Monday, 26 September 2016

Council just one of 3,253 losers after offshore fund's collapse


A total of 3,252 investors who placed their money and their trust in a now bankrupt investment fund have joined Scottish Borders Council as victims of the Premier New Earth Recycling & Renewables [Infrastructure] PLC or NERR's liquidation.

The sheer scale of the financial losses now facing the fund's creditors - SBC is not a creditor but managed to lose £2.4 million of public money as a result of NERR's failure to finance a £21 million waste treatment facility at Galashiels - have been laid bare following a major investigation by Sunday Times journalist Ali Hussain.

In an article which was published on the front page of the paper's Money section at the weekend, the story of how a couple lost more than £350,000 of their life savings after they were advised to invest in NERR makes disturbing and sickening reading.

David and Sheila Solomon, from Cornwall, have been left with just £3,000 from their respective pension pots although the Financial Ombudsman Service has instructed the company which advised them to make good the sum of £497,000. So far, according to the Sunday Times, they have not received a penny of the compensation due to them.

As Not Just Sheep & Rugby has reported on numerous occasions, the Solomons' were just two of many investors who were persuaded to put their money in NERR, a fund managed by Premier Group (Isle of Man) but ultimately controlled by a Premier Group offshoot in British Virgin Islands.

The worthless fund was earmarked to provide the millions needed by its business partner New Earth Solutions Group (NESG) to deliver a state-of-the-art waste processing centre on the Easter Langlee landfill site. But the council was fed different excuses during a four year liaison with NESG and NERR before finally binning the £80 million contract in February 2015.

The protracted dealings with SBC proved fruitful for the bosses at Premier Isle of Man. A liquidators' report shows they took many millions in management and promotion fees while NERR was failing its investors and clients, including the Borders local authority.

Deloitte, the NERR liquidators told the Sunday Times: "There appears to be little prospect of any meaningful recovery from the fund's investments", revealing that there are 3,252 registered investors in NERR.

Their money was loaned by NERR to the debt-ridden NESG which staged its own dramatic financial collapse a few days before NERR went belly up. Scores of creditors owed millions by New Earth Solutions will also have to whistle for their cash. The two-pronged debacle has left many small businesses struggling while a significant number of individuals have complained about the advice they were given to the financial Ombudsman.

The promotion of funds like NERR which was an Unregulated Collective Investment Scheme (UCIS) was outlawed in 2013 near to the time when NERR was suspended by its managers, a move which meant money could not be recovered from the fund's coffers.

In a second distressing case covered in the Sunday Times story, the financial adviser who brought heartache and misery to Mr. and Mrs. Solomons - MFS Partnership - also told an 82-year-old woman to invest £99,000 of her £125,000 savings in NERR. The lady has subsequently died, but the Ombudsman found in her family's favour.

According to the article. lawyers for MFS have warned that if the Solomons demanded their full payment immediately it would make the Partnership insolvent. But MFS insisted it had every attention of paying the couple the Ombudsman's award contained in a ruling which was issued six months ago. He described NERR as "high risk".

Correspondence seen by the newspaper shows concern was being expressed as far back as 2011 over the advice provided to the couple based on documentation related to the fund. That was also the year in which SBC signed the contract with NESG and its funder.

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