Ex-Charterhouse Partner Alleges Firm Sought To Cheat Him

Jan 29 2014 | 10:29am ET

A former executive at the U.K.'s oldest private-equity firm has accused his late partners of low-balling him for his stake in the £8 billion manager.

Geoff Arbuthnott alleges that Charterhouse Capital Partners' chairman and partners offered him only £1.4 million for his stake in the firm. Arbuthnott says his share was worth about £27 million.

The offer came in 2011, when Charterhouse was restructuring to give its active managers a larger stake by cutting the holdings of its retired members. Arbuthnott resigned from the firm after 20 years in 2008, after his relationship with Charterhouse Chairman James Gordon Bonnyman fell apart.

Testifying in the trial this week, Arbuthnott said the 2011 restructuring wasn't the only time Bonnyman and his partners sought to squeeze him out. He said that in 2006, Bonnyman told Arbuthnott that he and the other partners wished to halve Arbuthnott's share of the profits from one fund, a move that would have cost Arbuthnott up to £40 million. The two later agreed to cut his share by significantly less.

"I was rocked back on my heels," Arbuthnott said. "I'm just getting mugged here. There is no point trying to have a sensible conversation."

Arbuthnott said he was too afraid of Bonnyman to fight back at the time.

Charterhouse has said that Arbuthnott, who alleges he raised concerns about secret meetings with takeover targets, is simply trying to blackmail the firm. It also alleges that Arbuthnott played no active role at the firm, a claim Arbuthnott denies.


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