On Tuesday, the Cayman Islands Monetary Authority (CIMA) requested that the Grand Court of the Cayman Islands wind up Brighton SPC following a “forensic examination” on the umbrella fund.
The ‘examiners’ from accounting firm PricewaterhouseCoopers (PwC) focused on the Cayman-based Kijani Funds, which represented a net asset value of $135.4m (£87.6m, €119.3m) on 28 April 2015, against the remaining $2.2m in Brighton SPC.
According to CIMA, the sole investment asset of the Kijani Funds was actually a loan to Gibraltar-based firm Kijani Resources, of which Brighton SPC was the sole shareholder. The evidence suggests that neither Brighton nor Kijani engaged in a single trade.
“It is likely that representations about physical commodity trading, liquidity and diversification made in the offering and marketing documents of the Kijani Funds have been false since inception,” the report reads, before suggesting that investors would have a “wholly incorrect understanding” of the investments and associated risks.
PwC examiners found that no significant payments against the loan and no interest payments had been made, meaning there had been “no return” on the $81m invested.
Meanwhile redemptions were met through new subscriptions into the investments, a process which CIMA said is generally viewed as an indicator of a fraudulent scheme.
The controllors also found that marketing material containing a table of the Kijani Funds’ monthly performance had dated back to January 2011, despite the funds not becoming operational until around 11 months later.
“As such, the marketing material does not appear to reflect the genuine trading of the Kijani Funds,” the report said.
“Unexplained payments” of at least $2m were made to recently suspended Belvedere-owned stockbroker Citygate “without a clear rationale”, CIMA said. After its suspension by the Mauritius Financial Services Commission, Citygate directors decided to wind-up the company.
The PwC controllers established that Brighton has $12m in unpaid redemptions, and subsequently advised liquidation proceedings to start to enable investors’ assets – many of which are held in overseas jurisdictions – to be recovered on behalf of Brighton.
CIMA said it had held “significant concerns” about Brighton’s operations after it was advised that the directors of Brighton had resigned and redemptions to investors had been suspended.
In June, Kijani Resources was put into liquidation.
In July, news emerged that Mauritius-based auditor BDO was unable to find evidence that €33.8m in assets, which Belvedere-owned fund group Four Elements PCC claimed to manage, actually existed.