(Adds details on detail, background on Ackman/Herbalife
By Mark Hosenball and Diane Bartz
WASHINGTON, April 22 Hedge fund manager William
Ackman, who placed a $1 billion bet against Herbalife,
said that he had promised a former Herbalife executive who
became a whistleblower against the company up to $3.6 million,
ABC News reported on Tuesday.
ABC said on its website that Ackman's payments would come if
Giovanni Bohorquez, the former executive, lost the job he took
after leaving Herbalife.
Ackman's firm, Pershing Square Capital Management, so far
has paid Bohorquez $80,000 already. ABC quoted Ackman as saying
"it was the right thing to do."
ABC said Ackman agreed to the deal after Bohorquez balked at
blowing the whistle on Herbalife for fear it could make it
difficult for him to find work afterwards.
Bohorquez worked at Herbalife, a multi-level marketing
company that sells skin-care and weight loss products, but left
in 2011 and began work at a chain of laundromats. He lost that
job because of the stress of being a whistleblower, ABC said.
Bohorquez initially denied being paid by Ackman when talking
to ABC News but later acknowledged it.
The network said that Ackman gave ABC a copy of an agreement
with Bohorquez under which he agreed to pay the former Herbalife
executive up to $250,000 a year for 10 years, and make certain
other payments, should he lose his job with the laundromat
company because he was a whistleblower.
In the agreement, Bohorquez says that he has provided
information about Herbalife to "certain government agencies."
That confidential agreement was signed in June 2013. Two
months later, the New York Times published an article alleging
problems at an Herbalife plant in 2011 that was based on company
documents provided by a "former employee." Herbalife has alleged
that Bohorquez was the source of the documents, ABC News said.
"Giovanni could not afford to take the company on," Ackman
told ABC News. "Being a whistleblower is a very dangerous thing
to do if you want to get a job."
Ackman has called Herbalife a fraud. Several civil rights
groups have alleged that it is a pyramid scheme, which is a
company that makes more from signing up recruits than for
selling products or services.
The company denies the allegations, and high-profile
investors such as Carl Icahn, George Soros and Daniel Loeb have
supported the company in the past by taking stakes.
The Federal Trade Commission, Federal Bureau of
Investigation, New York State Attorney General Eric Schneiderman
and Illinois Attorney General Lisa Madigan all have
investigations underway into Herbalife.
Carl Icahn is Herbalife's biggest investor and was recently
promised three more board seats, paving the way for him to
eventually control five seats on the 13-person board.
Attempts to contact a spokeswoman for Ackman were not
immediately successful. Herbalife declined to comment.
(Reporting by Mark Hosenball and Diane Bartz; Editing by Ros
Krasny and Sandra Maler)