BOV chairman insists no staff had insider information on property fund

Bank of Valletta chairman Roderick Chalmers has insisted he does not believe any members of the banking group, staff or their families who traded in the La Valette multi-manager property fund have ever had access to privileged information, when a massive €16 million in redemptions took place before the fund was suspended in 2008 when it lost €50 million in value.

Chalmers' statement comes after the Malta Financial Services Authority yesterday issued a reprimand to former La Valette property fund director John C. Ripard, for disposing of his holdings in the property fund whilst in possession of sensitive information which was not available to the public and which he became privy to in his capacity as director.

"That remains the Chairman's firm view. John Ripard is not, and has never been, a member of the Bank of Valletta Board, management or staff," the bank said in a statement where it insisted on Ripard's separate role as a director of the Sicav and not a member of the banking group.

The Sicav is owned by the bank's investment arm Valletta Fund Management.

Ripard's resignation, back-dated to 6 January 2012, was only formally submitted to the MFSA by the bank on 19 January. The MFSA's sanction was also only published on its website yesterday 19 January but backdated to the 5 January.

The MFSA is still concluding an investigation into the abnormal level of redemptions that took place before the La Valette property fund was suspended in August 2008. They constituted 14.3% of the entire fund.

When announcing the bank's financials back in October 2010, Chalmers set much store in decrying "a mischievous and malicious insinuation" that the withdrawal of 14 million shares from the property fund in 2008 had been either "massive" or "extraordinary" as described by MaltaToday, or that this was due to BOV staff and favoured clients who had access to privileged information before trading in the fund was suspended. "Such a suggestion is totally untrue and grossly offensive... we would never tolerate such a breach of trust," Chalmers had told MaltaToday.

Chalmers had previously described Ripard as a director of "unimpeachable integrity" who had in fact disclosed in the annual report in 2008 that he had redeemed his funds. "This kind of attack is irresponsible. To imply that he had redeemed solely because he had access to privileged information is inexcusable," he told MaltaToday in June 2011.

In a statement issued today, the bank said John C. Ripard has always maintained that this disposal was not the result of any sensitive information that may have been in his possession in his capacity as an independent director of the La Valette SICAV.

BOV and Valletta Fund Management were fined €350,000 in an initial investigation by the MFSA, for having breached the fund's investment restrictions.

The two other investigations concern whether the bank sold the fund to retail clients who were not 'experienced investors' at law; and whether the redemptions that took place before the property fund was suspended had been abnormal, since 14.7 million shares, or 16% of the fund were withdrawn right before the fund lost €50 million from investments it held in debt-ridden property funds.

The withdrawals certainly took place before the 7 August 2008, when BOV suspended all redemptions, at a price of anything between €1.07 and €1.17 per share. After the fund was suspended the value of the shares crumbled to 26c per share.

Bank of Valletta is on record stating that it attempted to withdraw a large investment the fund held with the Belgravia property fund, back on 17 March 2008. It is understood that the bank was already aware of the problems afflicting Belgravia when the group published its 2006 audited accounts on 30 January 2008, revealing that its debts were twice as big as its assets.

Although Belgravia suspended redemptions on 1 April 2008, Bank of Valletta still accepted investments in the fund up until August 2008, when it suspended the fund.