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Belvedere: What do we know?

Making sense of the story.

CAPE TOWN – The allegations against Belvedere Management involving South African fund manager Cobus Kellermann have caused am understandable stir. The scale of the alleged $16 billion (R200 billion) makes it a compelling story.

When something of this nature comes to the attention of the media, we greet it with mixed feelings. We want to go after the bad guys, but at the same time we have to be 100% sure of any information we publish.

The allegations were first made in an article on OffshoreAlert that claimed to have unearthed a massive criminal enterprise. It named Kellermann together with Irishman David Cosgrove and Mauritian accountant Kenneth Maillard as the supposed masterminds behind a Ponzi scheme that made anything we had seen before seem like the cocktails before the real party.

As soon as it was brought to our attention, it was clear that this was potentially a major story. But our responsibility to the public and the people implicated means that we have to independently verify the facts for ourselves before we publish them.

Some people have assumed that we are doing so because we want to prove OffshoreAlert’s claims to be false. That is not the case. We are simply being old-fashioned, checking and re-checking the evidence so that we can make up our own minds.

It may be that OffshoreAlert has uncovered something. When there is this much smoke, there is very likely to be some fire. However, exactly what it is and how big a problem it may be, we do not know. That is what we have been trying to find out.

What we do know for sure is that Kellermann could not have stolen any money from South African unit trusts. The assets in a regulated unit trust are always segregated from the fund manager and held by the trustee, which is an independent entity. MET Collective Investments and the trustees of the funds with which his name is associated have all independently verified that the assets are where they are supposed to be.

However, it is what we do not know that is the real focus of the story. There is a complicated raft of allegations that we have been trying to sift through, and unfortunately answers are not easy to find.

On Friday, Moneyweb had the opportunity to speak to Kellermann.

He asserted that he is an absent shareholder in Belvedere, and so is not able to comment definitively on all of its business dealings. He claims that he is not actively involved in the running of the company.

His shareholding in Belvedere is through Stonewood Holdings. Stonewood is beneficially owned in equal share by Kellermann and David Cosgrove, and in turn Stonewood owns 51% of Belvedere.

He nevertheless, together with written responses Moneyweb received from David Cosgrove, provided some of his side of the story on a few matters. 

Mauritius

Two fund companies administered by Belvedere – Lancelot Global and Four Elements – are currently the subject of enforcement actions by the Financial Services Commission (FSC) in Mauritius. They are suspended from taking any new business and are under administration by PwC Mauritius.

The FSC will not however reveal why these companies were suspended nor what its investigations have revealed until they are complete. Neither will it confirm or deny whether any investor money is unaccounted for. PwC has only taken over the files in the past few days and is not yet in any position to comment on what they are facing.

Kellermann and Cosgrove’s explanation is that the suspension came following a routine visit from the FSC.

“When explaining how Lancelot and Four Elements operated, the authorities raised concerns that they would not be able to trace all the underlying beneficial owners/investors in the funds,” they said. “The FSC was not satisfied with so-called reliable introductory certificates from other institutions verifying the beneficial owners. The FSC wanted to find out who are the beneficial owners themselves, which was not practical for us. For instance Friends Providence International may invest on behalf of clients as a custodian and the information about the underlying investors is subject to confidentiality.”

Kellermann and Cosgrove said that they have not appealed against the actions taken by the FSC.

Until the FSC reveals its findings, therefore, we cannot know what the scale of the concern is. Any speculation about what may have gone on therefore remains only that – speculation.

It is also worth noting that these are not Belvedere’s only interests in Mauritius, which raises the question why, if the whole company is a fraud, did the FSC not stop Belvedere from operating altogether. Again, that question only invites more speculation.

Cayman Islands

There are further allegations that a fund in the Cayman Islands, the Brighton SPC Kijani fund, is simply a Ponzi scheme. This is based on the fund’s almost unerringly positive performance record and the fact that it was relocated to the Cayman Islands from Gibraltar last year.

While it was resident in Gibraltar, Kijani, was administrated from Mauritius by Belvedere. And the fact that it released its private placement memorandum four days after Lancelot Global and Four Elements were suspended by the FSC has led to the suggestion that it was hurriedly relocated to avoid being suspended itself.

However, Kijani was actually incorporated in the Cayman Islands in May 2014, which is a number of months before the FSC acted against Lancelot Global and Four Elements in Mauritius. When it relocated, it also appointed new counterparties – of particular interest is that Drake Fund Advisors took over as the administrator from Belvedere.

Kellermann and Cosgrove said that the reasons for relocating the fund were a more appealing tax and regulatory climate.

What does raise eyebrows is Kijani’s performance record. From 2011 to 2014 it reports annual returns of 44.18%, 19.36%, 16.24% and 21.44%. Over all of that time it reported only one month of negative returns.

The fund’s fact sheet also says that it targets 20% per annum capital growth in the Class A shares, or quarterly distributions at a rate of 2.25% per calendar quarter in the Class AG shares, which are for investors seeking an income. These are the sorts of numbers that tend to raise suspicions.

