Monday 11 November 2019

Top Irish share owner rocked by allegations

Capital Group under scrutiny

Claims: The allegations concerning Mark Denning were reported by the BBC
Claims: The allegations concerning Mark Denning were reported by the BBC
Donal O'Donovan

Donal O'Donovan

Bank of Ireland's biggest private sector shareholder has been left reeling after explosive allegations that a top fund manager bought and sold shares for his own benefit in portfolio companies.

Fund manager Mark Denning helped run a €265m portfolio at Capital Group, where he worked for 36 years before standing down abruptly in September.

He is understood to have resigned after details of an investigation by BBC's 'Panorama' were put to the US firm.

The details are from a documentary due to have run last night that included claims Mr Denning secretly bought shares for his own benefit in companies Capital Group funds had invested in, contrary to investment rules.

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The 'Financial Times' reported that Mr Denning has denied any wrongdoing and that his legal representatives had insisted he was not the beneficiary of the funds at the centre of the allegations.

Capital Group has been an important investor in Ireland in recent years, with significant investments at different times in stock market listed companies, including Cairn Homes, Datalex, Providence and Paddy Power.

It was Ryanair's single biggest shareholder, with a 17pc stake, up to just over a year ago. It has slashed that holding over the past 12 months.

It remains Bank of Ireland's biggest sole shareholder after the State, with a stake initially acquired as one of a group of investors alongside now US trade secretary Wilbur Ross and Canada's Prem Watsa back in 2011 - a deal that kept the bank from being nationalised.

None of the evidence presented by 'Panorama' related to Irish companies and Capital Group said it would not comment on specific investments.

Capital Group confirmed that Mr Denning had left the firm. It said: "Mark Denning is no longer with our firm.

"We have a code of ethics and personal investing disclosure requirements that hold our associates to the highest standards of conduct. When we learned of this matter, we took immediate action."

Fund managers are not supposed to invest in portfolio companies of the funds they manage, in order to avoid potential conflicts of interest, including because large investors can move markets up and down simply by buying and selling shares.

The 'Panorama' investigation alleged that shares in three companies were bought on Mr Denning's instructions through a fund called Morebath Fund Global Opportunities based in Liechtenstein, and ultimately held through an offshore trust.

Capital Group also invested in all three companies, in two through funds Mr Denning helped run.

According to the BBC, Mr Denning's lawyers say he received bad advice and that Morebath had an independent asset manager and fund administrator.

Irish Independent

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