The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

BENCHMARK (Bahamas) yesterday said the Supreme Court-supervised liquidation of one of its key clients would “not have a material impact” on its financial position or “long-term development”, expressing confidence that it would achieve long-term business development goals.

Responding to Tribune Business’s article last Friday, which said questions were being raised about Benchmark (Bahamas) future viability due to the insolvency of BC Capital Group, the BISX-listed company said it had always met regulatory and disclosure requirements.

Benchmark (Bahamas) added that it, and its wholly-owned broker/dealer subsidiary, Alliance Investment Management, had always complied with requests for assistance from the Securities Commission of the Bahamas.

The statement, though, did not directly address the issues raised by Tribune Business’s article. Its assertion that there would be no ‘material impact’ from the BC Capital collapse also appeared to contradict a previous press release, which warned that 2013 profits would be impacted by the affair.

And, again, no real details or full disclosure was provided about Alliance’s dealings with BC Capital Group or the nature of the latter’s liquidation.

Tribune Business reported on Friday how BC Capital, which is being accused of perpetrating a major multinational fraud, held all Alliance’s $5 million preference share capital.

Documents filed with the Supreme Court by the liquidators for BC Capital Group reveal that the company, which they certified as insolvent, was among the “principal and largest customers” of Alliance Investment Management, the Bahamian broker/dealer that is wholly-owned by BISX-listed Benchmark (Bahamas).

PricewaterhouseCoopers (PwC) Bahamas accountant, Kevin Cambridge, alleged that Alliance owed BC Capital “a portion” of the $48.7 million that was due to the Bahamian broker’s customers as at-end 2011.

And he also revealed that BC Capital and its entities owed $5 million of Alliance’s preference share capital.

Mr Cambridge described the insolvent company as an “equity holder, creditor and customer” of the Bahamian broker/dealer. His affidavit implies that Alliance and, by extension, Benchmark (Bahamas), may represent one of the best recovery sources for BC Capital Group’s creditors.

The significance of the liquidators’ findings is that the Alliance financials quoted by Mr Cambridge appear to mirror Benchmark (Bahamas) financial statements for year-end 2011 and the 2012 half-year.

Both Benchmark’s 2011 year-end “due to customer balances” and preference share capital are $48.7 million and $5 million, respectively, indicating that the BISX-listed company’s financials are the same as Alliance.

The figures for end-June 2012 show that Benchmark had a current solvency deficiency (liabilities exceeding assets) of $289,820, with the “due to customer balances” exceeding what was owed to the company by its clients by over $8 million.

In addition, successive annual and quarterly losses have pushed Benchmark (Bahamas) into a $7.065 million retained deficit, and BC Capital’s $5 million worth of preference shares were playing a key role, it seems, in keeping Benchmark (Bahamas) and Alliance in net shareholder equity territory. The latter totalled $2.385 million.

Those preference shares now seem likely to be “called in” or sold by BC Capital Group’s liquidators in a bid to recover assets for its investors, indicating both Alliance and Benchmark (Bahamas) are likely to require recapitalising.