The Financial Services Commission (FSC) of Mauritius has suspended the management license of Belvedere Management Ltd upon noncompliance and this suspension follows action taken by the Financial Services Commission in Guernsey against funds managed by Lancelot Management.(Image: Moneyhub.co)
The Financial Services Commission (FSC) of Mauritius has suspended the management license of Belvedere Management Ltd upon noncompliance with the specific provisions provided under the FSA Act, failure to abide with the Code on the Prevention of Money Laundering and Terrorist Financing, and non-adherence to its duties as Management Company, Registered Agent, Company Secretary and CIS Administrator.
This suspension follows action taken by the Financial Services Commission in Guernsey against funds managed by Lancelot Management, which is under the direct ownership of Stonewood Holdings, a company majority owned by Cobus Kellermann and David Cosgrove, which owns RDL Management and is the majority shareholder in Belvedere Management.
The Guernsey regulator successfully applied to have the Global Mutual Fund PCC under its administration, due to serious failure in governance and conduct.An affidavit sworn by a senior analyst in the enforcement division of the Guernsey FSC and presented to the Royal Court of Guernsey revealed how Lancelot Management at the very least failed to provide the requisite oversight on investment activity taking place within the cells of these funds showing underlying investments into the cells of two Mauritius-based funds, being Two Seasons and Four Elements which are managed by RDL Management.
The above transactions showed a move from more traditional investments to higher risk private equity and property investments in South Africa together with extensive conflicts of interest in these transactions, which the commission believes were not properly disclosed.
Other suspicious transactions referred to the Stellenbosch property whereby between 2008 and 2010 purchased price jumped from R28.5 million to R 72 million upon two loans to the property owners made by the Achilles High Yield Fund, which were supposedly meant for the development of the property.
The affidavit stated that the transaction appeared to have no degree of independence, at any stage, to ensure the transaction was carried out at arm’s length including the absence of an independent valuation of the Stellenbosch Property.
The second set of issues in the affidavit relate to loans to Basileus Capital which is linked to Kellermann and Cosgrove, where a web of transactions appearing to be highly conflicted due to their involvement at different levels and the concern is the sale of BK One shares from Kellermann’s Ankh Analytic to the Strategic Growth Fund.
A final section of the affidavit deals with ties between Cosgrove and CWM, whereby in March, London police in the office of CWM FX carried out a raid, revealing a scam in which investors may have lost as much as £20 million. However, the FSC is still investigating the connection between Cosgrove, Belvdere and CWM.
Although there are a number of other cells within the funds that the Guersney FSC had placed under administration, the affidavit only raises specific concerns around the Global Mutual Fund and its Strategic Growth Fund cells. The other funds and cells are mentioned as being under Lancelot’s management, but no evidence of suspicious activity is presented against them.
Finally, the serious nature of the issues set out above and the known impact which these have had on certain cells of Global Mutual Fund 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. In conclusion, it was noted that, “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.”