Saturday 24 March 2018

Irish firms sue for $1bn cash linked to Madoff fraud case

Dearbhail McDonald and Tim Healy

TWO Irish-listed investment funds are seeking the return of more than US$1bn (€770m)linked to alleged international fraudster Bernard Madoff, in what is the biggest ever financial claim to come before the Irish courts.

The legal action, first reported in the Irish Independent last week, has also prompted fears that Ireland could be overwhelmed by an onslaught of investor-related lawsuits as Madoff's alleged €50bn fraud and other losses unravel.

Ireland is one of three key countries in Europe for the setting up and administration of retail funds, along with France and Luxembourg.

The Irish Independent has learned that several groups have engaged Irish lawyers, with a view to sue on behalf of investors who claim they have suffered losses arising from the scandal, which has rocked the international and European funds industries.

Yesterday the Commercial Court heard claims that the money was allegedly given by the Irish arm of banking giant HSBC to administer.

It was then allegedly given to Madoff and his company to invest.


The proceedings, the first to have been lodged here following the arrest of Madoff, the former NASDAQ chairman, were brought by Thema International Fund plc, and AA (Alternative Advantage) plc, both of Fitzwilton House, Wilton Place, Dublin, who are trying to get the money back.

HSBC Securities Services (Ireland) Ltd and HSBC Institutional Trust Services (Ireland) Ltd, Grand Canal Square, Dublin, have not returned the monies so far.

This failure apparently arose out of concerns related to possible Madoff-linked litigation against it and others in the USA, Mr Justice Peter Kelly was told yesterday.

The judge heard HSBC had told Thema and AA that information with regard to the assets of the funds "may not be reliable" given the alleged Madoff fraud.

On Tuesday applications will be heard by the fund companies to prevent their monies being dissipated, or removed outside the Irish jurisdiction, without leave of the court. Thema and AA want orders directing the HSBC companies to pay all invoices addressed to the plaintiffs. Counsel for Thema and AA told the court €7m had been returned by HSBC from a transit account to his clients.

His side believed if it was possible to return some monies, it was possible to return all.

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