However, the fund notes in its material that it does not guarantee this performance and that an investment in the fund carries substantial risk. The current fund administrator, Drake, has also told Moneyweb that, based on the work it has done, the assets in the fund appear to be verifiable. It has also seen audited financial statements from December 2013 and drafts for 2014 which it said it “placed comfort in”.

Cosgrove and Kellermann said that they could not comment on Kijuani’s performance, as those questions should be directed to the investment advisers, Straffan Asset Management.

There may be links between Straffan, and RDL Management, which part of the Stonewood Holdings Group owned by Kellermann and Cosgrove. However, a link does not prove impropriety. What has to be shown is that money is actually missing. 

London

Another set of allegations against Belvedere relate to a police raid on the London offices of forex trader CWM FX. The raid on March 3 was supported by the Financial Conduct Authority (FCA) and 13 people were arrested over allegations of fraud and money laundering.

CWM FX is part of the CWM World Group, which also offers funds and financial solutions. One of those funds is the Brighton SPC CWM, a section of the same umbrella fund under which Kijani sits. The CWM cells have not yet however been launched.

There are other links to Belvedere in that it appears that Belvedere acts as investment advisor to some of CWM’s other funds.

However, these links to Belvedere do not prove that this is all part of a huge scam. While they contribute to the suspicions around the group, it still has to be shown that money went missing and how Belvedere would have been the ultimate beneficiary.

Kellermann told Moneyweb that to the best of his knowledge, CWM is an independent company. It is regulated by the Financial Conduct Authority in the UK and is not owned by Belvedere. 

Anchor

The most recent allegations around Kellermann came up on Thursday and are not part of the original expose. They relate to a website for Trinity Scheme, which is an investment company that on its website notes that it is managed by Lancelot.

The list of funds on its website includes the “Anchor Global Diversified Fund”, under which is a link to the website of South African asset manager Anchor Capital. The CEO of Anchor, Peter Armitage, has however stated that this fund does not exist and that Anchor has certainly never managed it or taken a fee from it.

Kellermann’s explanation to Moneyweb was that he and Armitage discussed setting up this fund in the course of last year. He said that Armitage may have forgotten about this, but the fund was indeed established. He does not, however, think that it ever started operating or took any assets.

He said that over the next few days this matter will be resolved between the lawyers of the two parties once they have had a chance to go over relevant documentation.

So what do we know?

The problem with reporting on a story like this is that the facts are so difficult to verify. The regulators investigating these companies won’t talk, so we don’t actually know what they are investigating until they’ve finished their work and make a public statement.

Kellermann and Cosgrove have provided their side of the story, but it is only really by scrutinising financial reports, asset registers and bank accounts that proof or otherwise can really be established. We don’t have access to those unless we have an inside source, but the regulators will and it is on that basis that their determinations can be made.

The Financial Services Board in South Africa has said that it is cooperating with the regulatory authorities in Mauritius and Guernsey with their investigations into Kellermann.

It may be that Belvedere is a giant scam and that it will unravel with major repercussions around the world. However, we can’t report that as fact until we know for sure. And there simply isn’t enough information available yet to make a certain judgement.

COMMENTS   48

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Your reporting on this matter continues to be appalling and replete with factual inaccuracies.

Re. ” … Kijani was actually incorporated in the Cayman Islands in May 2014, which is a number of months before the FSC acted against Lancelot Global and Four Elements in Mauritius.” That is false. Kijani is not incorporated in Cayman. It exists as an unincorporated cell within Brighton SPC and it is Brighton SPC which was formed in Cayman in May, 2014. Kijani – by its own admission in documentation – moved to Cayman in November, 2014 – a few weeks after being closed down in Mauritius. None of this is in dispute by anyone, not even Belvedere. To get your facts wrong is one thing but to then to use your own error as evidence to denigrate OffshoreAlert is comical. Re. “Kellermann and Cosgrove said that the reasons for relocating the fund were a more appealing tax and regulatory climate.” If you believe that, you’ll believe anything. It moved a few weeks after being closed down. This isn’t rocket science. Re. “Until the FSC reveals its findings, therefore, we cannot know what the scale of the concern is.” The authorities revoked the two firms’ business licences and appointed administrators – and you still don’t know “what the scale of concern is”. Dear me. Re. “Kellermann told Moneyweb that to the best of his knowledge, CWM is an independent company. It is regulated by the Financial Conduct Authority in the UK and is not owned by Belvedere.” It is not “independent”. For heaven’s sake, they even state on one of their sites that they are a member of the Belvedere Management group. Don’t you do any research? Re. “The problem with reporting on a story like this is that the facts are so difficult to verify.” No, the facts are easy to verify but you are incapable of verifying them because you aren’t very good at your job. Re. “The regulators investigating these companies won’t talk, so we don’t actually know what they are investigating until they’ve finished their work and make a public statement.” I know what they are investigating because I do have sources and I have copies of complaints made to regulators. Your reporting on this matter continues to be both lazy, inaccurate and incompetent.

