SoftBank 'Vision Fund' Chief Carried Out Weinstein-Style Sabotage Campaign To Sideline Rivals
Over the past six months, the words "SoftBank", "Vision Fund" and "WeWork" have become emblematic of the excessive valuations of Silicon Valley "unicorns". When a series of anonymously-sourced reports by WSJ and several rivals claimed investors were valuing WeWork at just one-fifth of its massive $47 billion, the company quickly pulled the IPO, before admitting that without the money from the IPO and a $6 billion credit line that was contingent on the dealing going through, WeWork would be insolvent in a matter of months.
This triggered a frantic rescue by WeWork's biggest backer, SoftBank, which had poured both the firm's capital, and capital belonging to its "Vision Fund" investors (mostly the Saudis) based on the investing 'vision' of Chairman Masayoshi Son, who controlled SoftBank and had a reputation as one of the world's most successful momentum investors. By the time the dust had cleared, SoftBank had committed another $6 billion to WeWork, and its reputation was in tatters. It would go on to become the butt of jokes as other SoftBank backed firms shut down or saw their valuations eviscerated.
The entire episode shocked the international investing community. It also didn't reflect well on SoftBank's culture, as the VC arm of the company, and the Vision Fund in particular, was characterized as a snakepit, with rival executives jockeying for Masa Son's favor.
Now, a lengthy investigative report written by two WSJ reporters delves into a stunning sabotage campaign allegedly organized by the executive who led the Vision Fund through many of its disastrous investments. Rajeev Mishra, the executive vice president in charge of the Vision Fund, allegedly enlisted the help of a shady Italian banker to sideline two rival executives so he could have exclusive control over the Vision Fund and its $100 billion pile of capital.
His schemes would put Harvey Weinstein to shame.
Their methods including hiring private investigators to tale the men, setting up an attempted 'honeypot' to try and ensnare one of the men in a sex scandal and leaking private details stolen from the mens' bank accounts to reporters and allege that it's evidence of corruption.
Rajeev Mishra
The Italian banker, Alessandro Benedetti, also reportedly had experience working with private intelligence operatives and computer hackers, making him an ideal fit for Mishra's purposes. During the course of the scheme, it's clear Benedetti began to see Mishra as a friend and benefactor, and was disappointed when Mishra failed to secure him a lucrative job in payment for the scheme - though at one point he did wire Benedetti $500,000 for 'expenses'.
Somehow, WSJ managed to obtain emails between Benedetti and Mishra (as for how, we have a few ideas).
It's unclear how much Benedetti spent on the campaign, but it involved hiring several professional spies, employing tactics also favored by newly convicted fallen Hollywood producer Harvey Weinstein.
That month, Mr. Benedetti sent a team to Tokyo to set up the so-called honey trap, in which one or more women would lure Mr. Arora to a hotel room rigged with cameras in an attempt to obtain compromising images, people familiar with the effort said.
The mission failed: Mr. Arora didn’t fall for the ploy.
Around that time, Mr. Benedetti hired K2 Intelligence LLC, a private intelligence firm, to investigate Messrs. Arora and Sama and disseminate findings to the media, according to emails and people familiar with the hiring. He also recruited a Swiss private intelligence operative, Nicolas Giannakopoulos, to work on the campaign.
Mr. Giannakopoulos distributed to journalists screenshots of Mr. Arora’s and Mr. Sama’s private banking records and emails, according to messages reviewed by the Journal. Mr. Giannakopoulos didn’t respond to requests for comment.
During one 'operation', one of the team's 'operative's allegedly bribed a journalist to publish a story raising questions about a deal that one of Mishra's marks had worked on.
K2 hired a London public-relations firm, Powerscourt Group, to try to get K2’s findings and information provided by Mr. Benedetti into the press. The operatives often referred to Mr. Arora by a code name, “Mr. West.”
In September 2015, Mr. Giannakopoulos, who goes by Nico, contacted a freelance reporter to pitch a story about a troubled telecom deal Mr. Arora played a part in. Reporter Mark Hollingsworth took the story to The Independent, a British newspaper. An email about this arrangement suggested the reporter would be paid if the story was published.
"The Independent is not a high quality newspaper so I’ve asked Nico only to offer a success fee," David Robertson, then a K2 employee working on the campaign, wrote in an email to several people.
The Independent published the article October 2015. Mr. Hollingsworth said the notion he received a success fee was "completely and utterly false."
A spokeswoman for The Independent said it expects journalists to adhere to “all applicable bribery and corruption laws.”
A spokeswoman for K2 said the firm doesn’t discuss clients or client matters. Powerscourt’s CEO said the same.
Amazingly, all of Mishra and Benedetti's sabotage attempts amounted to nothing, as their compatriots inside SoftBank seemed not to care about the allegations.
At SoftBank, the article and others that resulted were mostly seen as noise, people familiar with the internal reaction said. By November 2015, Mr. Benedetti was trying a new tack: a shareholder campaign. He asked law firm Susman Godfrey LLP to represent him as an investor making claims about SoftBank, Mr. Arora and others, emails show.
The law firm declined to take the work, and Mr. Benedetti then went to Boies Schiller Flexner LLP. Mr. Benedetti arranged for Mr. Giannakopoulos to be the shareholder nominally behind the claims, but stayed closely involved, according to people familiar with the events.
This inspired them to try a new tack: Shareholder activism. Eventually, this proved successful, Mishra's rivals resigned, and he was left in charge of the Vision Fund.
In January 2016, a Boies Schiller lawyer sent a public letter questioning Mr. Arora’s investments in Indian startups and asking for an investigation of alleged conflicts of interest. Mr. Arora’s "past conduct also demonstrates his willingness to put his personal interests—and those of his partners—above those of the companies that have employed him as a senior executive," the letter said.
More letters followed throughout 2016 from Boies Schiller and a law firm that succeeded it, prompting SoftBank’s board to launch an investigation into Mr. Arora, which found the allegations to be false. Over time, critical shareholder letters began to focus on Mr. Sama as well.
In June 2016, Mr. Arora resigned from SoftBank. He said he made the decision after Mr. Son chose not to give up his CEO post. Messrs. Son and Arora had begun to disagree on investments, said people familiar with the internal dynamics.
Benedetti had hoped that once Mishra was in charge of the Vision Fund, he would reward Benedetti with a cushy job. But this never happened, though the emails suggest that Mishra tried to set Benedetti up with friends, and even lobbied them to hire him.
Eventually, Benedetti grew bitter, and although he wasn't named as the source, we wouldn't be surprised to learn that WSJ's sources are either Benedetti, or some kind of intermediary.
Americans simply assume that many successful business executives, politicians and other powerful figures are irredeemable sociopaths. It's rare that we get to see them prove it so brazenly.
And just like with the Credit Suisse spying scandal, we can't help but wonder, are these tactics really the norm in the rarefied world of high finance?
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