Standard Bank responded in a statement that the nature of the funds involved had been “intricate and complex”, and that it has taken steps to address the issues raised.
Meanwhile, fallout from the Belgravia funds business collapse in 2008 has also been making news in Malta, where Finco Treasury Management Services, a financial management company based there, has claimed that Bank of Valletta and two of its subsidiaries may have been negligent in connection with investments they made on Finco’s behalf in Belgravia, according to reports in the Times of Malta. Finco is seeking publication of documents it says would shed light on a raft of redemptions that occurred in one of the Belgravia funds ahead of 7 Aug 2008, when redemptions were suspended, as part of its effort to get its investors’ money back.
The bank has reportedly declined to release the information, citing client confidentially, and according to a Malta Independent story today, is responded that arguments that there may have been a lack of due diligence would have been based on “speculative newspaper reports”.
Malta’s high commissioner, Joseph Zammit Tabona, is due to visit Jersey next Wednesday and Thursday to "strengthen economic, political and cultural links between the two islands".
In a strongly-worded statement, the JFSC said Standard Bank Jersey Ltd and Standard Bank Fund Administration Jersey Ltd had fallen short of regulatory guidelines in a number of areas, including corporate governance, internal controls, record-keeping and in the resources and the calibre of staff it had assigned to the task.
In its handling of the Belgravia funds, Standard Bank “failed to adequately understand the complexity of the structures underlying [them]”; was “deficient” in its corporate governance, and had in place a risk system “that placed over-reliance on individual reporting”, the JFSC statement said.
During its time as custodians and administrators of the Belgravia funds Standard Bank also failed to institute “adequate independent checks to ensure procedures and controls were followed” and “[failed] to engage sufficient resources… [or] to maintain appropriate accounting records”, the JFSC went on.
“Too much reliance was placed on third party administrators outside Jersey to provide accurate information in a timely manner.”
The JFSC said it found Standard Bank’s employees “were not appropriately qualified or experienced for the roles undertaken”, and that staff it had appointed as directors of the Belgravia Funds and underlying corporate vehicles “lacked appropriate experience and understanding of their legal and fiduciary responsibilities”.
“Some land sites were included in valuations when legal title had not been confirmed”, while more emphasis had been found to have been placed “on the wishes and instructions of the managers and investment advisers of the Belgravia Funds than the interests of unit-holders”, the JFSC statement said.
The JFSC report was based on a review the commission launched in May, and which looked only at Standard Bank’s provision of fund services business to Belgravia from its inception to November 2008. It was described as a separate enquiry from an ongoing JFSC investigation into Belgravia Asset Management itself.
Standard Bank’s response
Through an external spokeswoman, Standard Bank, which is based in Johannesburg and listed on the Johannesburg Stock Exchange, referred to a statement contained in the JFSC document that quotes the bank as pointing out that the “intricate and complex nature of the Belgravia Funds" had resulted in "difficulties arising in the administration of these funds, the extent and nature of which varied between each fund”.
The Standard Bank statement points out that the company has made “changes to the company’s senior management team” since the period covered by the investigation but does not elaborate, and a request for further details was declined.
In its statement, the bank said: “[Standard Bank Jersey Ltd and Standard Bank Fund Administration Jersey Ltd] have cooperated with the Commission and are undertaking a remediation plan to address the finds of the review.
“The implementation of a detailed remediation plan commenced in February 2009. The plan was presented to the Commission in May 2010 and has been agreed.
“[The Standard Bank Jersey fund custodian and administration operations] believe that the completion of the plan will further strengthen the overall business of the Standard Bank Group, and place it in a strong position to grow in Jersey.”
As previously reported, Belgravia is in liquidation, after collapsing following the death in May 2008 at age 40 of its founder and chairman, Duncan Hickman, and after a Plus Markets-listed company, First London Securities, rescinded an offer to acquire the company.
At one point Belgravia’s assets under management were said to have approached £1bn.
In 2006 Belgravia briefly made headlines after it made a reported £130m to £150m bid for the Newcastle United football club.
After its collapse, the company subsequently became the subject of a criminal investigation by Jersey’s Joint Financial Crimes Unit.