Here’s a copy and paste from Kijani’s own web-site at kijani.com: “In the light of the AIFMD directive and in consultation with legal counsel, the Directors decided it would be advantageous to relocate the fund to Cayman – recognised as one of the market leading offshore jurisdictions globally. In line with this enhancement, the fund also appointed new counterparties based in Europe and the UK. After more than a year of planning and consultation the fund move to Cayman was finally completed in November 2014. ” So how on earth can you report that “Kijani was actually incorporated in the Cayman Islands in May 2014”. Not only has it never been incorporated in Cayman (because it exists as an unincorporated Special Portfolio) but even it admits that it went to Cayman in November, 2014. Heck, it even issued a press release announcing the move.

Re. “The FSC will not however reveal why these companies were suspended nor what its investigations have revealed until they are complete.” Why the f@@k do you think they were closed down? Because they were making too much money? At what point does your brain kick into gear? Do you have an ounce of common sense? Let’s see now: two plus two equals … er … hang on a sec …

David Marchant, the kind of rudeness as inn your comments below is not the way we do business in SA. We do not attack people when they have a different opinion. All we need is facts and Moneyweb is doing an excellent job of focusing on facts only. No unproven facts and sensationalism as was has been concocted to date by biznews as yourself. To quote the deputy CEO of the FSB “not a single investor who suffered any losses approached us regarding this matter” and as Bruce Whitfield said on 702 “you cannot call it a murder if their is no body”. Lastly, whatever the outcome – this saga has once again proven that SA unit trust funds are super safe and well regulated.

Moneyweb team – please put David’s comments of earlier this morning back – so that the SA public can see who we are dealing with – no need to censor it

facts only please@ , I am also waiting for the ”smoking gun ” here, but really concerns me so far, is the risk that the ”so-called” beneficial shareholders are in here. The famous case , currently being heard in the North Gauteng High Court, Investec basically claims that the beneficial shareholders don’t have any rights….and I don’t like statements by authorities that they ”might not be able to trace all the beneficial shareholders in the fund”. Also the argument that the custodians might invest obo of the clients needs better scrutiny …..

The same principle applies to SA funds – when investors invest via a life company or a LISP, then such company or nominee’s name appear in the unit holder register. Most do not provide a list to the CIS manager of who invest in their funds. The only way to obtain such a list is for the regulator to contact the intermediary (life co/LISP) which such companies will gladly provide to them – but the CIS manager is not at fault in this case – it applies to all, including the big brand firms.

ps I wish you could see Marchant’s comments to the article above which were removed from this page by Moneyweb early this morning…….

I’ll keep this brief. I emailed Moneyweb documents showing that the falsity of the statement in the above article that: “… Kijani was actually incorporated in the Cayman Islands in May 2014, which is a number of months before the FSC acted against Lancelot Global and Four Elements in Mauritius.” These documents included a print out of a search for Kijani on the Cayman corporate registry site (for which I have an account) and the publicly-available corporate information for Brighton SPC, which I bought from the Cayman registrar. More than 12 hours later, this blatant inaccuracy has not been corrected but my comments (which were deservedly harsh) have been removed. That does not reflect well on Moneyweb.

Congratulations on a mature and reasoned approach to this as yet unproved Ponzi. Marchant does not come across in a credible manner whatever the ultimate outcome.

Re. “Congratulations on a mature and reasoned approach to this as yet unproved Ponzi. Marchant does not come across in a credible manner whatever the ultimate outcome.”

It’s only “unproved” if you don’t accept that a performance chart comprising a diagonal line trending upwards over a long period of time with no material variance is absolute proof of a Ponzi scheme. Just like you know something’s an automobile because it has a chassis, wheels, an engine and a steering wheel, you know an investment scheme is a Ponzi just by its performance chart. It’s as simple as that. This is well-known by the top investigators of financial crime but it’s not generally known among the public, which is why so many investors continue to fall prey to Ponzi schemes.

A performance chart for a Ponzi scheme basically reads like a right-angled triangle. For example, from left to right, there will be a diagonal line rising to the right and then, when the scheme collapses, there will be a vertical line to the bottom, therefore forming a right-angled triangle. For those investors out there, you should bear this in mind if ever approached by someone trying to sell you on an investment scheme. If the purported chart looks like a right-angled triangle, you should avoid it.

OffshoreAlert specializes in exposing investment fraud whilst it is in progress. We do our own research, form our own conclusions and warn the public. In doing so, we assume substantial financial and physical risk. But I came to terms with that a long time ago. We don’t wait for regulators or law enforcement to take action because, by then, it’s too late for many investors. Regulators and law enforcement take too long to act. Our subscribers, who are the top financial services companies in the world, trust us because of our impeccable track record since we launched in 1997.

facts only please@. I still don’t see the smoking gun, but there seems to be smoke around….I am alerted by claims of performances of 44,18 %, 19,36%, 16,24%, 21,44 % over the 2011 to 2014 period. Kindly quote/mention any investment in our ”La La land”, that you are aware off, that achieved these average performances in said period! I have listened to the North Gauteng High Court Case, and specifically Investec’s arguments pertaining to the roles and functions of the so-called Nominee companies, and I must be honest, it didn’t convince and / or impress me as the Nominee companies, don’t have the will nor authority to act on behalf of the so-called beneficial shareholders, if anything goes wrong…..my concern with this current case, is that the beneficial shareholders will take the hit, ……IF….anything goes wrong here, not the Nominees or so-called insurance companies…

If is indeed a ponzi scheme why have no one come yet and claim they were unable to redeem?

