Hands gets warned, attacks the FT

Terra Firma head Guy Hands said Friday he ignored information the Financial Times had that Cerberus had dropped out of the EMI auction because the newspaper ‘gets things wrong on a completely consistent basis’.

US District Judge Jed Rakoff warned Terra Firma head Guy Hands Friday that he had not been answering questions from Citi attorney Theodore Wells, potentially “confusing” the jury.

Rakoff had dismissed the jury for a break to instruct Hands to be clearer.

“You are not answering the questions put to you over the last five minutes at least,” Rakoff said, according to a transcript of the hearing. “You have taken the occasion of a question put to you about X to give a speech about Y. It’s reached a point where I think it is potentially confusing to the jury and not a good practice.”

Hands and Wells have been jousting in cross-examination for three days. Terra Firma is suing Citi, claiming Citi banker David Wormsley tricked it into overpaying for EMI. If victorious, the jury could award the firm up to £7 billion. Citi denies the allegation, claiming Hands is looking for a scapegoat to blame for the troubled EMI investment, which is valued severely under the £4 billion the firm paid in 2007.

Friday, Wells questioned Hands’ assertion he had had no knowledge that Cerberus Capital Management had dropped out of bidding for EMI until at least September 2007, when he says he received an email about it. Hands has claimed he wasn’t fully aware that Cerberus hadn’t made a bid until “mid-2008”, after his general counsel Tim Pryce completed an investigation.

Wells revealed to the jury an email sent the same day Terra Firma submitted its bid for EMI on 21 May in which a firm spokesperson informed Hands the Financial Times had knowledge Cerberus was not in the auction.

“You recognise there’s an inconsistency between what you said in your deposition and what you’re saying today?” Wells asked. Hands responded he didn’t remember the email, and also said he wouldn’t trust the FT as a source of information since it was frequently inaccurate.

“The FT gets things wrong on a completely consistent basis. If I followed up on every single email I get from [the spokesperson] with newspaper rumors, newspaper comments, I wouldn’t be able to sleep,” Hands said, according to the hearing transcript. “The best thing to do with emails like this is to take absolutely no notice, which I pretty (sic) presume is what I would have done.”

Wells has been working to attack Hands’ credibility. Several times over three days of cross-examination, Hands has testified he couldn't remember details of vital Terra Firma meetings focused on the EMI acquisition, yet he remembered conversations in which Wormsley allegedly lied to him from the same time period.

Hands cross-examination continues Monday. Also, Wormsley is scheduled to step onto the witness stand Monday.

Christopher Witkowsky contributed to this report.