TOXIC FEUD OF THE £1.5BN PHONE KING
When John Caudwell sold his business empire, he gave £300m to a beautiful financier to invest for him — and they became inseparable. So why are they squaring up in court today amid accusations of fraud, bullying... and a heartless demand for her to remain childless?
With a fortune of at least £1.5 billion, telecoms tycoon John Caudwell has always subscribed to the ‘if you’ve got it, flaunt it’ philosophy of life. When he’s not in London at his five- storey Mayfair mansion, with its ballroom and elaborate panelled walls edged with 24- carat gold, or at his Grade ii-listed Jacobean pile in the Staffordshire countryside, he might be found in his skiing lodge in Colorado or aboard his 240ft super-yacht titania, named after the queen of the fairies in Shakespeare’s A Midsummer Night’s Dream.
the City old guard detests such ostentation, but that has never worried Caudwell.
Last week, he was celebrating his 65th birthday — marking the occasion with all the flamboyance followers of his online photo- sharing instagram account have come to expect: a fancy- dress party with the theme Game Of thrones. Caudwell, in a golden crown and fur-trimmed tunic, was dressed as one of the kings from the sex and dragons tV show. ‘King Caudwell,’ joked his daughter, Rebekah.
As ever, sharing the limelight with the selfmade billionaire was his girlfriend, Modesta Vzesniauskaite, a Lithuanian former Olympic cyclist half his age who, naturally, was dressed as his queen.
Such are the material joys of life alongside the turbo-charged Caudwell, a former tyre factory labourer who pilots his own helicopter and who built an empire in the gold rush that was the mobile phone explosion of the Eighties and Nineties.
in recent times, his wealth has allowed him to devote much of his time to philanthropy.
ThERE
is his Caudwell Children charity, which helps under-privileged children, and a promise that he is ‘ committed to donate half my wealth on death’.
Yet amid the gilded lifestyle and the famous friends — Sarah, Duchess of York and her daughters, Princesses Beatrice and Eugenie are close to him; so, too, are Sir Rod Stewart, actress Elizabeth hurley and former tennis champion Boris Becker, about whom more later — things may not be as happy as they seem for the selfstyled mobile phone king.
For today the high Court in London is due to begin to hear a case which will pit Caudwell against his one- time right- hand woman, financial consultant Nathalie Dauriac-Stoebe, a glossy 39-year- old mother of two.
the French-born wine heiress, who previously worked for Coutts, the Queen’s bankers, set up a wealth management company with Caudwell. he was a man whom she once looked upon as a father figure, but their partnership turned sour.
Now, three years after she was fired as the £200,000-a-year chief executive, the court is due to hear claims that her shares in the firm — which she says were worth millions of pounds — were seized for a token £2. More shocking is the claim in court documents that Caudwell tried at one point to impose the inhumane condition on her ‘not to have children’.
She has also accused her former mentor of avoiding tax — a damaging claim for a figure who has previously spoken of a ‘moral obligation on people to pay their fair and reasonable dues’.
Caudwell strenuously denies the allegation and has counterclaimed, accusing her of fiddling expenses and incompetence.
the court will hear claims of bullying, harassment and intimidation and that Caudwell demanded his protege take a lie detector test and seek psychiatric help.
What is certain is that the case, scheduled to last three weeks, is expected to shine an uncomfortable light on the highly secretive world of wealth management. it is certainly a sorry state of affairs for a pair who were once so close that when she became a mother for the first time, Dauriac-Stoebe asked Caudwell to be a godfather to her daughter, Juliette, now five.
And when, in 2012, he celebrated his 60th birthday with a lavish party at Blenheim Palace, she wrote him a poem and read it to him in front of the hundreds of assembled guests.
So what caused this once glittering alliance to turn sour — and how could their business partnership become so bitter?
the billionaire and DauriacStoebe first met in 2006 when the Coutts ‘private office’ for ultra-rich clients pitched its services to Caudwell following the sale of his phones business.
the pitch was successful and, according to publicly available documents for this week’s case, Caudwell put £300 million of his fortune under investment.
Over time, the businessman and the banker became ‘professionally close’ as Dauriac-Stoebe was asked to help in other areas of his financial affairs. Yet their backgrounds couldn’t be more different.
Birmingham-born Caudwell, a father of five, abandoned his A-levels for an apprenticeship at the Michelin tyre plant in Stoke- ontrent and ran a corner shop and a mail-order business before getting his big break with mobile phones.
Almost exactly 30 years ago, he bought a job lot of handsets: it took him eight months to sell 26 big, clunky Motorolas from the boot of his car, but they fetched £1,500 each.
HE WAS on his way. From there, he built Phones4u, named the UK’s fastestgrowing company for two years in succession.
By 2003, the Caudwell Group employed more than 8,000 staff worldwide and was selling 26 phones every minute. At the height of its success, Caudwell employed 14,000 people.
in 2006, at the top of the credit boom, he sold most of his majority stake in his Caudwell Communications group, netting him more than £1.4 billion.
he cashed in again when Phones4u was sold six years ago, giving him a further £100 million.
it is only fair to point out that not even Caudwell’s prodigious wealth has been enough to spare him and his family some serious misfortune. he, his ex-wife Kate, former partner, Claire, and four of his children have all tested positive for Lyme disease which, left untreated, can seriously damage the immune and nervous systems, the brain and vital organs.
At its most dangerous, it can cause heart failure, inflammatory arthritis, inflammation of the membrane surrounding the brain and spinal cord, numbness, paralysis, memory loss, depression and anxiety.
For her part, Dauriac- Stoebe was brought up in a chateau in south-west France and educated in Bordeaux.
