
settlement in such a situation of cooperation, which could support BSLs pursuit of its claim against
the European Bankers, which were the true bad actors in the loss of BSL/BSIs commission. In
such a discussion the parties could also consider the next step, as noted in the Meeting Agenda,
including a possible further meeting in South Africa, as Mr Humphreys would be visiting in the
coming weeks.

Mr Humphreys confirmed the suggestion made by Dr. Lawson, and indicated the nature of the
proposed discussion on the reasons for which BSL/BSI and its Investors could consider such a
discounted settlement arrangement to conclude the Lisbon proceedings.

Mr da Silva responded by thanking BSL/BSI for the further invitation to continue the meeting in
the afternoon, but said that was not possible for the Armscor team, who had already scheduled their
own meetings in the afternoon with their Portuguese lawyers and would not thus be able to come
back to the Miranda offices for an afternoon meeting. He suggested as an alternative that the
meeting continue so that Mr Humphreys could explain the concepts he desired to put forward prior
to the close of the present meeting.

Mr Humphreys expressed disappointment not to have the opportunity to explore the issues in an
afternoon meeting, following reflection over what had been discussed in the morning meeting,
which he noted appeared to have made good progress in permitting the parties to start thinking in
the same direction, as opposed to the opposite positions which had been asserted throughout the
first days meeting. Nonetheless, he agreed to proceed with his explanations of the concept of

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cooperation between BSL/BSI and Armscor for the better position of both parties on which basis
the Lisbon proceeding could be terminated by mutual consent.

He noted the important elements and information in the control of Armscor which could be used in
support of BSL/BSIs claims against the European Bankers, both in the sense of the present
proceedings in Brussels and also in taking advantage of the unique opportunity, which he had
explained earlier in the morning, of the planned sale of the Luxembourg affiliate, KBL, to the
Hinduja group. That was a clear starting point for such cooperation, which would provide a clear
economic incentive for BSL/BSI to consider settling at a lower level with Armscor, and still recover
what was due to it from the European claim proceedings.

Separately, however, insofar as the Investors in the BSL/BSI proceedings intend to remain involved
with the further and much larger matters, which have been described as Project 2 (Khulumani) and
Project 3 (Reparations), Armscor itself could consider the possibility of using its substantial archives
and knowledge base to assist in the furtherance of those claims. Such assistance would have obvious
value and could be compensated to the benefit of Armscors own bottom line as well as for the
general good of the South African State, the owner of Armscor. These ideas need exploring in a
constructive environment, which is sadly not possible when the pending Lisbon proceeding
continues to simmer, keeping the parties at serious odds with one another.

Mr Cilliers asked Mr Humphreys if he was able to give a figure as to what a substantially discounted
settlement figure might look like. Mr da Silva added that even a ballpark figure as the Americas
say, would be helpful.

Mr Humphreys said that he could not do so in this meeting, which is not a settlement discussion,
particularly given the exclusion of Ms Gottert from the meeting. He could, however, propose to
the Armscor representatives that the Investors in BSL/BSI would consult over this matter and
would be willing in the near future to submit a proposal on settlement to Armscor, which would be
sent by Dr Lawson to Mr Cilliers through the established channel for these discussions. Following a
short discussion of the timing, and realizing the importance of such a letter to the Armscor
delegation in reporting back to their principals, he would try to assure that such a letter could be sent
by the beginning of next week. Mr Cilliers indicated that he would much appreciate having such a
letter at the time he reported back to the Chairman and Board of Armscor.

The meeting ended at about 14h20, on a positive basis.

Geneva, 6 September 2010 -- Dr. D. Lawson

Limited circulation: PF/WAH/JR/NG/RA/LG/MO


This document is not to be given to anyone else without
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