the irregularities and the missing $412 million? He said there's nothing to worry about even though he got fleeced. What's up with that?
shareThey fake their figures just like miller did, too. I believe it was a suggestion in that they all fake figures and miller was just another one of those managers
share
I don't have the first clue about big business, but this was how I saw it:
The $412 wasn't missing, it was just borrowed (ie, it wasn't Gere's money, so, during the course of the sale the health of the company was made to look better than it was - which is illegal). It was fake money, if you will.
I assume that it was to be replaced after the sale, when Gere's financial woes eased, so the buyer wasn't actually out of pocket. His employee brought to his attention that some chicanery had been going on, and his response was that there was nothing to be gained by bringing it to light - he had got what he wanted and it's all part of business anyway.
I'm a Prick With a Fork.
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That new audit was not actually submitted and legalized. That was just a new audit completed. In other words, they reran the figures, that being the draft audit. That is what I figured, at least.
Having said that, I agree with you about it being impossible to right things by giving the money back. The sale was for 525. He borrowed 412 to right the books to pass the audit. With interest he would probably be giving 450 back. That leaves 75 sale profit, out of an expected 525? The shareholders, and compensation, would be gone.
So, either Standard was going to have to figure out how to deal with the 412 million, or it would come out of the sale's profit, meaning the investors Miller was talking about earlier would be totally lost. This would, obviously, lead to class action lawsuits and criminal investigations and convictions down the road, including against Brooke.
I'm pretty sure Miller owned the company outright.
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Figuring the $412 million never existed and the books had been cleared by an audit, he didn't have to worry about it. The new owner could care less about the internal dealings before the sale as long as the company was still making money. It probably was. That one big deal cost the $412 million. But otherwise, there was money coming in. The new owner was also a sleazy guy going broke and figured buying the company was his only way out. And that he could probably make money from the company once he took over.
I know big businesses in real life never do such things, but this was only a movie. You have to remember that. Good companies like investment bankers, credit card companies, reggler old BOFA banks never do such things. They are always good. Investors always come first. And always make money. It's such a green world we live in, isn't it?
You mean good ole responsible big businesses like Lehman Brothers, Country Wide Financial, Enron, Fanny Mai?
shareGere explained it in their face to face negotiation, Mayfield was just a bank employee, a CEO making $18mil a year, he needed Gere's company and 15.4% ROI to help his overall bottom line and share prices. The $412mil locked away in Russia could be carried on the books for years and written off, it would be hardly noticeable for a big bank. Mayfield wins, the bank shareholders would end up carrying the loss.
shareYeah. Didn't he even say something about Mayfield's organization looking three BILLION or something? A few hundred million can be written off creatively, and they get the PR boost from the acquisition so more investors to their other funds, etc. etc.
Even with the loss being real and permanent, they can turn this into a win as far as he's concerned personally and maybe for his company.
I did not, otoh, really understand why it was important to hide the "lost" Russian money. Invest it in Russia, and carry it as an overseas investment. Take a little hit for it being locked up, but less than pretending it doesn't exist at all and defrauding your investors. That seems stupid.
Let's say there's no Russian copper mine thing happened, and if Miller sold his company, he will get 525Mil in his own pocket.
The missing 412Mil money is Miller's personal loss after the purchase completed. The company's total assets is perfectly okay, and it's running well. Why would the buyer care about what Mr Miller's magic was?
The point is, if the Russian copper mine thing exposed, the purchase negotiation will be aborted, and the company will collapse. Let's say the company's assets left after the loss in copper business is 200Mil, will anyone buy it? Of course not.
Remember Miller told his French miss explaining why he bought her paintings, it's pretty much the same logic all over the whole business world.
He didn't get fleeced. Miller effectively lost $412 million. To cover up the loss - which was basically a fleece of him by his Russian partner and the Russian government - he borrowed $412 million and put it back into the fund. He hid the initial investment completely.
The deal to sell his company was finalized for $475 million. That money would go to repay the loan, plus the lender's fee. Mayfield's bank wouldn't pay it back, Miller would. Effectively, the sale of the company bailed him out 100% on the Russian deal. He was personally out $412+ million, but his funds were solid, his reputation preserved.
I don't think a buyer would let that happen this way (like, 400 mil are fake but it's ok I'll get the money back in a few days in a black market transaction, or ok 400 mil are actually coming from an unknown loan instead of businesses but fine as nobody cares).
No I think in the car they both realize they have been screwed, but it would be a disaster for the overall parent company (Standard) if that was going public. Even in case of possible legal actions against Miller (i guess) and the deal cancelled (but i doubt as Miller advisor said a done deal is done, well not in that specific context though), Standard would look bad as not serious in business and share value would carry on decreasing drastically. So they decide to keep the loss, or actually carry on hiding it by faking the future accounts the same way.
That's how I see it.
On a different subject, what I don't understand is how a 100 Mil investment that's supposed to triple and a hedge on the commodity (in case the cope value drops ie to protect the expected earnings) makes a 400 Mil hole. Doesnt make sense. You don't need 400 to hedge an expected turnover of 300 Mil and if you did you would make a loss overall. Unless he used less than 400 and the hedge went the wrong way and he did say he didn't hedge his hedge ? Could that make up for 400 though ?