Why Isn't It Perjury

In today's Weekend FT there is an article on Guy Hands and his Private Equity vehicle Terra Firma. Now I am respectful of Mr Hands vision as he brought the idea of private equity as an internal business to Nomura and pioneered the concept of asset based securitisation as a means of financing whole business purchases to the UK.

To be fair his first big coup was to take advantage of the grossly mismanaged process by the then Conservative UK government of selling off the railways and then guarantying 85% of the costs. Not a bad deal for Nomura and Mr Hands, but perhaps a little less so for the British taxpayer.

The same game was played in selling off the housing stock of the married personnel of Her Majesty's Military. Pure Thatcherism,and perhaps a precursor to the public debt/private profit results of the financial crisis bailouts.*

He got paid handsomely for so doing, and left Nomura a wealthy man to start his own firm. At Terra Firma he bought into the entertainment industry.

He purchased two cinema chains, Odeon and UCI and is now trying to sell them for somewhere between 10 and 12 times earnings. Suffice to say that this is optimistic. Maybe he is hoping that 3D will prove to be a great money spinner-until the pirates figure out how to copy it. It does put a bit of a spotlight on valuations though, depending if you are the seller, or the buyer.

But back to the title of my post today and the question of perjury. In a highly publicised trial Mr Hands tried to sue Citibank and his personal friend and banker David Wormsely claiming that he had been misled and tricked into paying £4 billion for EMI.

As it turns out this was a rather inflated price. So inflated that during his testimony in the trial Mr Hands estimated that the real value was around £1.8 billion. And yet today he rejected charges claiming that he had overpaid for EMI. He went on to say that if EMI merged with Warner it would have a combined value of £4 billion.

Now I know Mr Hands is reasonably good a math. He can't have it both ways. Or maybe Warner has negative equity.

I always thought that when on the stand one swore to tell the truth, the whole truth, and nothing but the truth.

I also thought that not to do so constituted perjury.

There aughta be a law.....

*Despite my frustration at the lack of moral hazard in the massive bailouts in the wake of the credit crisis I believe they were absolutely necessary. I also believe that a proper post mortem should have been done and those responsible should have be prosecuted according to the 3 "R's": relentlessly, remorselessly, and ruthlessly.