The Guernsey Financial Services Commission (GFSC) has publicly confirmed it will not pursue any further action into David Cosgrove related to the ‘Belvedere’ R200 billion Ponzi scheme.
The GFSC published a ‘Public Notice’ – the first public announcement regarding its investigation – on its website on December 1, in which it states it “has no enforcement process pending against Mr Cosgrove” related to several companies and funds of which he was a director or shareholder.
However, Gosgrove’s business associate at the time, Cobus Kellermann, told Moneyweb the GFSC also offered him the opportunity to sign a similar agreement, which if he had, would have triggered the publication of a similar public notice.
However, Kellermann refused to sign the agreement as it included several confidentiality clauses which would have prevented him from speaking out publicly about the “appalling” conduct of the GFSC during its investigation.
“I am not prepared to accept the terms of the GFSC ‘settlement agreement’ for the commission to issue a public statement. To be frank, my reputation has been damaged so badly, the bland public statement they were prepared to make would not make a material difference in my life, I have come to realise,” Kellermann said.
Kellermann said if he signed the agreement, he would be legally prohibited from assisting or becoming involved in any form of class action from investors against the GFSC.
“I would assume the regulator – which is there to enforce the ‘Protection of Investors’ law – should not have to want to stop me from talking to investors.”
Kellermann added that the GFSC and GT (accounting firm Grant Thornton) acted “appallingly”.
“They were out of their depth, ill-prepared and acted unconscionably and according to me even criminally. I did lay a charge/complaint with the Guernsey police, but this went nowhere. They did a very superficial investigation on a point that I think is very easy to interpret. GT equally was not up to the task and ‘side-stepped’ a lot of procedures and rules that I thought would have been the correct and prudent thing to do,” he said.
The allegations of the alleged multi-billion Belvedere Ponzi scheme surfaced in 2015 when Miami-based blog OffshoreAlert, published by David Marchant, published several articles claiming the duo were the masterminds of the scheme.
Regulators in Guernsey and Mauritius reacted quickly and initiated investigations into the allegations.
The GFSC also shut or put under administration several platforms and funds linked to Cosgrove and Kellermann, effectively shutting down their business.
These included the investment platform Lancelot, the Global Mutual Fund, Universal Mutual Fund, Worldwide Mutual Fund, the Trinity Global Fund and Abroad Spectrum PCC.
Two and a half years later, in 2017, after a formal hearing, the GFSC dropped the case and informed Cosgrove and Kellermann privately that it would not take further steps against them.
However, the commission did not make this decision public.
Consequently, Kellermann and Cosgrove lodged several complaints with the GFSC and demanded that the commission announce publicly that the investigation found no wrongdoing on their part.
The two also demanded that the GFSC appoint an independent commission to investigate the interactions between the commission, Marchant and the international finance group deVere and how the “false and misleading information they provided to the commission resulted in the GFSC being used to disseminate false information and act on false information”.
Kellermann said the GFSC then proposed the settlement agreement, which Cosgrove signed, but he refused to sign.
Moneyweb approached the GFSC for comment, but the commission declined. Cosgrove also declined to comment on the public notice.
Kellermann has instituted several defamation cases against various media institutions in South Africa, but says any action against the GFSC would be “a waste of money”.