It seems to me that the only one complaining is Devere.

Devere, by its own admission, is also the one who gave the info to Mr. Marchant.

Quoting another reader in a previous article:

“Fact 1. DeVere shopped Belvedere to Marchant apparently armed with all this material yet by their own admission, only the SGF fund has affected them. Marchant chose not to mention SGF once in his entire tirade yet sought to link Belvedere to everything bar the plague….why?

2. It’s because deVere owned the SGF fund and clearly told Marchant not to mention SGF as they wanted to keep SGF out of the press…why?

3. Because deVere as an “independent” adviser openly promoted SGF over everything else…..consultants were paid more in SGF than anything else…..the whole fund was sold to clients as an independent fund but underneath the surface was an expensive, highly charged internal broker fund….and the less SGF is kept out of the press the better, so even though Marchant had all this material on SGF he chose not to publish it…..go figure…..

4. Marchant has sold his soul and his publication to the highest bidder….deVere furious with Kellermann and Belvedere over the locking up of SGF in 2013 and their refusal to sell down the underlying assets at any price have decided to exact revenge and in Marchant they have found a willing suitor….he betrays his subscribers and his readers”

http://www.moneyweb.co.za/in-depth/investigations/belvedere-allegations-money-in-sa-unit-trusts-is-safe/

20% p.a. returns are fairly common locally – over the past 5 years till end of Feb Satrix Indi delivered on average of 28% p.a., and that is a JSE index fund, with SIM and Coronation IND shortly behind with 27%. Sector funds tend to be more high risk than general equity and therefore have higher ups, but also deeper troughs during difficult times than general equity funds (Foord Equity average performance was 22% over the past 5 years). The fund in question in the Cayman islands is a commodity fund which has a high risk mandate with a minimum investment amount of more than R1m. I’m not saying all is ok, just that the returns quoted are not uncommon.

facts only please@….thanks for information, please quote local commodity fund performance, as commodities went south over last couple of years. A rose by another name is still a rose, and we should then compare high risk funds…

We do not have any commodity unit trust funds, only resources long only funds which struggled. However, the fund in question is a commodity hedge fund – google “international hedge fund awards commodity funds” and you will be pleasantly surprised by many of the winners. The Polar Star Fund is a winner and delivered on average 27.8% p.a. since inception in 2008 and 37.7% during the past 12 months. But as mentioned these funds are risky, in Jan 13 they lost 12% in one month, but they had a number of 10%+ months too. Must say Kijani’s 1 negative month in 4 years is very uncommon – either very good, pure luck, good protection strategies or a all of the above or ? but without the facts we can only speculate and no one should be publically prosecuted based upon speculation….what happened during the past week is the worst form of prosecutor, judge, jury, and hangman which we have seen in a long time.

Re. “I’m not saying all is ok, just that the returns quoted are not uncommon.” I strongly disagree. Kijani’s performance chart, steady growth month-in, month-out over 50 months (with one minor losing month), is that of a Ponzi scheme. If you see any chart that resembles that, it too is a Ponzi scheme. They are controlling the returns using new investors’ money. In the bona fide investment world, it is perfectly possible to earn high returns over several years but the performance will deviate significantly during that period.

Re. “is the worst form of prosecutor, judge, jury, and hangman which we have seen in a long time”. It’s actually the “best form” because OffshoreAlert has prevented future victims from squandering their savings. If OffshoreAlert hadn’t built up such credibility since it was launched in 1997, the story wouldn’t have had the impact that it has. Our subscribers, who include the world’s leading financial institutions and investigative firms, have seen us successfully expose one major fraud after another over the last 18 years and they react to that we published because they are satisfied that it’s accurate and, in doing so, protect their assets, their clients’ assets and their reputations. If you don’ want to believe it, that’s your choice. When this all officially collapses, which it’s in the the process of doing, feel free to write me off as lucky. The harder I work, the luckier I get!

To provide some background to OffshoreAlert and the seedy nature of international finance, including the world’s best-known financial firms, in the late 1990s, we exposed a $1 billion insurance and investment fraud by a Bermuda-based insurance broker (Stirling Cooke Brown Holdings) that was controlled by Goldman Sachs. We exposed Stirling Cooke the same month it went public on NASDAQ at $22 per share (from memory) and Wall Street analysts subsequently drove its price up to $35 or thereabouts. The company’s share price then went down to zero, it was de-listed, it went bankrupt and an insurance arbitrator voided major insurance contracts on the grounds of fraud. One of Stirling Cooke’s directors, Reuben Jeffery III, who as a Managing Director with Goldman Sachs, later went on to become the chairman of the Commodity Futures Trading Commission, one of the biggest regulatory agencies in the US. Welcome to the murky world of international finance!

