Fri, Jul 01, 2016 - Page 10 News List

SoftBank to face inquiry over alleged Arora conflicts

Bloomberg

US regulators are examining SoftBank Group Corp over allegations about former president Nikesh Arora’s activities before he resigned last week, according to people familiar with the matter.

The US Securities and Exchange Commission (SEC) office in Los Angeles is looking into whether Arora had conflicts of interest or engaged in questionable behavior, as well as SoftBank’s disclosures to investors, said the people, who asked not to be named as the matter is not public.

The opening of an SEC inquiry is typically a preliminary step and does not mean SoftBank or Arora, neither of whom have been accused of wrongdoing, are to face an enforcement action.

Arora, 48, on June 21 said he would step down after a SoftBank investor group had called on the company’s board to investigate the executive over his qualifications, compensation and potential conflicts of interest due to his role as an adviser at a private equity firm.

After the investor complaints, a committee of independent directors at SoftBank cleared Arora of any wrongdoing a day before his resignation.

The company said that his departure had nothing to do with the investor criticisms.

“SoftBank Group does not comment on press reports of regulatory inquiries,” the Tokyo-based company said in a statement.

“It notes, however, that a special committee of independent members of its board of directors, acting with the assistance of independent counsel, reviewed the allegations in the purported shareholder demand concerning the conduct of its former president and chief operating officer. The special committee concluded that claims were without merit,” it added.

Arora said in an interview last week that he decided to step down after founder Masayoshi Son told him he would not be promoted to the chief executive job at SoftBank next year as the two had previously discussed.

Son, 58, said he had reflected on ceding the role and decided he felt too driven and energetic to give up control.

Arora’s departure last week came as a surprise at SoftBank.

Son recruited Arora from Google Inc in 2014, promoted him to president a year ago and publicly called him the heir apparent.

SoftBank had also made Arora one of the highest-paid executives in the world, with compensation of ¥8.04 billion (US$78 million) in the last fiscal year and ¥16.6 billion the year before.

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