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Softbank lashes out over allegations of kickbacks received by former president

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Softbank has come out strongly and has firmly refuted allegations of kickbacks, made against former president Nikesh Arora and Alok Sama, who is the current CFO and president of the firm. These allegations surprisingly, came from the lawyers of anonymous Softbank shareholders, and not any external agents.

Apparently, lawyers of some anonymous Softbank shareholders have accused the company of indulging in improper financial practices. The shareholder has also alleged that Sama, SoftBank President and CFO of its international arm and Nikesh  Arora, former president, received kickbacks from the company’s India investments. The party/parties involved in these allegations have also submitted a letter to the Enforcement Directorate.

Both Sama and Arora have of course, denied the allegations stating that the are false.

A Softbank spokesperson provided the following statement to the Mint:

We are aware that certain individuals are waging a malicious smear campaign against SoftBank and its senior executives through a series of defamatory letters. These submissions are based on falsehoods and innuendo, littered with inaccuracies and are a blatant attempt to damage SoftBank’s reputation and that of its respected executives. SoftBank has investigated the matters raised in these letters comprehensively and with the help of counsel, and found these so called allegations to be baseless and entirely without merit.

 A certain individual in Switzerland, Nicholas Giannakopoulos, claiming to be a shareholder of SoftBank, appears to be fronting this campaign. While SoftBank has the deepest respect for the rights of shareholders to raise legitimate concerns, we will not allow ourselves or our executives to be victims of a shameless intimidation scheme.
Softbank has also filed a criminal complaint against Giannakopoulos with the Public Prosecutor’s Office in Geneva on December 23, 2016. The company talked about further actions to protect its interests.
The allegations against Arora seem to stem from his meteoric rise, and the equally spectacular fall from grace that occurred. After joining the firm in 2004 as its President from Google, where he was the COO, Arora rose very quickly in influence. Indeed, right before he left the company, there were rumors that founder Masayoshi San was thinking about appointing him successor.
Following his appointment, Arora increased Softbank’s commitments in India. The company acquired major stakes in companies like Snapdeal and Ola. All this was not liked by a section of shareholders who demanded a probe against Arora, making all sorts of allegations. Arora was later cleared by a special committee formed for the purpose however, he stepped down as President of the firm.
Similarly,  the current Global President and CFO Alok Sama has sorts of allegations including hacking, stealing data and so on, against him. People pointing fingers also bring Softbank’s $250 million investment in WWE-ING into consideration.
High-placed sources say that SilverLake and Google invested in Zynga soon after SoftBank invested $150 Mn in July 2010 in the gaming company and Arora and his friends made a fortune when they sold their shares at $12 each before they came crashing to a paltry $3.
Whew. Serious allegations one and all. Meanwhile, we can expect the company to set up a panel to discuss the matter, along with other things. Investors being unhappy with their companies is not something new, however, the allegations put up against Softbank this time are pretty serious and the company will want to get rid of them as soon as possible.
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