"I will pursue Herbalife to the end of the earth," is the threat Bill Ackman made and the hedge fund manager acknowledges spending more than $20 million in a lobbying and media campaign against the health product company. But on the heels of his non-front-running non-insider-trading transactions in the Allergan deal, details about the Herbalife whistleblower's "deal" raise more questions about ethics. Giovanni Bohorquez has now been named as Ackman's inside-man and the $3.6 million secret deal he will receive for spilling inside information about Herbalife's actions is raising significant questions about conflicts of interest. Having flatly denied being paid, "I'm not getting any benefit," during an on-camera ABC interview, ABC now reveals that Ackman agreed to the deal after Bohorquez balked at going public because he feared his disclosures could make it difficult for him to find work at an executive level.
It seems $3.6 million promptly relieved any fears of not being able to get a job.
In his year-long campaign against the embattled Herbalife company, Wall Street hedge fund manager Bill Ackman secretly promised a disgruntled former company executive as much as $3.6 million over 10 years if he lost his job after providing information to government investigators and the media.
“It was the right thing to do,” Ackman told ABC News.
The agreement between Ackman and the former executive, Giovanni Bohorquez, was signed in June 2013 but required both sides to keep it confidential.
Two months later, the New York Times published a critical article about an alleged problem in 2011 at an Herbalife manufacturing plant based on internal documents provided by a person described only as a “former employee, who was granted anonymity out of fear of retribution from the company.”
Herbalife says the former employee is Bohorquez and that any alleged manufacturing problems were quickly and safely resolved.
But the story just gets more and more dirty...
In December, after extensive discussions with his attorney, Bohorquez agreed to be interviewed on camera by ABC News for a report about his experience inside the Herbalife executive offices.
During the on-camera interview, which Ackman’s public relations team helped to arrange and which Bohorquez’s attorney attended, Bohorquez flatly denied he was being paid anything by Ackman or receiving any benefit other than his travel expenses and lawyers’ fees and legal costs.
“I’m not getting a benefit,” he said.
Asked last week why he did not disclose the additional arrangement with Ackman during the interview, Bohorquez said his answers were truthful because he had not invoked the provisions at the time and so had not yet collected any money.
“I didn’t tell you because I was not looking at using it,” he said.
His lawyer, Stephen D. Alexander, said ABC News did not ask “the right questions” and should have assumed there was more to the indemnification arrangement for Ackman to cover legal costs than Bohorquez said.
Ackman's side of the story stinks too...
Ackman said he thought Bohorquez and his lawyer had disclosed the deal.
“He should disclose it, absolutely. Absolutely,” said Ackman.
But Ackman’s own public relations team also failed to reveal the secret arrangement prior to the interview.
Ackman said he agreed to the deal after Bohorquez balked at going public because he feared his disclosures could make it difficult for him to find work at an executive level.
“Giovanni could not afford to take the company on. We thought his story was important,” Ackman told ABC News. “Being a whistleblower is a very dangerous thing to do if you want to get a job."
Taken together, the total value to Bohorquez over 10 years could be as much $3.61 million.
Of course, the question is - how much is Carl Icahn willing to pay another employee to say it's all lies... or perhaps pay someone at Allergan to spill their guts?