Businessman behind BOV fund crash slapped with travel ban in Bahrain

One of the two kingpins believed to be behind the crash of the Belgravia Group, in which Bank of Valletta poured 41% of its multi-manager property fund’s assets, has been slapped with a travel ban in Bahrain.

Businessman Russell King is under investigation for fraud in Jersey, where the Belgravia Group is registered and now in liquidation. The group is also under investigation by the Jersey Financial Services Authority.

The travel ban was ordered by Bahrain officials, after Jersey-based firm Close Finance filed a plea. The firm is pursuing the businessman for £2m in outstanding loans.

The order also freezes assets King holds in the kingdom up £2m. The same dispute resulted in a judge freezing the same amount of King’s assets in Jersey back in 2008, when Close Finance believed he was about to sell his house and leave the island.

BOV is being held responsible by 240 investors for the way its La Vallette Sicav plc’s multi-manager property fund – once valued at some €84 million – was decimated to €24 million, and for not being informed that the Belgravia Group, which ran three specific funds, had been placed under criminal investigation.

The financial services authority (MFSA) is also alerted to the possibility that a director of Bank of Valletta’s property fund could have had access to ‘price-sensitive’ information when he withdrew his shareholding.

The MFSA is aware of an abnormal level of redemptions – 14.7 million shares, valued at some €13.4 million or 16% of the fund – that were withdrawn, possibly by investors aware of the worsening state of the property fund after the Belgravia bust: maybe even directors and staff of Bank of Valletta and investment arms VFM and VFS, and perhaps even family relatives.

It is not being suggested that proof exists of this ‘smoking gun’ in the dealings of the property fund.

Bank of Valletta also revealed in a recent judicial counter-protest, that it had attempted to withdraw its large investment from one Belgravia fund on 17 March, 2008.

MaltaToday understands that BOV was made aware of Belgravia’s worsening state when the group published its 2006 audited accounts, on 30 January 2008, because a month later the bank attempted to withdraw its large investment from one Belgravia fund on 18 March, 2008. But it was advised by Belgravia that the requests could not be entertained, as the funds had been suspended.

However between March until August 2008, even though the bank was aware of Belgravia’s performance, the Sicav still accepted investments in the fund. At the same time, BOV - the custodian of the multi-manager property fund - was issuing clean compliance certificates on the Belgravia funds.

Dealings in BOV’s property fund were only put on ice in August 2008, when by that time the Belgravia group was being investigated by the Jersey police and the Jersey financial regulator, on suspicion of fraud.