So David, this is not going according to plan is it?

Ten days on since you “broke” the story about the “biggest criminal event in history” or the “worlds biggest Ponzi scheme at £20 billion” or stated categorically that “everybody and I mean everybody who had money in Belvedere administered vehicles has lost it all”, what has happened?……..No doubt by this time you were probably expecting to be on CNN or Sky News being lauded about how you had broken this story and been the saviour of the global financial services industry……..its all beginning to unravel isn’t it?

1. Two companies have had their licences revoked so as to enable PWC to investigate and at the same time protect remaining investors from vicious and uncontrollable redemptions….pending a review on each cell. So far, nobody has come forward and produced evidence of missing or misappropriated funds.

2. Belvedere’s other PCC’s involving life companies, stockbroking and platform companies and all of their other business and subsidiaries are functioning normally with business as usual. A company you’d think at the heart of a 20bn ponzi would by now have been completely shut down, police would be swarming over all their offices and all the staff would be in the clink….its not happened.

3. It appears every cent in South Africa administered vehicles by Belvedere or Kellemann companies is accounted for and fully audited. The saddest fact is that fund managers with unblemished records and reputations are having their funds emptied and reputations tarnished due to panic redemptions, given that you sought to implicate all and everybody in your initial article clearly without foundation.

4. A major and completely authentic rebuttal of the CWM story has appeared in the press.

5. Existing Belvedere PCC’s are now providing cast iron proof that all funds within their PCC are accounted for, visible and fully audited by the likes of BDO.

6. The only other entity to have complained publicly about Belvedere so far other than Offshore
Alert is deVere……they apparently came to you armed with evidence about Belvedere even though the schmuck that appeared on CNBC admitted that they had only been affected by the Strategic Growth Fund (SGF) yet you chose not to mention SGF once in your entire article…..you don’t need to be a rocket scientist to work that one out.

7. Anybody who hasn’t danced to your tune is incompetent or an an idiot. Your postings on Moneyweb have got more delusional, more abusive, more deranged and more emotional. You have abused journalists you don’t know, industry professionals like Kevin Hinton who is one of the straightest guys in the South African financial services industry, who again you don’t know, and you appear determined to trash anybody and everybody accordingly, unless they believe everything you say without a single piece of evidence so far to back up the allegations from last week. You trash Nicholas Faure because he and Kellermann went to the same university and overlapped for a year (along with thousands of other Afrikaners) meaning they “must” have colluded together…..it’s pathetic…….David, you have “undeniable hard evidence”…..and you resort to rubbish like this.

8. Cosgrove and Kellermann are sitting in Stellenbosch, neither of them have done a runner and again one would have though that had they concocted a 20bn ponzi, they would by now have enacted their exit plan strategy which I’m sure wouldn’t have been 30 years sitting in Pollsmoor.

Your entire website David and reputation rides on this, this is the biggest call of Offshore Alerts lifetime…..will the $60pm subscriptions continue if all of this is proven to be unsubstantiated rubbish……..your nervous, your writing is increasingly desperate and deep down, you know you should have told deVere where to go and refused the wads of cash they offered you to act as a front for this story and to facilitate their revenge mission. You talk about watching a train wreck unfold mate……..we’re witnessing one right here.

Keep taking the tablets! Re the “worlds [sic] biggest Ponzi scheme at £20 billion”. This is something you have invented. It only exists in your imagination. Re. “You have abused … industry professionals like Kevin Hinton who is one of the straightest guys in the South African financial services industry.” I’ve never reported about, posted about or uttered a single sentence that mentions Kevin Hinton. Best to remain anonymous when posting such nonsense.

@DavidMOA

Are you sure you never posted anything about Mr Hinton? The link below states otherwise.

http://www.moneyweb.co.za/in-depth/investigations/belvedere-allegations-met-global-diversified-fund-suffers-large-redemptions/

In the comment section, you clearly resorted to ad hominem attacks and cast doubt on Mr Hinton character. Your subsequent denial of this prove that you are a liar. I just hope when all these settle in, you will be exposed as the pathological liar that you are.

As I was saying “delusional”

“Re. “It’s actually scary to see how destructive negative publicity can be to a business’s reputation.” It’s even scarier that people like you and MoneyWeb’s journalists can’t see an elephant when it is right in front of you. And that’s why fraudsters keep taking investors to the cleaners for huge amounts of money year-in, year-out. Kevin Hinton needs to get out of the investment business if he thinks these claims are “unsubstantiated” because he has demonstrated that he doesn’t understand what’s going on and can’t process information properly. The investment world is full of idiots. David Marchant OffshoreAlert”

Not to mention the serious defamatory remarks made by AH on Biznews – it caused a large number of innocent shareholders in various businesses losing millions of rands during the past week due to being associated in one form or another with these businesses. And at the end the investors in the funds will be the net losers as one of the top performing equity managers was “forced” to resign as fund manager of the local funds due to the reputational risk created by inaccurate media reporting (Moneyweb excluded – thank you) – sad day week indeed for SA financial journalism as one gentleman or rather sensationalist with website relied on DM without testing the accusations and thereby harmed the SA industry’s reputation for accurate and reliable reporting big time.

