Duo with Irish links at centre of $16bn 'Ponzi scheme' probe
Regulator in Mauritius sought help from Central Bank in its investigation into offshore hedge fund
The financial regulator in Mauritius has written to Ireland's Central Bank as part of a global investigation into controversial offshore hedge funds linked to the captain of the Irish international polo team Richard Fagan and David Cosgrove, an Irish-born businessman.
Fagan's commodity fund Kijani Resources, which went into liquidation last year, and Mr Cosgrove's Belvedere Management Group have been at the centre of an international storm for months amid allegations that both form part of an elaborate $16bn Ponzi scheme.
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.
Both men robustly deny the allegations, and insist they have not been charged with any wrongdoing. But a number of high-value managed funds linked to the duo have been seized by financial regulators and put into administration to protect investor funds in recent months.
The Financial Services Commission in Mauritius has suspended two of Belvedere's local fund vehicles, one of which housed Fagan's Kijani fund, over investors' concerns.
Financial regulators in Guernsey have also successfully applied to have fund vehicles with ties to Belvedere Management placed under administration, on the grounds of investor protection.
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.
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.
An affidavit filed by the Guernsey financial services regulator in a successful court bid to have administrators appointed to Belvedere-linked hedge funds criticised Cosgrove's governance of hundreds of millions of euros' worth of managed funds. "Mr Cosgrove in his actions does not appear to have displayed all of the attributes required of a director of a licensee to be fit and proper," it states. The document also raises concerns that Cosgrove's "conduct has or may extend to the managed funds".
In a statement to worried investors, 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."
However, despite seeing the demise of his Kijani fund - which promised investors an annual return of 25pc - it's not all bad news for polo-playing Richard Fagan. As well as being a patron of the Irish polo team, he reportedly owns a 116-foot superyacht named Ratio, which boasts four staterooms and sleeps about 15 people.
Neither Cosgrove nor Fagan had responded to a number of emailed questions at the time of going to press.
Sunday Indo Business