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MFSA inspectors visit BOV as investigation into property fund continues
Financial watchdog’s inspectors despatched to Bank of Valletta to investigate how property fund lost value and whether investment rules were breached.
3 October 2010, 12:00am
Matthew Vella
Matthew Vella
3 min read
Inspectors from the Malta Financial Services Authority were seen at Bank of Valletta’s headquarters this week, as investigations by the regulator continue into complaints received over the way the bank managed a property fund.
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 by the bank that the Belgravia Group, which ran three specific funds, had been placed under criminal investigation.
Sources in the MFSA who spoke to MaltaToday said the regulator’s top officials were already alerted to complaints that a director of the Sicav’s property fund could have had access to ‘price-sensitive’ information when he withdrew his shareholding.
Specifically, investors have complained to the MFSA of the abnormal level of redemptions – 14.7 million shares, valued at some €13.4 million or 16% of the fund – that were withdrawn, possibly by investors aware of the worsening state of the property fund after the Belgravia bust: maybe even directors and staff of Bank of Valletta and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.
The MFSA will want to ascertain itself when BOV was made aware of Belgravia’s worsening state, when the Jersey-based financial services group published its 2006 audited accounts, on 30 January 2008.
BOV has been severely criticised for 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.
BOV has already said that after Belgravia published its accounts in January 2008, 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.
The MFSA will perhaps ask the bank why – if it was aware of the worsening state of the Belgravia Group funds – the Sicav was still accepting investments in the fund until August 2008, when it suspended trading; and why BOV – the custodian of the multi-manager property fund – was issuing clean compliance certificates on the Belgravia funds.
Meanwhile, one of the two kingpins believed to be behind the crash of the Belgravia Group is trying to fight 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 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.
Matthew Vella, a freelance journalist at MaltaToday, was formerly executive editor at Malt...
Lawrence Cutajar •
So, according to the Hon. Dr Tonio Fenech, it was the investors' responsibility to understand the risk they were taking as every investment carried a risk. The Hon. Minister is echoing what the MISMANAGEMENT COMMITTEE of the BOV's VFM said; that investors had signed that they were experienced ones. When investing with the BOV 'the advisors' always harp on the BOV's stability and its reserves. Let me remind the Minister that by far, the majority of investors are nationalists, and in two years time, the day of reckoning is coming. It is well known how chummy MFSA members are with the BOV's above mentioned committee, so the Minister, if anything should help the investors and not the bank, as he should see that the irregular investment of the investors' money by a supposedly responsible bank and the withdrawal of some of that investment by a comparative few, is well noted. The PEOPLE's money was not safeguarded until the attempt to do so was too late. The honourable way out for the BOV is to compensate the cheated investors if they want to prevent a run on their bank.
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Dak li gara barra min Malta irrid jigri hawm, id-differenza hi li hawn hadd ma jmur il-habs...hlief dawk li jinqabdu jpejpu il-haxixa ! Mhux tiega MFSA taf x'gara u x'ghamlu il-BOV.....mela alfejn dan id-dragging kollhu...mhux biex bhas soltu insibu xi toqba gol-hajt...BOV tal-misthija !
Godfrey Grech •
This case has put BOV under a dark cloud. The longer it drags on, the bigger the dent in BOV’s credibility.
Mark Fenech •
BOV say they cannot devulge the names of those who withdrew the 14million shareholding before trading of the fund was suspended.
But on the other hand they have never came out denying that these withdrawals were made by a director of the fund and various high officials of the bank and their families.
Now they have the confirmation that the Jersey Court has confirmed that there was gross neglegence and even corruption in the Belgravia Funds. BOV should never have invested our money in these funds when they did not have proper documentation and accounts which would have shown the huge risks the investments in Belgravia were carrying. The risks were higher than the provisions allowed by the prospectus of the BOV Property Fund.
Therefore BOV are to make good for the principal and interest the shareholders have lost due to these defaults.
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It has gone on for far too long.
