The ongoing collapse of the office-sharing company WeWork is the result of derelict board members and greedy financiers who failed to rein in the erratic behavior of former CEO Adam Neumann, according to a new investigative report.
The Wall Street Journal published Saturday an in-depth look into the inner workings of WeWork in an attempt to determine how the once red-hot company became a cautionary tale of executive excess and corporate governance gone wrong.
The Journal found that investors eager to take part in the planned IPO bought into Neumann’s pitch and rarely expressed skepticism despite mounting financial difficulties and missed projections. Masayoshi Son, the CEO of SoftBank, was one of the biggest boosters, pushing an “already wild-spending Mr. Neumann to act bigger and crazier,” according to the report.
Other big banks including JPMorgan and Goldman Sachs championed WeWork in the hopes of landing its coveted IPO, which was ultimately called off in a major embarrassment for all.
At the heart of the fiasco was WeWork’s board of directors, which the Journal concluded was derelict in its responsibilities.
“The outside board directors, all of whom had decades of experience in business and finance, voted for years to approve decisions by Mr. Neumann that paved the way for WeWork’s near collapse,” the Journal found.
The report alleges that some board members had potential conflicts of interest, including one director whose private equity firm was in a joint venture with WeWork, and two directors who had children who worked at the company. Another board member borrowed money from WeWork.
Board members also approved “hundreds of millions of dollars for acquisitions” of tech companies that were viewed by top executives as wasteful.
Neumann had been known for his unpredictable and self-aggrandizing behavior but he nonetheless managed to seduce investors and employees with his cult of personality.
The catalog of outrageous conduct includes alleged drug use and his copyrighting of the word “We” which he charged his own company to use.
Neumann stepped down in September after WeWork’s planned IPO was put on hold.
As part of his exit package, which includes a $185 million consulting fee, the Journal reported that WeWork forgave $1.75 million that Neumann owed the company for personal trips on the jet, as well as other personal expenses.
Follow David Ng on Twitter @HeyItsDavidNg. Have a tip? Contact me at dng@breitbart.com
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