Ponzi scandal: Kellermann, Cosgrove open up to Alec Hogg | Fin24

Ponzi scandal: Kellermann, Cosgrove open up to Alec Hogg

Mar 26 2015 07:56

By Alec Hogg 

In journalism, once you have an outline of the facts, there is no substitute for face-to-face engagement. Body language and eye contact exposes the truth in a way the written word cannot. Any focused listener knows each answer triggers a new question. You need to dig to get to the root. Reality can easily disguised by part disclosure.

So the format of this on-the-record engagement with the Belvedere duo Cobus Kellermann and David Cosgrove is not ideal. But a whole lot better than the silence with which they met my first inquiries.

Yesterday they were in the Werksmans offices in Stellenbosch with high-powered media lawyer Johan Theron. I asked to speak on the phone and record the conversation. Theron at first seemed to think that was OK. But after consulting with his now famous clients, that option was refused.

So here are their responses in the only form they agreed to engage with Biznews. This was the first batch of general questions. A second list of more specific ones was also sent. I have added the obvious follow-up questions in italics beneath the responses. These will be submitted to Theron this morning.

We can be confident that the other sets of questions and the follow-ups will be answered in full. Theron says his clients want to “get this thing off the table.”

Biznews has been promised answers to second group of questions later today. Stay close.

1.  What is the ownership structure of Belvedere?

The ownership structure of Belvedere Management Ltd. is as follows: fifty-one percent is owned by Stonewood Holdings Ltd; thirty-nine percent is owned by Kenneth Maillard and ten percent is owned by Laval Law.

It is important to note that Belvedere Management Ltd.’s main function is that of fund administrator.

Belvedere Management is a regulated entity and is independently audited, as well as is the funds which it administers.

All of the above is public record.

Follow up: What is the ownership structure of Stonewood – specifically the direct and/or indirect ownership of Kellermann and Cosgrove.

2.   What is the size of the total assets under administration?

The total assets under administration by Belvedere Management Ltd. is approximately 200 million US dollars.

Follow up: Why then in your Kijani submission to the MFSC did you state assets under management by the group is $16.5bn. If Belvedere is not the top company, what is? What constitutes “the group”?

3. What percentage of that total comes from South African residents?

The total representation of South African residents in Belvedere Management Ltd. is not readily ascertainable because Belvedere Management cannot with 100% accuracy determine who the broker or brokerage of each investment is, as well as how each investment is structured with regards to whether it is made via pension fund structures and/or life policy structures which makes use of nominee companies.

Follow up: OK, be less specific then. Provide a rough guide please. Is it 10%; 50%; 75%; 90%

4. How many underlying structures are there under the Belvedere umbrella?

Belvedere Management Ltd. administers twelve FSC regulated Mauritian mutual fund structures.

Follow up: Please provide the names.

5. Where are they housed – ie Mauritius/Geurnsey/Cayman/SA? 

The eleven FSC regulated mutual funds are all housed in Mauritius.

Follow up: You said 12 in the answer above. Is 11 a result of finger trouble? If not, why the difference?

6. How big is deVere’s clients’ investment in the Belvedere Group?  

The size of deVere’s clients’ representation in Belvedere Management Ltd. is not readily ascertainable because Belvedere Management Ltd. cannot with 100 percent accuracy ascertain who the broker or brokerage of each investment is. Further, if the investment is made via pension fund structures and/or life policy structures which makes use of nominee companies.

Follow up: DeVere stated publicly in our CNBC Africa interview yesterday that its clients exposure to your group is R52m (£3m). Is this a reasonably estimate? DeVere claims it has been unable to get its clients’ funds back from you. Why?

7. Which are the other major clients/major sources of inflow to Belvedere?

Belvedere Management Ltd. deals with approximately 30 asset management/ Independent Financial Advisory Groups (IFA) which make use of the aforementioned mutual fund structures.

Follow up: For further clarity, please provide a list of the bigger institutions.

8. Where exactly have those funds been invested?

This is determined by the investment advisor for each fund in accordance with the scheme particulars (“fund rules”). The asset classes are equities, bonds, cash, alternative strategy and/or property.

Follow up: What do you mean by “alternative strategy”. Please provide breakdowns in percentage terms of the five categories.

9. How are the navs of those investments determined? By whom?

Belvedere Management Ltd. is the administrator to the aforementioned funds and is responsible for the calculation of the NAV. The NAV calculation is calculated in accordance with the relevant scheme particulars. The NAVs are verified by an independent third party group. This is also independently audited on an annual basis.

Follow up: Who is the independent third party? Who is the independent auditor?

10. What commissions are paid to intermediaries?

The commissions paid to intermediaries differ from fund to fund; they range from zero to five percent as initial fees and zero to two percent as ongoing management fees. This is fully disclosed in the scheme particulars of relevant fund.

11. What is the total cost associated with each dollar invested on behalf of clients?

  • * Custody;
  • * Investment advisory fees;
  • * Upfront fees;
  • Are all disclosed in the relevant supplementary scheme particulars.

    These are reflected in the audited financial statements.

    The funds are independently audited and all costs are reflected in the financial statements and the relevant supplementary schemes.

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