Registered users can save articles to their personal articles list. Login here or sign up here

Kellermann and Cosgrove: What’s next?

The ‘Belvedere’ allegations that still need to be resolved.

On September 1 the Guernsey Financial Services Commission (GFSC) concluded its more than two years of scrutiny into David Cosgrove and Cobus Kellermann and the fund platforms for which Lancelot Management was responsible. It found no grounds to take any action against them.

The investigation was initially based on allegations that widespread fraud had taken place within the fund platforms operated by Lancelot. Each of these platforms consisted of a number of cells that were managed by independent managers.

The GFSC’s concerns were set out in an affidavit deposed by a senior analyst in its enforcement division, Paul Yabsley. It argued that net asset values (NAVs) in funds may have been manipulated, and that there were serious conflicts of interest in a number of related-party transactions.

While this ends a long period of uncertainty relating to Lancelot’s operations, there are still matters outstanding for Cosgrove and Kellermann in other jurisdictions.


The centre of the allegations around Cosgrove and Kellermann has always been the so-called ‘Belvedere Group’. There is no such legal entity, but essentially it refers to companies owned or majority-owned by Stonewood Holdings, a company owned by Cosgrove and Kellermann in Mauritius.

The two most significant of these are Belvedere Management and RDL Management. Both of these companies have had their licences revoked by the Mauritius Financial Services Commission (MFSC). Cosgrove himself was also disqualified from holding any position in the financial services industry in that country for five years.

The basis for these actions, however, remains unclear as the MFSC has not revealed how it reached its decisions to act. It has not published a report on the matter and has not held any hearings.

A report compiled for the regulator by PwC after it audited the funds in 2015 has also never been made available, even to RDL. This is even though RDL is expected to pay for it.

RDL Management and Cosgrove are therefore challenging the regulator in court, both on the actions taken against them and to get the PwC report released. Despite a number of postponements by the MFSC, the regulator is yet to file a responding affidavit.

One of the most serious reasons given by the MFSC for disqualifying Cosgrove was that it believed there was manipulation of the NAV within the Two Seasons PCC. It has not, however, explained in which fund this took place. Cosgrove also argues that the NAVs were always checked by an independent third party, specifically to prevent any manipulation.

In the interim, a number of funds that were housed on the Belvedere and RDL fund platforms have been allowed to transfer to other funds or investment companies. While the MFSC has refused to comment on these relocations, it is safe to assume that they would not have been allowed to take place if there was any indication that their assets were not accounted for.

South Africa

Based on requests from international regulators, the Financial Services Board (FSB) has conducted inspections into all the financial services companies linked with Cobus Kellermann. A report has been sent to the international bodies that made the initial enquiries. This includes the GFSC.

While the FSB has said that it is waiting for feedback from its fellow regulators before it can complete its findings, whatever it presented to the GFSC would likely have been considered in the course of the investigations in Guernsey.

Cayman Islands

The Kijani Commodity Fund was at a time on one of Belvedere’s fund platforms in Mauritius. RDL Management also set up the Brighton SPC in the Caymans. Investors in the Mauritian Kijani Commodity Fund disinvested from that vehicle and reinvested in the Cayman Island Kijani Commodity Fund in November 2014.

After establishing Brighton SPC, RDL sold the non-participating management shares it held, and therefore any interest it had in the platform, to UK-based Straffan Asset Management.

In October 2015 the Cayman Islands Monetary Authority (CIMA) applied to have the Brighton SPC liquidated. This was based on findings by PwC that raised a number of concerns about the Kijani Commodity Fund’s activities and its assets. These included what it believed were irregular payments to Citygate, a stockbroker majority-owned by Stonewood, as well as that net asset values had been overstated.

These findings were disputed in court by Belvedere Life, one of the major investors in the fund. The court however accepted CIMA’s petition that the liquidation should proceed.

Cosgrove and Kellermann have not themselves been the subject of any investigations in the Caymans. At the time that CIMA began acting on Kijani, the only company linked to them with a direct involvement with the fund was Citygate.

Oops! We could not locate your form.



To comment, you must be registered and logged in.


Don't have an account?
Sign up for FREE


ZAR / Euro



Follow us:

Search Articles:Advanced Search
Click a Company: