Ex-Charterhouse Executive Sues Owners Amid Blackmail Claims

Geoff Arbuthnott, a former executive at Charterhouse Capital Partners LLP, sued the other owners for trying to seize his stake in the private equity firm for 5 percent of what he said it was worth.

The 17 other shareholders, including Charterhouse Chairman James Bonnyman, valued the company at 15 million pounds in a restructuring designed to seize Arbuthnott’s shares, he said in documents provided at a London court hearing July 26. The lawsuit features duelling allegations of corporate indiscretions and blackmail.

The dispute came after Arbuthnott “raised concerns as to whether Charterhouse was misusing confidential information in making acquisitions,” he said in the documents.

Charterhouse, which manages about 8 billion euros ($10.6 billion), was formed in a management buyout from HSBC Holdings Plc (HSBA) in 2001. The company is trying to secure an agreement with investors for a 12-month extension to its 4 billion euro 2009 vintage fund in order to allow it to continue investing.

Arbuthnott made “sudden demands” for 50 million pounds for his shares and a greater portion of profits shortly after he left the firm in 2008, Jonathan Hawker, a spokesman for Charterhouse, said in an e-mail.

At the same meeting, Arbuthnott, who had worked at Charterhouse for more than 20 years, “raised vague historical allegations for the first time,” Hawker said. “These claims were independently investigated at the time and we are confident that these are false. We were told the allegations would go away if we paid up. We have not and we will not.”

‘Grossly Excessive’

Arbuthnott claims the shareholders tried to restructure the company to lower its value when he said it was worth at least 300 million pounds. His lawyer, Gary Milner-Moore, declined to comment. Nick Archer, a lawyer for the other owners, didn’t immediately respond to an e-mail seeking comment.

Arbuthnott “sought to blackmail the other members of the company into buying his shares at a grossly excessive valuation,” using claims of improper conduct, according to documents from the case filed by the 17 other shareholders. The offer was fair and Arbuthnott never gave details of his allegations, they said.

Arbuthnott resigned as an executive in 2008 after becoming “disengaged from Charterhouse’s business” and “no longer making the contribution, or indeed effort, of someone in his position,” the owners said. He remained a shareholder.

The company “refused to be intimidated” by the allegations of improper conduct, which were investigated by its lawyers and later withdrawn by Arbuthnott without being fully explained, the shareholders said.

A six-week trial is scheduled to take place in London starting in October.

The case is In the matter of Charterhouse Capital Ltd., Between Arbuthnott v Bonnyman & ors, case no. 12-3290, U.K. High Court of Justice, Chancery Division.

To contact the reporter on this story: Kit Chellel in London at cchellel@bloomberg.net

To contact the editor responsible for this story: Anthony Aarons at aaarons@bloomberg.net

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