When Man Arms introduced he was stepping down as chair of Terra Firma final yr, one of many UK’s most tenacious dealmakers indicated he was beginning a brand new, more-benevolent chapter. “Man needs to vary the main target of his life,” the personal fairness agency stated of its founder’s plans to commit himself to philanthropy. Whereas nonetheless controlling Terra Firma-backed companies, comparable to property group Annington and McDonald’s eating places within the Nordics, Arms recognized range, inclusion and psychological well being initiatives as his charitable goals.
Within the mid-Nineties, Arms kick-started the UK personal fairness increase, turning into a billionaire and one of many nation’s most influential financiers. However his repute was later bruised by enterprise failures, pricey authorized feuds and caustic public recriminations.
Simply final week, the UK’s Ministry of Defence paid Annington £6bn to take again 1000’s of army houses, after years of authorized wrangling. For Terra Firma, the deal appears like a win. For the federal government and taxpayer, it was “one of many worst-ever” offers, in keeping with the UK defence secretary.
Arms’ retirement announcement final yr was in step with a renovation of his repute that had begun a number of years earlier. In his 2021 memoir, The Dealmaker: Classes from a Life in Non-public Fairness, Arms vowed to reform each his private habits and “philosophy of enterprise”. His objective, he wrote, would change into “to depart the world a greater place”.
One instance was Mansfield Faculty at Oxford college, to which he and his spouse donated hundreds of thousands of kilos over time. This largesse supplied the funds for The Arms Constructing, a glass and stone construction combining pupil housing and the college’s human rights institute. The annual Arms Lecture, which takes place there, welcomed audio system together with Sir Bob Geldof and Lord William Hague, a detailed buddy of Arms, who’s now Oxford’s chancellor.
However two dozen former workers and enterprise associates described a unique aspect of Arms to the Monetary Instances. The people, who labored for Terra Firma between 2002 and 2023, variously accused him of screaming and raging at employees, humiliating underlings and repeatedly telling sexually specific tales at work. The FT has additionally seen WhatsApp exchanges, dated from 2019 to 2023, between workers through which they focus on Arms “pushing us all to the sting”. In a single, a girl says she is “scared to be alone” with him, after he diminished her to tears.
Former workers spoke to the FT on the situation of anonymity for concern of reprisal. Many stated they felt Arms’ current positioning as a philanthropist and mental-health advocate was hypocritical, given the best way he handled them. “Folks know they’re signing up for lengthy hours, exhausting work and no boundaries,” stated one former worker. “Nobody indicators up for bullying and intercourse discuss.”
One junior worker, who left Terra Firma in 2020, stated Arms instructed her privately that he liked studying about sadomasochism. “He was speaking about how he’d actually suggest Story of O, that Fifty Shades of Gray was basically actually beginner, introductory stuff. It wasn’t hardcore sufficient for him,” she stated. Story of O is a 1954 erotic novel a few feminine photographer who’s educated to be a intercourse slave by her lover.
The accusations make Arms the newest high-profile UK determine to be accused of failing to reform their office behaviour. “There was this tradition for 25 years within the Metropolis of individuals like that, and so they’ve simply gotten away with it,” stated one former senior male colleague of Arms. “His story is without doubt one of the business.”
This yr, the Monetary Conduct Authority, the Metropolis’s regulator, launched efforts to enhance how complaints of bullying and different non-financial misconduct are handled. Since October, all UK corporations have a authorized obligation to anticipate and forestall sexual harassment within the office.
Terra Firma is now run by Arms’ son, Richard, whom workers stated was well-liked and had a notably totally different administration type. An announcement supplied by the corporate learn: “Now we have all the time regarded the wellbeing of our folks as our high precedence. To be clear, there isn’t any place for bullying, intimidation or inappropriate conduct of any type at Terra Firma and there by no means has been.”
It added that Terra Firma had “sturdy processes and whistleblowing mechanisms in place” and that “problems with this nature have and can all the time be handled severely and confidentially, and our folks have been made conscious of tips on how to escalate them.” The corporate maintains that its HR operate labored effectively and that it was by no means notified in regards to the allegations towards Arms referred to on this article.
When allegations had been put to them for remark previous to publication, attorneys for each Terra Firma and Arms stated that “this story on no account displays the tradition of Terra Firma now or up to now”.
