In March 2015, shortly after allegations first surfaced against David Cosgrove, Cobus Kellermann and the ‘Belvedere Group’, international consultancy deVere issued a public statement highlighting the role it had played in the story.
The company noted that it had “helped a US-based investigative financial news service expose what could be one of the world’s biggest-ever frauds in order to protect investors and try to recover assets”. An unnamed deVere spokesperson added that: “We suspect that this case could turn out to be one of the largest financial scams in history”.
The spokesperson went on to claim that deVere and it clients had been “badly let down” by fund managers and administrators, and that “seemingly clear warning signs had been ignored by professional service providers trusted by deVere”.
However, last week – four years later – South Africa’s Financial Sector Conduct Authority (FSCA) announced that after extensive investigations into companies linked to Kellermann, it could find no breaches of the law. It noted that no international regulator had taken any action against Kellermann either.
When asked about this by the publication International Adviser, an unnamed deVere spokesperson said:
“It’s interesting the regulator has reached this conclusion regarding South Africa-based funds. We are aware of several international funds where Mr Kellermann has, at least, made unwise investments.”
This is a meaningfully different position from the one the company adopted in 2015. Self-evidently, “unwise investments” are not equivalent to “one of the largest financial scams in history”. However, Moneyweb’s queries to deVere asking for clarification on how the company reconciled the two statements were essentially rebuffed.
“Certainly unwise investments were made,” was all that deVere would say in response to questions. The company did not supply details of the funds in which these decisions supposedly took place, or why deVere believed them to be “unwise”.
“A full list can be checked online,” was all that a company spokesperson was prepared to offer.
(Moneyweb’s full request and deVere’s response appear in full at the end of this article.)
Having made this statement, therefore, deVere was either unable or unwilling to substantiate it.
It would also not say whether it still stood by the allegations it made in 2015, given that various bodies have now concluded their scrutiny of Kellermann and Cosgrove.
No action has been taken against Kellermann after investigations by the Guernsey Financial Services Commission, the South African FSCA, or the CFA Institute. Kellermann was never personally under investigation in Mauritius.
Cosgrove has also not been sanctioned in Guernsey, but was disqualified from holding any position in the financial services sector in Mauritius for five years in 2016. However he is fighting the decision in court, as he was not granted a hearing before the action was taken.
Strategic Growth Fund
deVere’s responses to both the regulatory findings and Moneyweb’s questions are significant, because the firm’s specific interest in the ‘Belvedere’ matter has always focused on the Strategic Growth Fund. This fund was suspended in February 2013 due to a lack of liquidity, and it has since become apparent that no money will be recoverable from it.
The Strategic Growth Fund was available through the Global Mutual Fund based in Guernsey – a fund platform that was managed by Lancelot Management. The beneficial owners of Lancelot were Kellermann and Cosgrove.
The Strategic Growth Fund portfolio itself was not, however, managed by Lancelot. Its day-to-day portfolio management was handled by a company called United Asset Management.
In the March 2015 statement, the deVere spokesperson claimed that: “Like many other international brokerages, several years ago deVere was approached by the fund manager of a Belvedere-administered fund to invest in the Strategic Growth Fund.”
This was expanded upon by deVere’s then-divisional manager in Africa, Greg Stockton, in an interview with CNBC Africa. He asserted that Kellermann “approached deVere around 2007 with Belvedere, to talk about Strategic Growth Fund”.
For a number of reasons, however, this may not be true.
Firstly, Belvedere Management was only established at the end of 2008. Moneyweb is in possession of a copy of the company’s first licence issued by the Mauritius Financial Services Commission, as well as a letter from the regulator noting that the licence was issued, both dated November 3, 2008.
Secondly, Belvedere was never the administrator of the Strategic Growth Fund. The fund was administered initially by Bordeaux Services and later by Lumiere Fund Services, but Belvedere never performed any administration services in Guernsey. In fact, it could not have done so as it was never licensed in that jurisdiction.
Moneyweb’s investigations have also revealed that deVere set up the Strategic Growth Fund itself. A letter written in November 2006 by the managers of the Global Mutual Fund to deVere CEO Nigel Green confirms that deVere had requested two cells in the Global Mutual Fund. These cells, which are portfolios on the platform, are numbers 45 and 46.
In a Global Mutual Fund prospectus dated December 5, 2006, these cell numbers correspond to the Strategic Growth Fund of Funds (GBP) and the Strategic Growth Balanced Fund of Funds (USD).
It has also become clear that all of the investors in the fund were deVere clients.
This was confirmed by deVere itself to Grant Thornton, the auditors appointed in Guernsey as administrators of the Global Mutual Fund. In its report on its investigations, Grant Thornton notes that its joint administrators “met with a representative of deVere, who advised us that all investors in the Strategic Funds are considered to have been introduced by deVere”. This is also supported by a June 2008 fund fact sheet for the Strategic Growth Fund, which indicates that it is “exclusive to deVere & Partners”.
Who knew what, when
United Asset Management, the Switzerland-domiciled company that managed the Strategic Growth Fund portfolio, is also closely linked to Green, deVere’s CEO. The company’s registration certificate lists Green as its sole shareholder.
Although he sold this interest in September 2012, deVere has publicly acknowledged that Green controlled the company. A deVere spokesperson is quoted in a May 2013 International Adviser article saying: “Green’s control of United Asset Management concluded some 12 months ago and his ownership was officially relinquished in September 2012.”
While deVere has denied that Green himself had any input on investment decisions, it is apparent that deVere was at all times fully aware of how the portfolio was being managed.
Moneyweb is in possession of a series of emails sent from the fund administrator, reporting on the Strategic Growth Fund’s daily dealings and included in the recipient list on all of these mails is Beverley Yeomans, who is currently a director at deVere, and has worked for the company for more than 20 years. If Kellermann did make any “unwise investments” while he was managing this fund, therefore, deVere was fully aware of them at the time.
Moneyweb put all of this to deVere prior to publication of this article, but the company declined to respond to any of the specific points raised.
Moneyweb’s request to deVere following its statement to International Adviser:
I hope you can assist me to clarify a few things.
I refer to the comment by a deVere spokesperson in this International Adviser article: https://international-adviser.com/belvedere-boss-cleared-by-south-africa-regulator/
Please can you clarify:
1. Is this an acknowledgement that the claims deVere made in its press release of 25 March 2015 were wrong? In that release, deVere states: “We suspect that this case could turn out to be one of the largest financial scams in history”.
It would appear to be self-evident that “one of the largest financial scams in history” and a few “unwise investments” are not the same thing. Please could you clarify how deVere reconciles those two statements.
2. Why does deVere refer to the FSCA’s decision as “interesting”?
3. Both the Guernsey FSC and the South African FSCA have now concluded their investigations into ‘Belvedere’ without taking any action against Cobus Kellermann or David Cosgrove. The action taken against Cosgrove in Mauritius is being challenged in court. Kellermann faced no sanction in Mauritius. Kellermann was investigated by the CFA Institute, which found no evidence against him. In light of this, does deVere stand by the allegations it made in the 25 March press release? If so, on what basis, given that years of investigation by multiple bodies have found no wrongdoing on Kellermann’s part specifically, and the justification for Cosgrove’s sanction in Mauritius has never been tested? (Also consider that certain statements in that press release are demonstrably false, as Moneyweb has previously reported.)
4. Please could you provide detail of the “several international funds” where deVere claims Kellermann made these “unwise investments”, and on what basis deVere believes such investments to be “unwise”.
1) certainly unwise investments were made
2) as stated
3) this is incorrect
4) a full list can be checked online