By International Adviser, 16 Jun 17
John Bourbon, the former director of Isle of Man-based Premier Group, the company behind the ill-fated £300m New Earth Group of funds, has described the regulator’s decision to investigate allegations of mis-selling against the fund manager “something of a witch hunt”.
Speaking to Isle of Man Today, Bourbon, a former senior official at the Isle of Man financial services regulator, said that despite 3,247 investors facing losses of almost £292m ($372m, €332m), a greater number of people have made a profit from New Earth, which invested in recycling plants in the UK.
New Earth Recycling and Renewables (NERR) group of funds were wound up by the Isle of Man authorities last July, while another Premier Group investment Eco Resources Fund, was ordered to be shut in March this year.
A total of 189 investors lost up to £61m from the Eco Resources Fund, which invested in bamboo plantations in Nicaragua, with tax payers on the Isle of Man picking up the bill for the collapse of both funds.
Large commissions
Bourbon’s comments come despite allegations by the Premier Shareholder’s Group, a campaign group for investors, many of whom claim to have lost their life savings, that Premier Group (Isle of Man) paid large commissions to “unqualified and unlicensed” agents to target pensioners by marketing their funds as low risk.
The group also claims investors were locked in with “punitive” exit fees, often as high as 30%, which they were not told about when they signed up.
However, Bourbon denied the accusations, adding: “It is highly unlikely that anybody could have a significant investment in Premier Group without understanding the risk.”
Boubon insisted all fees and charges were clearly set out in the offer document that investors were required to sign to confirm their status as an experienced investor.
He added that it was financial advisers’ “responsibility to check whether investments were suitable for their clients”, adding that a number of Premier group funds were sold by unregulated IFAs in Spain where claims against them have been upheld.
Regulator’s failure
The Premier Shareholder’s Group also accused Isle of Man authorities, including the Financial Service Authority (FSA) of failing to protect investors, claiming the regulator had received complaints about the Premier Group funds as early as 2002.
The group added that despite concerns raised with the authorities, the regulator still went ahead and granted a new licence to the fund manager in 2007.
Last month, Isle of Man treasury minister Alfred Cannan has confirmed that the island’s Financial Services Authority (IOMFSA) is “undertaking a review” of unregulated funds and will “make appropriate recommendations for change”.
The Isle of Man Financial Services Authority said it is now investigating historic allegations against Premier Group (Isle of Man)
“The FSA can confirm the allegations and events surrounding PGIOM and its group of companies are actively under review by the FSA,” the watchdog told IoM Today.
‘Witch hunt’
Bourbon slammed the regulatory action as ’something of a witch hunt’.
“There is a popular view in the market that certain negative elements of the Moneyval report have placed pressure on the financial services regulator because they do not have examples that they can give of successful prosecutions when compared with jurisdictions that have strong Mafia and/or other criminal activity.
John Bourbon, the former director of Isle of Man-based Premier Group, the company behind the ill-fated £300m New Earth Group of funds, has described the regulator’s decision to investigate allegations of mis-selling against the fund manager “something of a witch hunt”.
John Bourbon, the former director of Isle of Man-based Premier Group, the company behind the ill-fated £300m New Earth Group of funds, has described the regulator’s decision to investigate allegations of mis-selling against the fund manager “something of a witch hunt”.
“It might therefore be suggested that they may seek to find other examples of wrongdoing to justify their existence when in fact the reputation of the jurisdiction should support the efforts they have made,” he said.
Eco Resources Fund
In February, the Isle of Man High Court appointed an inspector to look into the collapse of the Eco Resources Fund after the Premier Group told investors in November 2016 that the fund would have to go into liquidation after investors refused to pump any more money into it.
Against the advice of the liquidator and the FSA, Bourbon said the Eco Resources Fund still has the potential produce returns for investors for years to come if it is refinanced.
“With the right liquidator, it would be possible to refinance the fund, to pay off creditors and financial indebtedness by 2023 and be left with an asset which produces $25m per annum for investors for the following 60 years,” he said.
Describing Bamboo as an “amazing fibre product”, he added: “It can be used for anything from socks and pan scrapes to scaffolding on tower blocks in Hong Kong and at the other extreme activated carbon cleaning the world’s industrial chimneys.”