Guy Hands drops case against Citigroup over EMI buyout

Private equity baron Guy Hands has dropped his £1.5bn lawsuit against US bank Citigroup over his ruinousdeal to purchase EMI.

Hands, who claimed he and his buyout business Terra Firma were tricked into acquiring EMI for £1.75 billion in 2007, withdrew the action just four days in. The case at London’s High Court was expected to run until mid-July with Hands’ evidence alone expected to be presented into late this week.

Hands said in a statement on Friday:

“These claims were brought in good faith. However, it has become evident that our documentation of the fast-moving and complex events, and memories of these events after nine years, are no longer sufficient to meet the high demands of proof required for a fraud claim in court.”

The collapse of the long-running lawsuit, which dates back to 2010, is expected to leave Hands with a huge legal bill of around £20m (The Times). His Terra Firma company will pay the costs of Citgroup, which The Guardianreports is likely to run into millions of pounds.

Hands’ claims centered around Citibank’s former head of global banking and markets Michael Klein, its former European head of investment banking David Wormsley and former head of global credits market, Chad Leat. He claimed the former Citi executives made false claims about EMI’s financial health. He said he was ‘duped’ into purchasing EMIalmost a decade ago afterbeing told a bidding war for the then major label was underway.

Hands revealed last Thursday in court that he lost €200m of his personal fortune on his disastrous deal to purchase EMI.

Speaking outside court on Friday, a Citigroup representative said:

“We have always maintained that the allegations made by Terra Firma were entirely baseless and that Citi, specifically David Wormsley, Michael Klein and Chad Leat, acted at all times with absolute honesty and professional integrity throughout theEMI transaction.

“We are very pleased that Terra Firma has unreservedly withdrawn the allegations, agreed to the dismissal of the proceedings and will pay Citi’s costs in relation to this matter.”

As previously reported by TMN, during last Thursday’s hearing Citigroup’s barrister Mark HowardQC questioned Hands on whether his behaviour was honest in suing Citi over his claims for fraud.

“The problem is, Mr Hands, your story is shifting and it is impossible to reconcile these different versions,” said Howard last week.

HowardQC also accused Terra Firma of “surreptitiously” filing he appeal in the UK in 2013 for last week’s High Court proceeding.

“You, Mr Hands, are prepared to lie and put forward false claims against individuals and against Citi in order to further your own ends and your own interests,” said Howard.

“This is what one would call, if one were out on the street, a shakedown.”

The case was reopened in the UK last week following Hands’ legal action in New York in 2010. The same claims were heard by a New York jury six years ago but the case was rejected. In 2013 the case was overturned on appeal over a misinterpretation of English law before both sides agreed to this month’s hearing in London.

Justice Michael Burton, who was to decide a verdict without a jury, said on Friday: “I’m sure this is the right result.”