I’ve never reported about Kevin Hinton. If I had, I would have remembered him. Clearly, as you have pointed out, I made a post about him. I forgot about that. I had never heard of him before, I believe, reading an article somewhere that mentioned him in relation to Belvedere, and immediately posted a comment that was quickly removed by the moderator of this message board. I;’ve never heard of him since and, therefore, his name did not stick in my mind. I didn’t have the luxury of having my memory refreshed since the comment had been deleted. I don’t know him from Adam and I don’t have a photographic memory. Of that, I plead guilty. Clearly, at the time, I thought he had made a comment regarding Belvedere that I considered to be stupid and I stand by that. The rest of your posting is absurd. Nowhere have I or OffshoreAlert reported that Belvedere committed the “worlds [sic] biggest Ponzi scheme at £20 billion”. This is something you have plucked out of thin air. We described it as one of the world’s biggest criminal financial enterprises but didn’t estimate the size of it, merely reporting that Belvedere itself claimed to have $16 billion (which is considerably less than £20 billion) of assets under administration, management and advisory. I doubt that this figure is accurate because, as OffshoreAlert also reported, the group artificially inflates assets. In the coming days, we will start publishing further details of Belvedere’s many scams.

Re. ‘since you broke the story what has happened?’. Well, the same day of the story, Kijani Commodity Fund was suspended and, four days after the story, two Belvedere companies had their licenses revoked in Mauritius, their collective investment scheme authorization withdrawn and the Mauritius Stock Exchange de-listed two Belvedere funds. the two companies whose business licences were revoked were also placed in administration by the regulators in Mauritius. And the South African Financial Services Board also announced that it was helping with two regulatory investigations in Guernsey and Mauritius. The City of London Police also announced details of their raid and arrests on the office of CWM FX. The group, for all intents and purposes, is in the midst of collapsing. This is a bit like ‘What have the Romans ever done for us’ sketch in Monty Python’s ‘The Life of Brian’.

Still no ”smoking gun” and lots of the smoke is now gone!

There are way too many layers through where investors money is channeled and controlled. Fund companies, managers, trustees, administrators, holding companies, investment schemes, asset management companies, and the rest. This allows for obfuscation, as being experienced with all those trying to get to the bottom of these allegations.

I still don’t see any ”’smoking gun”, but saw the headlines of Rapport Newspaper today, which reads , ” Cobus Kellerman:
Ligte flikker oor plaas in Helshoogte” (i.e. Lights flash over farm in Helshoogte)…can somebody report on this please ?

facts only please, your comments on the relative good performance of certain commodity hedge funds, prompted me to research a bit as it was my view that these indexes should actually suffer due to lower commodity prices commodity prices, hence the posting of this article: Commodity hedge funds suffer longest losing streak on record
LONDON | BY TOMMY WILKES
(Reuters) – Funds betting on commodity price moves have lost money every month since January, their joint longest losing streak on record, raising more doubts about their ability to make money at a time when the commodity “supercycle” may be over.

The average fund slid 3.58 percent in the first six months of the year, according to a widely watched Newedge commodity index. Funds have only suffered five consecutive losing months once before, in 2002-2003, the index shows.

Hedge funds market themselves as capable of making money in all markets, yet funds trading commodities as varied as gold, grains and gas, have failed to turn an annual profit in the last three years.

The weak performance will put more pressure on the industry to lower fees and introduce clawbacks, which enable investors to reclaim some performance perks paid to hedge fund managers in boom times if the returns they hope to achieve fail to continue.

Worries about cooling demand in key markets like China, and a huge shift in the supply-side from shortage to glut, has sent prices tumbling in recent years, and left many warning that the end of the commodity “supercycle” – the long period of rising commodity prices – is here.

“Historically most of these funds have been a levered beta play on the commodity cycle, or in some cases arbitrageurs of commodity spreads,” Michele Gesualdi, portfolio manager at hedge fund investor Kairos, said.

“The end of the supercycle has hurt the first area, while the volatility and discrepancies that have arisen in forward markets have made life difficult for the second.”

Adding to the sector’s woes, hedge funds which trade other asset classes such as equities have rebounded this year, including those that trade mining and energy shares.

The $1 billion fund of Clive Capital, a firm which trades oil and ran about $5 billion at its peak, is down 3.5 percent to June 28, performance data shows. Krom River’s Commodity Fund has lost 4.4 percent to end-June, while Brevan Howard’s Commodities Strategies Fund is off 2.5 percent to June 28.

Krom River’s chief executive Itay Simkin said that despite falling prices, commodities were still a very good investment due to production problems, urbanisation, decent economic growth rates and a lack of forward investment in mining.

Other funds mentioned in this story either declined to comment or could not immediately be reached for comment.