In his memoir, Arms described a tough childhood. He was dyslexic and dyspraxic, he wrote, making him a goal for bullies and for corporal punishment at college. He additionally recounted being sexually abused by his piano instructor.
After attending Oxford, Arms finally landed on the London outpost of Nomura in 1994. The Japanese financial institution welcomed his concept to imitate US corporations, utilizing low cost debt to purchase European companies with untapped potential. By 2002, a string of successes satisfied Arms to go it alone. “I [wanted] to create a personal fairness agency to rival — and surpass — the best of the US giants,” he wrote about founding Terra Firma.
In London, potential Terra Firma recruits had been put via a rigorous course of to show themselves: a string of interviews, numerical and verbal reasoning assessments, and psychometric evaluation. Those that made the reduce discovered themselves on the coronary heart of the personal fairness increase. “It was intense . . . thrilling, mental, egalitarian,” stated one former senior director who labored there within the early years.
However Arms was a taskmaster with a mood, and he anticipated employees to match his work ethic. It was “hazard cash”, the identical individual recalled. “You might be paid for the hours you retain, for the robust discuss . . . He was not a tyrant however was positively autocratic.”
In line with workers, Arms was unpredictable: “charming and charismatic” at one second, “harsh [and] domineering” the subsequent. Seemingly minor incidents might set off him. “There was a tradition of concern and trepidation round Man, notably round what sort of temper he’d be in,” a former human sources director stated.
A number of former workers likened Arms’ conduct to that of an impulsive youngster. “He’s like somewhat boy who needs to show himself,” one stated. That usually manifested in sexually inappropriate tales and specific feedback. “Folks can be fairly horrified, ladies would positively be offended,” a senior male former colleague stated. “He used to suppose it was amusing. It wasn’t.”
At different instances, employees stated, Arms raged. “There have been most likely numerous conferences the place he internally simply misplaced it,” stated a unique former senior director, who labored at Terra Firma for a decade. “A billionaire shouting at a 22-year-old analyst who has simply come from college about how silly that individual is.”
Former workers who spoke to the FT stated they felt they didn’t have recourse to Terra Firma human sources. “The concept of any person coming to the human sources director eager to make a criticism about Man was inconceivable,” the previous HR director stated. “He dominated all people with a rod of metal.”
There have been upsides to Arms’ idiosyncratic management. Employees had been picked from various backgrounds and juniors had been uncovered to high-level decision-making extraordinary at different personal fairness corporations. Past profitable pay packages, workers stated Arms may very well be personable and mentoring. “There have been situations when he actually made folks really feel like household and supported them,” one other former director stated.
In an announcement to the FT, Arms stated he “based Terra Firma on the precept that every one voices can be heard. I deny ever having been a bully, a tyrant or behaving inappropriately, however on this atmosphere there have been instances when tempers had been misplaced, voices raised and feedback made that some could have discovered tactless or ill-chosen. I apologise to anybody who felt upset or offended by how I spoke or reacted up to now. I perceive that my drive to construct a profitable firm and take my staff with me typically meant I spoke harshly, for which I’m very sorry.”
Arms’ representatives denied that he had an inclination to speak about intercourse or books about intercourse. They stated he can’t exclude the likelihood that he instructed jokes that will have appeared inappropriate however that he by no means meant to make folks really feel uncomfortable.
By early 2007, Terra Firma was closing its third fund, which might finally complete €5.4bn. That was the yr the agency acquired file label EMI for £4bn. A music buff whose autobiography options lyrics as epigraphs to every chapter, Arms quickly discovered he had misgivings in regards to the deal. Strains from Eric Carmen’s plaintive ballad “All By Myself” preface pages in his memoir about EMI.
Terra Firma struggled to service EMI’s debt, and Arms got here to consider that lender Citigroup had tricked him into the deal. He filed a pricey lawsuit, which he finally misplaced. In 2011, Terra Firma was pressured at hand management of EMI to the financial institution. Arms’ buyers misplaced £1.5bn.
One former Terra Firma director instructed the FT that Arms was as soon as “as influential as” Stephen Schwarzman and Leon Black, the founders of US personal fairness giants Blackstone Group and Apollo International Administration, “however finally EMI meant that he can be remembered for very totally different causes”.