She moved to Britain in 1998 and completed a diploma in management studies at Queens’ College, Cambridge. She began her City
career at Lazard Brothers before moving to Coutts in 2001.
Unlikely financial bedfellows they may have been, but Caudwell was happy with the performance of his £300 million investments. The professional relationship was strengthened when the banker and her private equity executive husband, Konrad Stoebe, were invited by Caudwell to his ski chalet in Vail in 2007.
Two years later, when DauriacStoebe decided to set up her own wealth management firm, Signia Wealth, Caudwell backed her. Each invested £300,000, with Caudwell taking 51 per cent of the shares and Dauriac-Stoebe and her husband (from whom she has recently parted) 49 per cent. But there was an early sign of possible trouble.
According to the court documents, which I have seen, the tycoon tried to impose a very demanding condition — particularly for a young woman. He’s said to have requested she ‘give an undertaking to him not to have children’.
Perhaps not surprisingly, she refused. But she did agree not to have children until the business ‘was firmly established’. Then still only 31, she was being feted as ‘one to watch’ in the highoctane world of private equity — tipped as a ‘future leader’ and ‘rising star’. Certainly, DauriacStoebe cut a glamorous figure: she and her husband bought a £4.8 million house in Hampstead, North London, where she entertained clients with dinners prepared by a private chef. Speakers at Signia events included the then Lib Dem leader Nick Clegg and Amanda Wakeley ( the British fashion designer beloved of the Duchess of Cambridge and Hollywood stars). She got to know tennis star Boris Becker, whom she introduced to Caudwell and he later provided the former Wimbledon champion with a £2 million loan when his finances collapsed. At the same time, the French financier gave interviews about her glittering life while listing her favourite London haunts near her Mayfair office: breakfast at the Connaught hotel or the George club, lunch at the Arts Club or the Japanese restaurant Nobu, dinner at Scott’s or 5 Hertford Street.
SHE described a ‘ money can’t buy’ client trip to Bordeaux that culminated in a visit to her family’s chateau in the classic claret-producing area of Pomerol.
The reality, however, was somewhat different.
In court papers she says she made ‘huge sacrifices’ in her family life to ‘prioritise the business’.
She adds: ‘I had very little personal life for six years and spent all hours of my days, including most weekends and holidays, with clients or potential clients.’
Dauriac-Stoebe worked, she says ‘up until the day before the birth of my first-born and returning to work less than a week after’.
She claims that over six years, Signia had over £2 billion in assets under management and supervision of which £ 1.5 billion was ‘actively managed’ by the firm.
It reported profits, she has claimed, for the calendar years 2010, 2011, 2012 and 2013. ‘The only year where a loss was reported was 2014, after I left.’
Other sources have said the level of investments she claimed was never reached. Several sources also complained of Dauriac-Stoebe’s management style and of personality clashes within the company.
Nevertheless, all seemed well with Caudwell who, she said, had promised her a £300,000 annual bonus for every year she remained with the firm.
But matters came to a head in late 2014 after she is said to have queried a ‘sham transaction’ that allegedly helped Caudwell avoid VAT. Within days she was accused of expenses fraud involving £33,640 following an internal audit. She denied any fraud, claiming the amounts all
related to her work managing Caudwell’s affairs. In the High Cour t documents, DauriacStoebe described how the tycoon was ‘based at various locations throughout the year, including homes in London, Stoke, Vail and his yachts . . . he often required me to travel to meet him’.
In her statement, she claimed the expenses were for trips to the Seychelles, for which she claimed £2,799 for flights; to Vail in Colorado, £1,885 for flights and gifts; and to St Barts in the West Indies, £4,343 for flights and gifts.
There were also five trips to Nice to see Caudwell on his yacht, with expenses of £4,922; a return flight from South Africa where she had to cut short a family holiday totalling £6,613; and £2,077 for a trip to the U.S. with Rebekah Caudwell. ALL of the flights were in economy or premium economy class, she says. To suggestions that she had also claimed travel expenses for her children, she says that at the time they were aged between ‘one and two years old and could not be left behind’.
Other expenses claimed include £185 for gifts for the Caudwells, £596 on gifts for clients and/or their children, £947 for a client weekend away, £1,101 on flights and accommodation to attend Real Housewives Of Cheshire star Dawn Ward’s 40th birthday party, and £1,300 to cover entertaining clients to dinner in her home.
The only ‘honest mistake’ among them was £132 spent on flowers and chocolates for her obstetrician following the birth of her child.
Nonetheless, in November 2014, she was summoned to Caudwell’s Mayfair home. He and another company director had her expenses file in front of them and ‘threatened to report me to the police for stealing.
‘I was in tears and they were shouting at me,’ she recalls.
She says that she was ordered to leave the house, but Caudwell followed her in to the street ‘shouting and screaming at me.’
The drama increased in subsequent days when Dauriac-Stoebe claims she was asked to take a lie detector test by Caudwell, who she says had become ‘ cold and rude’ towards her.
‘While I thought the whole idea was insulting and ridiculous, I had nothing to hide and so I immediately agreed to do so.’
At a later meeting, he told her she needed to seek psychiatric help and that ‘as a friend, he would accompany me’.
He also demanded that she sign a ‘ confession’ letter in which she would admit her guilt. ‘ I was scared and upset by what was happening and feeling very intimidated,’ she tells the court.
‘All kinds of threats had been made against me which put at risk my reputation and livelihood.’
Seven days before Christmas 2014, she was fired.
A former director of Signia says: ‘John Caudwell believes his own hype. It’s his way or the highway.’
After what is known so far, this week’s High Court is expected to be a tantalising, if deeply unedifying, glimpse into the vulgar and greedy world of high finance.