Offshore fund group Belvedere Management, which claims to have $16 billion of assets under administration, management and advisory, appears to be one of the biggest criminal financial enterprises in history, headed by David Cosgrove, Cobus Kellermann and Kenneth Maillard, OffshoreAlert can reveal.

IT IS not certain if or to what extent investors have been bilked, or who has done the bilking. Indeed, it is hard to establish very much at all, given the complexity of the case: authorities in the Cayman Islands, Guernsey and Mauritius are all looking into it and a South African financial regulator is following it closely.

Since then, there has been just one piece of relatively good news for Belvedere and CWM investors: CWM seems to have been downgraded from a £100Mn scam to a £20Mn scam.

All the rest of the news is bad.

First up, there’s an affidavit from the Guernsey FSC (the financial services regulator), dated 22nd April 2014, applying to the Guernsey courts for administrators to be appointed to five Belvedere funds, on the grounds of investor protection.

Its conclusions, which could have done with a spot of proofreading, are on p25:

1. There appears to be systemic failings in corporate governance and the application of law, regulation, code and principle to the management and function of GMF and the Managed Funds by Lancelot and the respective boards. This is evidenced by the matters relating to the failures relating to the management of the conflicts of interest.
2. Significant and systemic conflicts of interest exist in relation to certain cells of the GMF and their underlying assets. These conflicts of interest do not appear to have been dealt with appropriately by Lancelot. The failure to manage the conflicts of interest appropriately appears to have given rise to circumstances which have negatively impacted the value of the assets of certain cells of GMF. Such reduction in the value of the assets of certain cells has led to issues relating to the liquidity of these cells.
3. Mr Cosgrove sits on the boards of Lancelot and the Funds, the he is very much the controlling mind of these investment schemes. Mr Cosgrove in his actions does not appeared to have displayed all of the attributes required of a director of a licensee to be fit and proper and has not even responded to the Commission’s letter relating to proposed dates for an interview. Further the Commissions concern that this conduct has or may extend to the Managed Funds.
4. The remaining board members of Lancelot and GMF have failed to recognise the issues that brought about the suspension of the Strategic Cells.
5. In addition, the significant nature of the investigations by MFSC, which includes investigation into the financial position of funds into which GMF and the Managed Funds have been invested, gives rise to further concerns that Four Elements and other funds, may not be correctly valued. This gives further rise to concerns that the value of the underlying assets of cells of the Funds may not be correctly reflected. Further to this, the commonality of persons between Lancelot, the GMF and the Managed Funds and the entities under investigation by the MFSC show the significant conflict of interests which exist in respect Lancelot, the GMF and the underlying assets and investments. This conflict extends to a number of other Managed Funds which have advisers with similar ownerships or investments into Four Elements and Two Seasons.
6. The serious nature of the issues set out above and the known impact which these have had on certain cells of GMF has led the Commission to the view that there is a high risk that the behaviour which has caused this, including the failure to manage conflicts of interest, also affects the Managed Funds. Due to the risk of contagion, there is a risk that the value of the underlying assets of such funds are not accurately known and that the net asset value attributed to the various cells is incorrect.

Accordingly, the Commission has concerns that the value for redemption’s of shares in cells of GFM as well as shares in other Managed Funds are being made, and the value at which shares in the cells of GMF and other Managed Funds are being issued, may not reflect the actual net asset value of such cells or funds (as relevant).

Further, due to the conflicts of interest relating to Lancelot, GMF and their advisors, and a failure to manage and mitigate these conflicts appropriately, the unacceptable standard of corporate governance and questions over suitability and integrity pertaining to certain key individuals in the management and operation of the funds, the Commission feels that it is necessary to take such steps to as necessary to:

1. prevent further devaluation of the funds and assets therein; and
2. to protect investor and their assets.

Further, Lancelot’s apparent failure to deal with the conflicts of interest appropriately in relation to GMF and its advisers has led the Commission to the view that there is a high risk that the behaviour which has caused this also affects other Managed Funds. This concern is particularly acute where funds and their advisers have persons in common.

In short: to the Guernsey regulator, Belvedere looks crooked.

Read the whole story: http://bit.ly/1K4eLdB