The loss was compounded by Arms’ private life. By then, he had moved to Guernsey, a tax haven within the Channel Islands, to publicly protest towards the Labour authorities’s fiscal coverage. However his spouse and 4 kids stayed behind, a separation Arms later described as “emotionally very robust”.
For a few years after the transfer, in keeping with his attorneys, Arms didn’t journey to London. However workers made frequent journeys to work out of Terra Firma’s Guernsey outpost or went on abroad journeys with Arms. Typically, they had been required to work out of his house on the island. “Even when he wasn’t there,” one individual recalled, “the choices all went via him”.
A number of expressed sympathy for his or her former boss’s private circumstances. Arms’ anger, some employees stated, usually adopted moments of vulnerability. When he was candid about his troubled childhood, these he opened as much as might discover themselves in his crosshairs. “He was virtually so terrified of his personal emotions that he would then go on a rage,” one of many former workers stated. “As if . . . he needed to put you in your house.”
After the publication of Arms’ memoir and articles through which he described his mental-health struggles, some employees “simply couldn’t consider it”, as one individual put it. “How might he discuss being bullied when he was such a bully?” One other enterprise affiliate added: “In a means, I really feel he [was] having a dialog about what he want to be like,” referring to Arms’ advocacy.
Within the ebook, Arms wrote about attempting to engineer a Terra Firma comeback, following the EMI debacle. However promising offers upset, and the corporate struggled to boost cash. Arms admitted that, by 2019, “the rebirth of the agency hadn’t labored . . . I might lastly resist the truth that I used to be by no means going to be Stephen Schwarzman.”
In 2020, Arms, a frequent op-ed author, based Interact Britain, a charity meant to cut back political polarisation. “By and huge what I noticed was a person who was doing his finest, who did finally care in regards to the individuals who labored on the agency,” an worker who labored carefully with Arms round this time stated. “Somebody who . . . was attempting to take a look at how they may use their place for some good.”
However former workers stated altering mores in Metropolis workplaces over current years appeared to go Arms by. The problem was not company-wide, workers famous. “This shock went via the Metropolis . . . there was an actual cleanse,” stated a former Terra Firma funding director. “[But] it didn’t get via to him that issues had been altering and also you couldn’t behave that means any extra.”
One individual, who stated they left Terra Firma partly due to Arms’ outbursts and sexual feedback, stated Arms as soon as instructed a narrative at a piece offsite a few enterprise affiliate masturbating within the tub. “I’m simply him pondering, ‘what the fuck’?” they stated. A number of former workers stated he made feedback in regards to the measurement of girls’s breasts. “Man over-sexualised all the pieces,” added one other staffer who labored carefully with Arms and left just lately. At work dinners, she stated “the dialog would all the time revolve round intercourse . . . folks’s kinks”.
A former senior colleague added: “He instructed us as soon as a few story when he joined [a City trading floor] and analysts needed to lie on the bottom and the secretaries must take their knickers off and stroll over them.” Two different workers stated Arms had instructed them the same story. Arms’ consultant disputed particulars of this anecdote and stated he had used it for instance how the tradition of the Metropolis had modified for the higher. (A number of the workers disputed this characterisation.)
The lady who left in 2020 alleged that, on one event after a piece dinner in London, she was so distressed by Arms’ behaviour she known as a relative on her means house. She stated his inappropriate feedback and overly acquainted method had been “terrible”. One other time, throughout an abroad enterprise journey in 2019, Arms insisted on strolling her again to her lodge room after dinner. She stated he then hung round her room door, standing uncomfortably near her. Afterwards, in misery, she known as the identical relative.
The lady, who stated she ended up taking a number of months off work after leaving Terra Firma attributable to stress from Arms’ bullying, stated she was talking out now as a result of she discovered Arms’ advocacy “galling” and wished him to be accountable: “I’m not a shrinking wallflower, and what occurred wasn’t OK.”
She and several other others commented that, apart from Arms, Terra Firma was an gratifying place to work. “If you happen to eliminated him, yeah, completely that poisonous stuff would all go,” stated a former senior director. “The office tradition was truly superb,” stated the previous HR director. “However there was all the time this spectre of, when Dad’s house, all people went to their room and hides below their beds.”
