Fortress boss takes stand in UK tribunal

Fortress Investment Group’s New York-based co-chief investment officer Constantine Dakolias gave evidence to the Central London Employment Tribunal near Holborn this morning.

Dakolias, who is also a member of the firm’s management committee, was flown into London to take the stand in a lawsuit filed by former Fortress managing director Michael Johnson, who is suing the investment firm for terminating his employment in July 2015 while he was undergoing treatment for motor neurone disease.

Johnson joined Fortress’s credit team in March 2014 and was responsible for sourcing direct corporate lending opportunities for Fortress Europe. He reported to Chris Linkas, head of European credit, who he is also suing alongside the firm.

Johnson was dismissed on 30 July 2015 and claims he was fired “without warning” as his symptoms started to show, just four days after he returned to work following treatment, according to his witness statement.

Fortress maintains that Johnson’s dismissal was a result of underperformance.

The counsel for Johnson, David Craig QC of Essex Court Chambers, presented Dakolias with examples of deals – as outlined in Dakolias’ own witness statement – that Johnson had sourced during his employment, including a deal to underwrite a loan for haulage firm Eddie Stobart, which saw the firm earn performance and management fees of around $800,000, and an investment in Canadian online gaming platform Amaya, which saw the firm earn fees of over $20 million.

Craig went on to analyse Johnson’s role at Fortress, which Dakolias said was “to find transactions in loans and lending.” Craig then mentioned a number of other deals sourced by Johnson and subsequently pursued by Fortress after Johnson had left the firm.

As a part of his role, Johnson was required to file one page summaries of all of the potential deals that he sourced that would then be reviewed by Dakolias and the investment committee, which included Linkas.

However, during the hearing Dakolias said that Johnson did not understand what was required by the business. “He understood how to put together one pagers. However, at the end of the day I do not think he ultimately understood what would be good transactions for us.”

When asked by the Employment Tribunal if Johnson was ever told that the potential transactions that he was presenting were not what Fortress required, Dakolias said that he could not recall having a direct conversation with Johnson. However, he said he had regular calls with team members about the suitability of individual transactions, but it was up to the individual if they wanted to continue to pursue them.

Dakolias reiterated that the firm felt that Johnson was spending too much time on unsuitable transactions, but could not recall a general conversation with Johnson or anyone else about this before his termination. 

The Tribunal hearing is due to conclude Friday 22 July.

Johnson is being advised by law firm Mishcon de Reya, which also represented Terra Firma in its recent lawsuit against Citi Group. The firm famously handled Princess Diana’s divorce proceedings from Prince Charles and is currently representing a group of clients seeking to stop the UK Government triggering Article 50 to leave the EU.

Fortress is being advised by GQ Employment Law and barrister Daniel Stilitz QC of 11KBW.

Fortress did not respond to a request for comment on the case.