Soft­Bank In­vestors Call for In­ter­nal Probe of No. 2 Arora

The Economic Times - - Around The World - PETER EL­STROM & PAVEL ALPEYEV

A group of in­vestors in Soft­Bank Group has called on the board to in­ves­ti­gate and pos­si­bly dis­miss Nikesh Arora, the com­pany’s sec­ond in com­mand, in a sharply crit­i­cal, 11-page let­ter that ques­tioned his track record and qual­i­fi­ca­tions as pres­i­dent and heir ap­par­ent to bil­lion­aire founder Masayoshi Son.

The re­quest came in a let­ter to Soft­Bank’s board dated Jan­uary 20 from the Amer­i­can law firm Boies Schiller & Flexner and signed by Matthew Schwartz, a part­ner at the elite New York firm, with­out iden­ti­fy­ing the share­hold­ers or how much stock they own. The cri­tique of Arora, which hasn’t been made pub­lic, ques­tions whether the ex­ec­u­tive has con­flicts of in­ter­est due to his ex­ist­ing role as a se­nior ad­viser to the pri­vate equity firm Sil­ver Lake. It also sug­gests he may have been in­volved in past wrong­do­ing and gen­er­ally poor busi­ness de­ci­sions. A sep­a­rate let­ter from one in­vestor to the board of Sprint, which Soft­Bank con­trols, asks for his re­moval as a di­rec­tor there for sim­i­lar rea­sons.

In ad­di­tion to th­ese al­le­ga­tions, the in­vestors crit­i­cised Arora’s al­legedly “poor in­vest­ment per­for­mance and a se­ries of ques­tion­able trans­ac­tions” dur­ing his ten­ure. “De­spite th­ese is­sues, the Soft­Bank board saw fit to make Mr Arora the third-high­est paid ex­ec­u­tive in the world with­out any track record of ac­com­plish­ment at the com­pany,” wrote Schwartz.

The in­vestors are de­mand­ing that the boards at Soft­Bank and Sprint con­duct “an in­ter­nal in­ves­ti­ga­tion” by an in­de­pen­dent firm. “We be­lieve that an in­de­pen­dent in­ves­ti­ga­tion will es­tab­lish com­pelling grounds for the boards of Soft­Bank and Sprint to dis­miss Mr Arora from his ex­ec­u­tive and board po­si­tions.” Soft­Bank de­nied that Arora has done any­thing wrong and called the let­ter “un­sub­stan­ti­ated al­le­ga­tions” from “uniden­ti­fied share­hold­ers.” The Tokyo-based com­pany said it vets any po­ten­tial conf licts in Arora’s in­vest­ment de­ci­sions and has com­plete con­fi­dence in his man­age­ment. It said the board is in the process of re­view­ing the let­ter. “I have com­plete trust in Nikesh and one thou­sand per­cent con­fi­dence in him and know he will con­tinue to do great things for Soft­Bank in the fu­ture,” Son said in a state­ment. Sprint de­clined to com­ment.

One of the in­vestors chal­leng­ing Arora is Ni­co­las Gian­nakopou­los, a

46-year-old Swiss na­tional. He said that his firm holds a bit more than $100,000 of shares of Soft­Bank and Sprint. Gian­nakopou­los said he is of­fended by Arora’s ethics and a his-

tory of deal-mak­ing he views as self­serv­ing. “This is a kind of per­son, a kind of man­ager, who has no place in this world,” said Gian­nakopou­los.

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