Sunday, 12 March 2017

Death throes of council's invisible funders


The "last knockings" of yet another failed investment fund in the Premier Group stable will be played out in an Isle of Man court this week when finance regulators move to have the fund wound up.

It seems $61 million which had been placed in the trust of the Eco Resources Fund by 189 unsuspecting investors has all but disappeared with a paltry £12,500 left in the coffers.

Our readers will be aware that Premier Group (Isle of Man) which is in the process of being liquidated, was also responsible for another worthless fund which was supposed to pay for a £21 million waste management facility for the Scottish Borders at Easter Langlee, Galashiels.

Critics argue that inadequate scrutiny by Borders councillors who sanctioned a £80 million contract with (now bankrupt) New Earth Solutions Group resulted in the loss of £2.4 million of council taxpayers' cash when the deal had to be cancelled in 2015.

 New Earth Recycling and Renewables [Infrastructure] Fund was the approved 'funder' for the Borders project, but could not come up with the money. The untried and unproven form of technology chosen by Scottish Borders Council's senior officers and elected members for the Galashiels facility also turned out to be a complete dud.

It is to be hoped that the various investigations by financial experts into the activities of Premier Group and its subsidiaries will get to the bottom of the catastrophes which have left thousands of investors and shareholders in dozens of countries out of pocket.

While the range of Premier funds were functioning the Group's directors trousered millions of pounds in management and promotional fees.

And as Not Just Sheep & Rugby revealed last year, the company had business links to the offshore tax haven of British Virgin Islands. A number of individuals involved in Premier Group had stakes in BVI based entities.

The Isle of Man Financial Services Authority's [IOMFSA] claim to have the Eco Resources Fund consigned to the dustbin will be heard in the island's High Court of Justice on March 16.

This particular Premier failure was founded as a joint venture with EcoPlanet Bamboo Group to invest in bamboo plantations in Nicaragua and South Africa. It had been promoted as 'a truly green fund' with the promise of handsome double-figure percentages for investors.

It became clear three months ago that the Fund was in serious difficulties when IOMFSA applied for a court order to appoint an inspector to investigate the fund's activities.

Around the same time Eco-Resources directors decided to place the fund in voluntary liquidation as they were convinced it was insolvent. The "balance sheet" showed assets of £12,545 and debts of £2.7 million.

The position worsened when Premier Group's joint liquidators made a demand for fees totalling £2.3 million which the bamboo fund could not meet. When shareholders voted against dissolving the fund its three directors regarded that as a vote of no confidence and resigned on the spot.

But there was an immediate move to keep the fund going when three individuals put their names forward to become directors of the stricken fund. They included Troy Wiseman, head of EcoPlanet Bamboo and John Bourbon, a Premier Group board member and a former head of supervision of the Isle of Man's Financial Supervision Commission.

However, according to a report published by Isle of Man Today, on the morning of a special meeting called in January "the three proposed new directors gave notice that they were no longer prepared to stand".

As Isle of Man Today explains IOMFSA had sought the liquidation of Premier Group (IOM) to be carried out under the supervision of the court. However, a consent order has been agreed to proceed with a creditors' voluntary liquidation.

Premier Group also managed the New Earth group of funds, which went into liquidation last June, and an official receiver was appointed following an application by the regulator. These funds had a paper valuation of $292 million and a total of 3,249 investors who are unlikely to get their money back.

Meanwhile, back in the UK, the New Earth Solutions Group, selected by SBC to build the region's waste treatment facility is being dissolved with dets of more than £50 million. Unsecured creditors may receive between four pence and eight pence in the pound.

Voters in the Borders should remember that a fair number of the councillors who were directly involved with New Earth Solutions and its offshore partners between 2011 and 2015 - at great cost to the council's 'clients' - will be seeking re-election at the local government polls in May.

It might be worth asking them for an explanation as to why they ever became involved with any of the organisations named above. At best they certainly fell well short in the due diligence stakes!

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