One of the City of London's top bankers was assailed in a Manhattan courtroom yesterday for playing both sides of the 2007 takeover of EMI and misleading a client to juice his multi-million-pound bonus.
Citigroup's David Wormsley picked his way cautiously through a barrage of questions and insisted he had no memory of the conversations in which he is alleged to have lied to Guy Hands, the private equity baron who had been one of his closest friends and business associates.
Contradictory testimony from the two men now lies at the heart of a bitter legal battle between Mr Hands' private equity firm, Terra Firma, and Citigroup, with billions of pounds at stake. Terra Firma's £3.2bn takeover of EMI, home to Kylie Minogue and Coldplay, has been a disaster and Mr Hands says he would never have paid so much if Mr Wormsley hadn't pretended there were other bidders who also wanted the company.
Mr Wormsley was formally advising EMI, which put itself up for sale four years ago, but was also helping Terra Firma arrange financing for the deal, financing from which Citigroup took an estimated $375m (£237m) fee and hundreds of millions more in interest from EMI since then.
Mr Wormsley said he thought his bonus was calculated only on the much smaller £6m fee that Citigroup was paid for its advice by EMI – but he couldn't be sure. "The way bonuses are determined is not something I can really comment on," he said. A sheet which was sent up to his superiors detailing the fees he earned in 2007 did not include the financing side of the deal, he said.
But Terra Firma's star lawyer, David Boies, who made his reputation winning the US government's case against Microsoft for abusing its computer monopoly a decade ago, said other Citigroup employees had boasted in emails about being paid "on both sides of the deal", and he said that Mr Wormsley and his colleagues had been desperate to make money from an EMI deal after losing out on an earlier refinancing of the company.
Being called to testify on the minutiae of a disputed deal amounts to an exquisite embarrassment for one of the City's urbane deal-doers, and Mr Wormsley struggled repeatedly to explain that he was never a formal adviser to Terra Firma, only to EMI.
The personal relationship between Mr Hands and Mr Wormsley has been destroyed by the Terra Firma lawsuit, however, and the two have not acknowledged each other, despite the close confines of the courtroom and its surrounding corridors.
The private-equity millionaire had worked with Mr Wormsley on deals worth a total of more than £35bn, had shared nights at the opera and clay-pigeon shooting trips, and even given over his Italian vineyard for a 40th birthday party for Mr Wormsley's wife.
Terra Firma v Citigroup hinges on a series of calls on the weekend in May 2007 before the firm made its bid for EMI, when Mr Hands claims his friend told him he had to quickly offer a high price to beat a bid from a rival private equity firm. No such offer was forthcoming; in fact, the other firm, Cerberus, had told EMI much earlier that it would not bid. Citigroup says its famous dealmaker never lied.
The last of the calls between the two men took place near midnight as the Sunday turned into Monday, after which Mr Wormsley emailed EMI's chief executive to say he had told Mr Hands not to "play games on price".
On the stand yesterday, the banker said: "I have spent a large part of the last 10 months trying to remember that call. I'd love to remember it, but I don't."
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