By NEIL HARTNELL
Tribune Business Editor
nhartnell@tribunemedia.net
The Bahamian liquidators of an alleged multinational fraud that has ensnared a BISX-listed firm’s affiliate have applied to the Supreme Court for an Order that the first creditors meeting be held during April 2013.
Kevin Cambridge, who together with fellow PricewaterhousCoopers (PwC) Bahamas accountant Kevin Seymour, is the co-liquidator for BC Capital Group, said their US colleague, Brick Kane, had informed them “of a potentially wide class of investors” who did not appear at last year’s Supreme Court hearing that wound-up the alleged fraud.
As a result, they argued that a period up to April 2013 would be enough to allow these investors to submit claims.
Tribune Business revealed a recent report by Mr Kane, which alleged there was a $75.5 million discrepancy over the sum allegedly held for BC Capital Group by Alliance Investment Management, the broker/dealer subsidiary of Benchmark (Bahamas).
The report said senior executives at Alliance Investment Management alleged to the Bahamian co-liquidators that the broker/dealer was holding less than $500,000 in cash for the insolvent investment scheme.
The report contrasted this statement with the findings of Bahamian accountant, James Gomez, the voluntary liquidator first appointed for the BC Capital Group entities, who in a report filed with the Supreme Court alleged that Alliance was acting as custodian for some $80 million belonging to the scheme.
Pledging that together with his Bahamian co-liquidators, he would get to the bottom of this discrepancy, Mr Kane’s report revealed the following:
The Securities Commission of the Bahamas, as part of its probe into Alliance’s role and involvement in the BC Capital Group collapse, seized computers and a server from the company’s offices at the British Colonial Hilton’s Centre of Commerce on Bay Street.
Forensic specialists from PwC North America have been brought in to examine the electronic hardware seized from Alliance.
BC Capital invested $5 million in two preference share issues by Alliance, worth some $2 million and $3 million respectively, as “in-kind” transactions with no funds changing hands. BC Capital Group holds 100 per cent of Alliance’s preference share capital, and both issues were staged in 2010 and 2011 to lift the latter’s BISX-listed parent, Benchmark (Bahamas), out of its then-solvency deficiency.
“KPMG said it was prevented by an “internal policy” from acting as co-liquidator for BC Capital Group with Robb Evans, leading to PwC (Bahamas) appointment in that capacity.
The report noted that BC Capital Group S.A (BCCG) and BC Capital Group International acted as the manager, and managing companies, for the Private International Wealth Management (PIWM) and Private International Wealth Management - Insurance (PIWM-I) investment schemes run by BC Capital Group and its principal, Nikolai Battoo.
These firms then “contracted” with Alliance “to execute security trades, subscriptions and redemptions in various investment funds, and marketable equity securities. Substantial investor funds were placed in Alliance’s omnibus accounts with the Royal Bank of Canada and CIBC First Caribbean Bank International, Nassau”.
“Alliance is currently the subject of a probe by the Securities Commission. In the course of the Securities Commission’s probe, certain information relating to the BC Capital entities, including computers and a server, were seized from Alliance’s office premises,” the Kane report alleged.
“The joint official liquidators, with the consent of the Securities Commission, engaged forensic experts from PwC North America to assist in the retrieval of information that resided on the computer hardware seized from Alliance. These efforts are ongoing and a report of findings is expected shortly.
“The PwC joint official liquidators and their associates have performed substantial forensic accounting work on books and records made available by Alliance. That process is ongoing.”
As to the discrepancy between the BC Capital Group-related cash it claimed to hold, and the first liquidator’s findings, the report’s reference to Alliance senior management likely means Benchmark (Bahamas) president and chief executive, Julian Brown.
“Alliance’s senior executives have represented to the PwC joint official liquidators that there is less than $500,000 in cash due to the BC Common Enterprise,” the report alleged.
“Efforts are underway by the PwC joint official liquidators to verify the accuracy of the cash balance represented by Alliance’s management.
“The prior liquidator appointed by Battoo filed a document with the Supreme Court showing investment funds totalling approximately $80 million under Alliance’s custody for the benefit of the BC Common Enterprise.”
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