Muddy Waters employs EX-CIA spooks to debunk Burford claims
THE war of words between Muddy Waters and Burford Capital has taken a bizarre twist with the revelation that the US short-seller employed a team of EX-CIA agents to debunk claims by the London-listed company.
The US firm led by Carson Block said that a third-party agency, Qverity, had run a behavioural analysis on Burford’s management and found that they were “deceptive in their written and verbal responses” to Muddy Waters’ initial report released earlier this month.
Qverity is run by former US Central Intelligence Agency (CIA) staff who co-authored the books Spy the Lie and Get the Truth. Mr Block is also a published author, having co-written Doing Business in China For Dummies more than a decade ago. Last week the short-seller alleged that Burford had been “egregiously misrepresenting” its returns and criticised its “laughable” corporate governance.
Burford Capital hit back by highlighting the report’s “many factual inaccuracies, simple analytical errors and selective use of information”.
The Aim-listed company funds legal cases in return for making money from financial settlements. Earlier this week it announced a slew of changes, including a boardroom shake-up and a possible secondary listing in the US.
Muddy Waters said that Qverity ran its analysis of Burford’s statements prior to the company announcing changes to its management. City sources called the analysis from Muddy Waters and Qverity “a joke”.
A source close to Burford said: “The firm writing this fact-free psychobabble can’t even get one of the few basic facts right.”
The report refers to comments made by Burford director John Lazar, although The Daily Telegraph understands the remarks came from Jonathan Molot, its chief investment officer.
Justin Bates, an analyst at Canaccord Genuity, said the row had escalated in a “quicker and more aggressive fashion” than he had expected. Another City analyst said he still had concerns over plans to parachute Morgan Stanley’s Jim Kilman into the position of chief financial officer at Burford, after it chose to remove the chief executive’s wife from the role.
Burford defended the hiring of Mr Kilman, who will take up the job for a maximum of two years. It declined to comment on Qverity’s analysis. Its shares closed down 8.8pc at 803p.