Red trousers and a yacht brawl: the trials of a powerful tycoon

One thing to start: The carried interest tax deduction, a favourable tax treatment for private equity and hedge fund partners, faces a new threat as the US Senate pushes forward new legislation that seeks to raise $14bn by tightening the tax loophole.

In today’s newsletter:

• A Barclay billionaire goes to court

• Regulators scrutinise JetBlue/Spirit

• Twitter’s internal turmoil

Another battle rages within the billionaire Barclay clan

For a long time, very little was known about the lives of the powerful British tycoon Frederick Barclay and his late twin brother David.

They built a business empire including London’s Ritz hotel and the Daily Telegraph newspaper, but remained notoriously private, leading a reclusive life on the private island of Brecqhou just off the coast of France.

In 2020, a family feud blew the lid off in spectacular fashion. London’s High Court heard claims that Frederick and his daughter Amanda had been secretly recorded for several months after his nephew bugged the Ritz’s conservatory — a case that was settled last year.

A different Barclay battle has been aired in London’s court this week, shining even more light on the internal workings of one of the most powerful families in Britain.

Frederick’s estranged wife Lady Hiroko Barclay was trying to get him sent to jail for not paying a £100mn divorce settlement — one of the biggest such awards in English legal history.

The Telegraph proprietor turned up to court wearing high-waisted tomato-red trousers, a tucked-in tie and plush navy blazer, and scored a victory of sorts. He has avoided an immediate jail sentence and been found not to be in contempt of court for failing to pay the first half of the divorce award.

But he isn’t out of the woods. Judge Jonathan Cohen ruled on Thursday that Frederick was in contempt of court for failing to pay £245,000 in legal and maintenance costs, which carries a maximum of six weeks in prison, the FT’s Kate Beioley reports. The judge adjourned sentencing until August 11.

That will no doubt be playing on the mind of the tycoon whose lawyers have described his “abject fear of prison”. 

And for a privacy-loving family, it will have been difficult to see even more personal and financial information spill out into the public domain. Frederick’s nephews had asked the judge to keep certain financial information private — an application that media groups including the FT and the Guardian opposed and which the judge rejected, allowing the case to be reported in full.

Hiroko’s legal team told the court that the tycoon holds loan notes worth £545mn in a trust, and half of Brecqhou, on which the Barclay family have a mock-Gothic castle. Frederick had the means to pay but was trying to “string things out” until “one or other of us dies”, she said.

She told the court that Frederick had fought with David, who died last year, on a yacht as part of a battle for control over the family’s businesses.

“There was a fight on a boat when we were on holiday . . . David and Frederick were punching each other,” she said.

Frederick said he was trying “extremely hard” to find the money but couldn’t unlock it because he’d handed control of the business empire to his three nephews — and a “war between the two sides of the family” meant they would not help him access funds.

The airline deal that has yet to take off with regulators

Low-cost carrier JetBlue Airlines’ quest to buy its even lower-cost rival Spirit Airlines has been a bumpy journey. Now that the deal for $7.6bn, including debt, has been agreed, it can expect further turbulence ahead from US antitrust officials.

The definitive merger agreement signed on Thursday, which would create America’s fifth-largest airline, has been a tough fight for JetBlue.

When the New York-headquartered airline first gatecrashed Spirit’s plans to merge with Frontier Airlines back in April, analysts were sceptical.

Spirit employs a similar business model to ultra-cheap airlines such as Europe’s Ryanair and easyJet, subsidising its rock-bottom fares with extra fees for luggage, seat selection and other services. JetBlue has, on the other hand, invested in more premium amenities such as WiFi and luxury business class set-ups that will make it difficult to uphold Spirit’s prices.

Nevertheless, JetBlue chief Robin Hayes has claimed that the combined airline will be a solution to the lack of competition in the US airline industry’s so-called Big Four (American, United, Delta and Southwest), thus lowering fares across the board.

US antitrust watchdogs may be less convinced. The Department of Justice is already challenging JetBlue’s existing partnership with American, a plan introduced in 2020 to shake up competition in New York and Boston by offering customers reciprocal frequent flyer benefits, alleging that the pact is anti-competitive.

Separately Federal Trade Commission chair Lina Khan has made her disapproval of dealmaking in the sector unwittingly clear, writing in 2015 that it negatively affected the quality of services and bore “classic signs of oligopoly.”

Regulatory headwinds aside, Spirit shareholders can now wait out the deal in first class.

JetBlue has awarded them $2.50 per share while they wait for regulatory approval, Lex notes. That’s either a down payment on a high-premium cash bid, or a decent consolation prize.

Musk’s mixed signals leave Twitter in a tizzy

Late on Wednesday evening Elon Musk took to Twitter to fire off another extemporaneous musing: “Much harder to make friends than enemies. My skill at the latter is improving.”

One of those enemies is almost certainly Parag Agrawal, as the Twitter chief executive takes a more aggressive approach in the bitter legal battle to prevent Musk from backing out of a $44bn acquisition deal.

The list might also include a portion of the social media group’s dwindling ranks, as Musk’s hot-and-cold pursuit of the company sent employee morale and its share price plummeting in one fell swoop.

Particularly hard-hit has been Twitter’s $4.5bn-a-year advertising business. Ad agencies have cut back digital ad spend to the platform, prompting Agrawal to spend extra time with advertisers to address their mounting concerns, according to multiple people familiar with his thinking.

The vibe at Twitter was best described by Arete Research’s Richard Kramer to our colleagues at Alphaville last week: “You’re basically just sitting on your arse waiting for something to happen.”

Many of those employees have tired of sitting around. The tensions that began forming between staff and Twitter’s leadership since Musk’s initial takeover bid in April have led to a higher attrition rate.

Those that remain at the company, plugging away under the soft neon glow of signs sporting phrases like #lovewhereyouwork, described to the FT an environment fraught with uncertainty, where many employees have been discouraged by management to speak out.

Said one senior Twitter employee: “It seems like Twitter’s take is ‘This man is awful [but] he should run the company.’ Either way it seems like the loser gets Twitter.”

Job moves

• Lazard has named Mary Ann Betsch, a managing director at Citadel, as its next chief financial officer. She succeeds Evan Russo, who was named chief executive officer of Lazard’s asset management business in June.

• BAE Systems has confirmed that Cressida Hogg will become its first female chair, succeeding Roger Carr.

• PJT Partners has hired Aga Masud, a managing director and head of private capital markets for Europe, the Middle East and Asia at Bank of America, as a managing director in its strategic advisory unit.

Smart reads

Second thoughts Ukraine’s fight for survival and financial resources hasn’t deterred hedge fund manager Richard Deitz from demanding repayment of a doomed investment in the country, the Wall Street Journal reports.

Dealmaking drought Failed deals such as Reliance and Apollo Global Management’s bid for Boots are just the beginning as recession fears dry up deals in consumer retail M&A, Reuters reports.

News round-up

​​EY set to record global revenues of $45.4bn (FT)

KPMG hit with half of UK accounting fines as penalties reach new record (FT)

Prada explores secondary listing in Milan (FT)

Jack Ma plans to cede control of Ant Group (WSJ)

Barclays’ profit halves after misconduct provisions wipe out trading gains (FT + Lex)

Carlyle’s credit business overtakes private equity for first time in 35 years (FT)

Vivendi offers to spin off book publisher Editis in regulatory battle (FT)

Former Carillion executives fined over ‘misleadingly positive’ statements (FT)

Signature Bank bet big on crypto — and must now reckon with the crash (FT)