Financial regulator: ‘no definite date’ for conclusion of BOV investigation

The MFSA has issued a press statement claiming it is still undertaking “lines of enquiry” into the La Valletta Sicav multi-manager property fund, whose value fell from €84 million to €24 million and lost over 300 investors some 50% of their investments.

“This process will enable MFSA to make an informed decision regarding the level of compliance with licence conditions by the licence-holders in question. Accordingly, whilst the Authority is endeavouring to conclude its examination within the shortest possible time, a definite date by when the work will be concluded cannot at this stage be suggested,” the MFSA said.

The MFSA’s investigation concerns allegations raised in judicial protests filed by over 300 investors,who claim Bank of Valletta is responsible for the way the property fund was managed. The fund was managed by the bank’s investment arm Valletta Fund Management, which invested the cash in global real estate funds.

It has ignored repeated press reports in the media, amongst them MaltaToday, and has only reacted this later after veteran economist Karm Farrugia wrote in the press on how his €20,000 investment was decimated to half its value.

The MFSA said it was “determined to fulfil its duties painstakingly and responsibly” and examine “all the actions connected to this specific fund and determining whether they were in accordance with the rules.”

Farrugia said his investment starting dipping in October 2007 and again in April 2008 but the last thing on his mind “was that the fund had been in troubled waters.”

“Imagine my disbelief when only three months later (August 2008) I was informed that redemption requests were ‘temporarily’ suspended… However, I did discover that 40 per cent of the fund had been invested in Belgravia. This percentage turned out to be even much larger in the months that followed, by which time even some of the fund’s other investment outlets had attained the Belgravia status.”

Specifically, a €17 million investment in the Belgravia European Property Fund lost in excess of 90% and is today estimated at €1.3m, while other investments originally valued at some €47 million have fallen to €18.5 million

Farrugia writes that “what hurt [him] more” was that BOV did not inform him of how many other shareholders had been allowed to redeem their investments by the time the ‘temporary’ suspension was announ­ced.

A judicial protest first filed by Finco Treasury Management has accused the bank of not being transparent with shareholders when it failed to disclose that the Belgravia fund’s directors were being criminally investigated for fraud by the Jersey police, and that its shares had been suspended by the Jersey Financial Services Commission.

According to annual reports by VFM, some 14 million shares were redeemed between October 2007 and August 2008

“At this rate, had I been among the privileged, more than my original investment of €20,000 would have been recovered. But, of course, that would have been at the expense of those remaining unredeemed – the under-privileged whose trust in BOV stayed solid.”