CAPE TOWN – Over the last few days allegations have been emerging about a supposed $16 billion (R200 billion) Ponzi scheme run by a Mauritian-domiciled company called Belvedere Management Limited. The allegations were first made in an article on OffshoreAlert, which claimed that Belvedere was essentially a “massive criminal enterprise”.
This has caused waves in South Africa because one of the people implicated is South African fund manager Cobus Kellermann. He together with Irishman David Cosgrove and Mauritian accountant Kenneth Maillard are the supposed masterminds behind Belvedere.
In the original article, OffshoreAlert says it has evidence of “funds that are blatantly fraudulent, including a current $130 million Ponzi scheme in Cayman”. The fund in question is Brighton SPC, a registered mutual fund in the Cayman Islands.
The evidence for OffshoreAlert’s claim is apparently not that any investors have been unable to reclaim their money from the fund, but that its performance has been suspicious. However, the current administrators of the fund have told Moneyweb that all of the assets can be verified and there is no evidence of any fraudulent activity.
Brighton SPC has two sections of cells, CWM and Kijani. The allegations pertained to both.
However, Brighton SPC has not yet even launched the CWM cells. So the allegation that it is a Ponzi scheme is hard to substantiate.
That leaves the Kijani cells. There again the truth appears to be somewhat different to what appeared in OffshoreAlert.
Nicolaas Faure, director at Drake Fund Advisors in Cape Town, says that the Cayman fund was only recently structured and their role as administrator was only activated last month. They therefore cannot comment on any performance that they have not disclosed themselves. However it is their duty to check on the assets within the fund and everything they have suggests that those assets are valid.
“We were still onboarding the assets when the rumour broke,” Faure says. “But we have received independent evaluations to confirm their value.”
He says that he is puzzled that the claims about Brighton SPC would be made without Drake as the independent fund administrators being asked to provide any evidence.
“Everything we have done points to the fact that the assets are valid,” Faure says. “We expect an audited set of financials within 14 days, but our work points to the fact that the allegations of Brighton SPC being a Ponzi scheme are baseless. They were made with little or no evidence.”
Faure also points out that Brighton SPC is a registered mutual fund in the Cayman Islands, and this is a well-regulated market.
“I believe that the necessary processes and applications and regulatory approvals are in place,” he says “A well-respected law firm structured the vehicle, and it has every licence and registration it is required to have, including the necessary service providers.”
In addition, Brighton SPC is not run by Belvedere. It is managed by London-based firm Straffan Asset Management, which is regulated by the UK’s Financial Conduct Authority (FCA).
The link to Belvedere appears to be that Belvedere ran a fund in Mauritius called Four Elements. One of its sub-managers set up in the Cayman Islands, and that is the current Brighton. However, there doesn’t appear to be any way in which Belvedere could take any assets out of the fund.
Following the allegations that Brighton SPC was a Ponzi scheme, the directors elected to suspend any trading in the fund. They felt that while an investigation was taking place, they did not want to put any assets at risk of a run.
However, Faure says that Drake welcomes any review and it is currently working with all the parties concerned, including the regulators.
One of the more curious points made by OffshoreAlert is that Faure went to the same university as Kellermann. Faure says that while this is true, it isn’t that unusual given that they are both Afrikaans-speaking Cape residents, and there is only one local Afrikaans university that they could attend.
However they were not in the same year, and he says he has never met Kellermann.
Update: Faure clarifies Drake’s position
Following further comments made by OffshoreAlert’s David Marchant on the Moneyweb website, Faure provided some additional detail on Drake’s role with the Kijani sub-fund. He pointed out that while Brighton SPC was set up in 2014, its assets were only received in 2015. It was therefore only at that stage that Drake could begin the primary job of reconciling those assets.
“On 28 January 2015, the directors of Brighton SPC signed the necessary agreements to fund Brighton SPC’s Kijani cells, and the counterparties signed on 5 February 2015,” Faure explains. “This is the date we could start our work, as prior to this date, we did not have the necessary agreements making Brighton SPC the owner of the assets in question.”
Faure confirms that Drake was listed as the independent administrator from the fund’s conception in 2014, and that will be reflected on any prospectus from an earlier date. However, Brighton was an unfunded entity until the date that it became the legal owner of the assets it now holds, and so Drake could not have done any verification of the assets prior to that date.
On the question of whether or not Drake removed its name from Kijani’s website, Faure points out that the company was erroneously listed on the site as a partner.
“Once this came to our attention, we requested that it be removed, as we are the independent administrators of Brighton SPC, and can only be listed in that sense,” Faure says. “We have no problem with being listed, but it must be in the correct way, indicative of our role as independent administrator. Being listed as a partner may indicate that we are not independent, which is not acceptable.”
He points out that Drake is still listed as the independent fund administrator under the ‘contact’ section of the website.
Kellermann was not available for comment at the time of publication.