Broken Record? Where does Guy Hands’ Reputation go from here?

Having originally lost a lawsuit against Citigroup in New York 6 years ago for fraudulent misrepresentation in relation to his disaster purchase of EMI, Guy Hands was  putting that reputational blot behind him when up popped news of the London-based retrial, where he hoped for a markedly different outcome. It soon became clear all Mr Hands’ good reputation restoration work between trials would be forgotten.

As the London case opened we were reminded Hands lost $230m on the EMI acquisition and that he has failed to raise a new fund since. The Daily Telegraph headline “Guy Hands‘ record remains stuck on EMI” aptly summed up his predicament.

For investors and the business world to now know Guy persisted with this legal battle when his memory of events was ‘hazy’ (according to Mark Howard QC) and his testimony ‘confused’, leaves the impression of someone prepared to gamble both time and money in the process of doggedly pursuing an unconvincing case.

It was so different back in 2010. Then, in the wake of the financial crisis, Mr Hands was perceived as a brave man prepared to take on powerful names at a venerable financial institution.  Now, David Wormsley, Michael Klein and Chad Leat now look positively hero-like against the diminished figure of their opponent.

On withdrawing his claim in London today, Mr Hands maintained in his statement: ““The matter is now closed. Terra Firma is looking to the future. We have an exciting portfolio of companies, a talented and experienced team, supportive and loyal investors and one billion euros of capital to invest.”

Perhaps. Yes, Terra Firma recently took a positive step of recruiting former Sainsbury’s Chief Executive Justin King and has acquired and improved solid businesses like Wyevale. However isn’t it a little naive to think this Citi matter can be swept so easily under the carpet?

Mr Hands now has two choices – keep a low personal profile for a while to let the dust settle and allow Terra Firma to speak for itself, taking to the airwaves only once he has business success to promote. Or demonstrate some real bravura, do a reflective profile interview, explain the reasons behind bringing the London case, whilst accepting the defeat with grace (even if Oscar-worth acting skills are needed) admitting the lessons learned from a bruising experience, but crucially, ending the profile with a positive focus on his current successes and future ambitions.

Whatever his preference, he should not enter the Brexit debate as he has done of late. No need to remind people of his offshore status at a time of public disquiet over perceived different tax rules for the rich. He should create a narrative to explain ownership of his businesses on a lifeline like Four Seasons and not be tempted to give Michelin-star or equivalent restaurant reviews to the likes of the FT’s ‘How to spend it’ magazine column. He must be aware that the media vultures are circling, looking for every sign of trouble such as cracks in Terra Firma’s team, company failings and fund redemptions.

Mr Hands almost recovered from his New York debacle. Even by curbing any tendency towards hubris, it’s now doubly challenging for the once ‘star financier’ truly to put this litigation behind him and shine once more.

 

10 June 2016

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