Friday 21 October 2016

Boardroom ban for Irish chief linked to $16bn Ponzi scheme

Financial storm centres on Belvedere Management Ltd, which controlled billions of assets, writes Simon Rowe

Simon Rowe

Published 04/09/2016 | 02:30

David Cosgrove
David Cosgrove

An Irish businessman at the centre of an international storm over allegations his companies form part of an elaborate $16bn Ponzi scheme has been hit with a boardroom ban in Mauritius, and his company Belvedere Management Ltd has had its management licence revoked by the country's financial regulator.

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David Cosgrove, who was slapped with the corporate bans on August 24, said he intends to appeal the disqualification notices.

"I have 21 days to object to this ruling. I intend to object," he told the Sunday Independent. "At the moment I can't comment but will let you have details when I can comment and [am] in a position to comment."

A Ponzi scheme is a fraudulent investment operation where the operator pays returns to its investors from new capital paid to the operators by new investors, rather than from profits earned through legitimate sources.

Cosgrove robustly denies the allegations and insists he has not been charged with any wrongdoing. But a number of high-value managed offshore funds linked to the Irishman have been seized by financial regulators and put into administration to protect investor funds in recent months.

Cosgrove declined to answer questions as to whether Irish investors may be affected.

But it is understood the financial regulator in Mauritius wrote to Ireland's Central Bank as part of a global investigation into offshore hedge funds linked to Cosgrove, who is now based in South Africa.

Before issuing a ban last week, the Financial Services Commission in Mauritius had suspended two of Belvedere's local fund vehicles - one of which is linked to the captain of the Irish international polo team, Richard Fagan.

Fagan's $130m Kijani fund was seized by Cayman Islands regulators last summer in order to protect investors, less than a year after Kijani moved from its original domicile of Mauritius. Fagan denies any wrongdoing.

Concern is growing that investors may be exposed, as Belvedere Management is reported to have had $16bn of assets under administration at one time.

Belvedere was set up in 2008 as an umbrella group for more than 100 investment funds marketed to wealthy individual investors. It is now under investigation by regulators in several jurisdictions, with the trail stretching from the Indian Ocean to South Africa, and from Guernsey to Ireland.

According to documents seen by the Sunday Independent, the Mauritius Financial Services Commission (MFSC) has been engaged in a two-year investigation of Belvedere that "has been working with various counterparts on the matter, including regulators from Guernsey, British Virgin Islands, Cayman Islands, Gibraltar, South Africa, England and Ireland".

"Some 125 correspondences have been exchanged since June 2014 with regulators from these countries to ensure the veracity of documents and to construct the flow of funds given that the companies under the management of Belvedere have been advancing loans to entities in various jurisdictions," the documents reveal.

In a statement issued to worried investors before last week's ban by the Mauritius financial regulator, Cosgrove said: "All of our companies go through an annual audit by an approved independent auditor and all assets can be accounted for."

The defiant Belvedere boss added: "These are regulated funds with regulated investment advisors. The underlying strategies are not correlated to traditional markets and naturally tend to follow an upward path. They are not Ponzi schemes."

Sunday Indo Business

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