Wednesday 23 August 2017

HSBC's Irish arm faces second action on Madoff bankruptcy

Bernard Madoff under arrest (TIMOTHY A. CLARY/AFP/Getty Images)
Bernard Madoff under arrest (TIMOTHY A. CLARY/AFP/Getty Images)

Tim Healy

THE Irish arm of banking giant HSBC is facing another court action here arising from the bankruptcy of alleged $50bn fraudster Bernard Madoff and his companies.

Kalix Fund Ltd, registered in the British Virgin Islands, is suing HSBC Institutional Trust Services (Ireland) Ltd, Grand Canal Square, Dublin, for $35m given by Kalix for investment purposes to a sub-fund of Thema International Fund plc, and later allegedly passed on to Madoff companies by the HSBC company.

Kalix claims the actions of HSBC have effectively meant the $35m investment has been "wiped out" and that loss is due to the wrongful conduct of HSBC. It claims the placing by HSBC of the funds with the Madoff companies breached a number of obligations owed to it by HSBC.

The case arises after a statement on behalf of Thema to the Irish Stock Exchange in December announced, in light of the events then emerging relating to Mr Madoff's companies, that HSBC had been unable to obtain confirmation regarding the safe custody of Thema's assets.

In those circumstances, all dealings in the Thema fund were suspended, with effect from December 14.

When Kalix's proceedings came before Mr Justice Peter Kelly in the Commercial Court, he was told by Eoin McCullough counsel for HSBC, the case mirrored an earlier claim by Thema and HSBC may apply to stay the Kalix action.

John O'Donnell, counsel for Kalix, said he was contending this was a separate claim and Kalix had suffered a separate loss.

The judge transferred the action to the Commercial Court list on consent of both sides and listed it for mention in June next.

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