New York bank 'deceived Britishfirm into paying billions for EMI'

A British private equity firm was tricked by New York bank Citigroup into paying billions of dollars for the struggling music company EMI in 2007, a lawyer told a civil trial yesterday.

David Boies said Citigroup falsely claimed to Terra Firma Capital Partners that there were other bidders for the record company when there were none.

Mr Boies was making his opening statement in the New York trial.

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Citigroup lawyer Theodore Wells countered that Terra Firma had its facts wrong.

He said Citigroup never lied and Terra Firma just wanted to blame the bank because its investment in EMI turned out to be a bad one.

Terra Firma wants Citigroup to pay damages related to the $4.9 billion (3.1 billion) takeover.

Mr Boies said Citigroup falsely claimed to Terra Firma that there were other bidders for the record company and that Terra Firma needed to raise its bid when an auction had actually been broken because there were no other offers for EMI.

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“They knew that they’d lied and made Terra Firma make this bid on the fictional claim that there were multiple bids,” Mr Boies said.

The lawyer said Citibank took advantage of its close relationship with its biggest customer – Terra Firma – to keep EMI as a client when the company was threatening to let another banking institution handle the deal.

In addition to brokering the sale, the bank advised both EMI and Terra Firma as it provided financing for the transaction.

Mr Boies urged jurors to closely review emails and documents in the case, and he put several of them onto a large screen in front of the jury.

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He said they would show Citigroup deceived Terra Firma repeatedly by hiding that it knew the only other bidder – investment firm Cerberus Capital Management – had dropped out.

Mr Wells countered that Terra Firma has its facts wrong and was unwilling to take the blame for having promised investors that buying EMI was a great investment.

“It turned out to be a bad deal and people lost a lot of money,” Mr Wells told the jury in US District Court in Manhattan. “There was no fraud. There were no lies.”

Mr Wells said one of the biggest losers in the purchase was Citibank, for having provided $2.5 billion for the deal to go through.

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“We didn’t go out and lie to anybody so we could loan them $2.5 billion (1.5 billion),” Mr Wells said.

Terra Firma sued Citigroup last year, seeking a return of any money Citigroup was paid for the deal among other unspecified damages, including lawyer fees.

The trial, expected to last up to three weeks, features two heavyweights in legal circles.

Mr Boies argued the case for Democrats before the US Supreme Court in the 2000 tied presidential election. He lost.

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Mr Wells represented former White House aide Lewis “Scooter” Libby when he was convicted on charges he lied to investigators about his conversations with reporters regarding CIA operative Valerie Plame.

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