Funds trading bullion are nursing some of the heaviest losses. Gold has tumbled this year on expectations the U.S. Federal Reserve will cut back on its money-printing programme, which had driven gold to record highs.

John Paulson, the billionaire U.S. investor, has seen his gold fund, his smallest with $300 million in assets, plunge 23 percent in June and is down 65 percent this year.

Despite the losses, most managers are not down as much as commodity prices this year – the 19-commodity Thomson Reuters-Jefferies CRB index .TRJCRB fell 5.7 percent through end-June.

Some have also shone. After losing 30 percent in 2011 and 7.6 percent and a big chunk of his assets in 2012, Mike Coleman’s Merchant Commodity Fund is up 24.2 percent this year.

But the bigger concern for commodity funds is proving they can consistently make money amid a sustained downward trend in prices.

The problem, investors and managers say, is that the long, gradual trend of rising prices has been replaced with shorter, more uncertain trends, in which prices can plunge suddenly, making it difficult to profit from their slide.

Commodity prices, down 22 percent from a 2011 peak, have entered bear market territory, while volatility – which some funds thrive on – has also fallen, challenging managers further.

(Reporting by Tommy Wilkes; Editing by David Evans)

Re. “I still don’t see any ”smoking gun””. That’s just an issue of judgment. We all process information differently. Information is presented and some people decide ‘this is clearly a scam’ and some people decide ‘i don’t know’. Some people need to be hit over the head with the proverbial sledgehammer, others don’t. I once exposed a fraudulent offshore bank that was offering ‘get-rich-quick-returns on certificates of deposit. I provided my articles to a retired couple in Florida free of charge because they were thinking of investing. They prayed to God for a sign that they should not invest and, when no sign was forthcoming, they invested their life savings. Within months, the bank was in liquidation and their money was lost. I was baffled that, despite overwhelming evidence that the bank was committing a fraud, they couldn’t see it – and suffered a financial disaster as a result. It was remarkably sad.

David, what’s happened so far is old news…..all that’s happened are investigations where suspensions have been put in place to protect existing investors…..the suspensions don’t point to wrong doing…..you’ve alleged and they’re investigating…….nobody has come forward yet with an emptied fund or bank account….20 bn ponzi or “the biggest criminal financial enterprise in history”….mate, what’s the difference?….you fired the first shot and now you are backtracking……I don’t doubt at all the value of what offshore alert have done over the years, the Axiom story in particular….but sorry, this is just a load of bollocks and you know it….

DavidMOA@…..La La land, is not for sissies…..we do indeed all process information differently. I still don’t see a ”smoking gun” even although I am very concerned about the ”rights of minority shareholders and the so-called beneficial shareholders here in La La land”. You also, ad nauseum refer to everything that ”you once” did etc , etc. , how about the present tense and reputable evidence, in this case?

Thank you Patrick, compliments on keeping things factual and rational and clearly distinguishing between “what we know” and “what we don’t yet know”. Responsible journalism at its best.

Patrick-what don’t we know…..on the Biznews site a Organigram, explaining the relationship between Clarus and Bekvedere were provided: I don’t understand the following: Stonewood – what Forex trading are they talking about, and where ? Treasury Two ( who are they) as their name is very similar to local Treasury One, a very successful treasury outsourcing company. Beach : Trade finance and letters of credit….where are they and who is providing the services to them ?

This morning I left the following comment on the Biznews article but it seems to have been nixed by the editor there:
“Alec, I think you need to remove the byline “the rational alternative” from the Biznews branding. From where I sit, your reporting on the Belvedere story seems hyper-emotional and rather bizarre. The whole story clearly rests on the factual accuracy or not of one David Marchant’s accusations. And his comments on the Moneyweb site read like the rantings of a teenager. (He now apparently denies that he ever said that the funds constitute a ponzi scheme).
I do not agree with your view that they picked the “softest target” a la Sharemax. It is much simpler than that: Marchant sits in the USA, beyond easy reach of the SA legal system – making Biznews the primary source of the local story.
Full disclosure: I have no personal interest in this matter and had never heard of Belvedere or any of the role players before this news story broke. I have never worked in financial services, investment or journalism. I don’t even particularly care whether the Belvedere guys are crooks or not – but I do recognise defamation when I see it. As a regular reader of yours since way back in the Moneyweb days, I sincerely hope that you have your “truth and public interest” defence fully prepared. Alternatively, that your insurance cover is adequate.
*gets popcorn* “

Things I would like to know, after this story broke the news, and the publication of the Organigram to explain the relationship between Clarus and Belvedere, before I would invest one cent in these operations:
• Please confirm that you don’t use Stonewood to convert the ZAR proceeds to any other currency, before investment into any other instrument. Please confirm that you don’t use them when and if these funds are repatriated at the end of the investment perod etc, and that only locally authorised financial foreign exchange providers are used :
• Please confirm that Treasury Two, treasury management services are not involved in any way in these transaction, as I don’t know them at all, even if they are registered as a local financial service provider.
• Please confirm that my investment will never be converted to any other currency ( other than mutually agreed) and only be used for the instrument(s) agreed to at inception. I specifically instruct than my funds will never be used in any structure whereby trade finance are given and or where any letter of credits are issued.

Re. “And his comments on the Moneyweb site read like the rantings of a teenager.” My comments were the result of exasperation at inaccurate reporting by Moneyweb and an inability to form logical conclusions from information presented. I run the risk of having my comments deleted again but Moneyweb’s reporting of Belvedere is among the worst I’ve ever encountered in financial journalism. Re. “He now apparently denies that he ever said that the funds constitute a ponzi scheme.” That’s not true and something you have fabricated, indicating you are not impartial in this matter. Make no mistake: Belvedere has perpetrated a massive fraud, which includes Ponzi schemes, misappropriation of assets, self-dealing, false NAVs, material omissions and false statements in promotional material. Re. “Full disclosure: I have no personal interest in this matter and had never heard of Belvedere or any of the role players before this news story broke. I have never worked in financial services, investment or journalism.” This is perhaps the most comical part of your posting. Your “full disclosure” doesn’t even amount to “basic disclosure” because you didn’t publish your name. That irony seems to be lost on you.

“Mauritius’s Financial Services Commission said it suspended the licence of RDL Management Ltd. to provide mutual-fund services”…Its the ”morning after” and there is a lot of smoke around right now! We are now all waiting for the ”smoking gun”, if any, but it does not look good for the directors involved..Question : I had a look at Kellerman’s CV today; dId he work at Mcubed as well during the last 10 years ?

RDL Management was 50-50 owned by David Cosgrove and Cobus Kellermann and, in the initial prospectus for Brighton SPC, was identified as the company that controlled Brighton SPC. What is occurring with Belvedere is what occurs after every fraud OffshoreAlert exposes: they quickly collapse – against a backdrop of anonymous posters on message boards accusing us of poor research, inaccurate reporting and claiming that no-one is taking our articles seriously!

Re. “Has anyone actually lost any money?” Yes, this is well documented. Re. “We are now all waiting for the ”smoking gun”. Crime doesn’t unfold in real-life like it does in the movies. You’re not going to see a video of the crime taking place, which you can freeze, enlarge, and play back while eating your popcorn. The “smoking gun”, for want of a better term, is the plethora of evidence of fraud, lies, misappropriation, self-dealing, and inability of investors to redeem their investments.

David, some of us here in La La land ( your derogatory description of South Africans which I take great exception to), has also been around the block and worked as International Treasures in the local market, a couple of years ago in London, Sydney,Norway, Europe etc. We have even been to New York a couple of times for business etc. I want to ensure you that we do have a first world financial system in sunny SA. Furthermore, we are very well regulated here ( so far no Enrons etc) and we don’t need your sarcasm! We are well aware of what happens in Hollywood, with the movies that you allude to, and I can use fancy words like prima facie evidence etc. etc., but I prefer to use ”smoking gun”, as that is what I remember from the American movies! We actually eat ”pap en vleis” in Africa, our staple food, and only really eat if and when we go to the ”movies”. I have been very clear in my comments that I also things that concerned me, after the local press broke ”your big story”. It is also very clear from the statement from the local authorities that they are, and have been investigating same for some time, and I am therefore awaiting the plethora of incriminating evidence that you refer to in all your replies here. Maybe we get ”the smoking gun” in the form of the illiquid asset class, that has been used to redeem the investments etc, and is under investigation , or we don’t.

re my post below….unable to do spelling and grammar check after I posted but post should be amended to read …”änd only really eat popcorn”’…and ” very clear in my comments that there are also things that concerned me”….

line 11 should read….”only eat popcorn”’and line 12 …”clear in my comments that there are also things that that concerned me”….

Re. “David, some of us here in La La land ( your derogatory description of South Africans which I take great exception to) …” I did’t use ‘La La Land’ to describe all South Africans. I used it to describe anyone who can’t figure out what has gone on here so your attempt to play the nationality card is misplaced (deliberately so, in my opinion). I’m reminded of the great opening scene in the movie ‘Beavis and Butt-Head Do America’ when they’re trying to figure out what happened to the TV. I tried posting link to the scene here previously but Moneyweb’s system wouldn’t allow it to be posted. I can only re-iterate what I’ve stated before: If you can’t figure out what’s going on from the plethora of evidence, then it indicates to me that your ability to process information is appalling.

David, another bold statement by you….”I used it to describe anyone who can’t figure out what has gone wrong on here’’. Maybe you meant, ‘’the One that flew over the Cuckoo’s nest?
I think 99.9 % of people here in what you call La La Land can’t figure out yet, what had gone wrong…Don’t be a coward David, you did insult South Africans! I used the ‘‘plethora’’ and ”smoking gun” expression ad nauseum here on these posts, as I am not convinced, with the information out in the public domain, that this is an South African problem, rather an International one…The FSB statement clearly indicates that nothing untoward were reported and or picked up during their investigations in the local market to date….Come on David, you are a big boy now, dry your eyes and take responsibility for insulting South Africans!

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