A bitter dispute has erupted afresh between the administrator of a promoter of a series of funds which collapsed through 2011 and 2012, and its founder, in the wake of an initial report into the failures.
Malcolm Fillmore of BM Advisory, joint administrator of Propertybourse and liquidator of its two principal investment funds, has circulated to various interested parties an interim report attributing the funds’ demise almost entirely to poor management.
As reported last summer, around 100 financial advisers who recommended funds operated by Propertybourse got the go ahead for an investigation following a sequence of failures through 2011 and 2012 that liquidators estimate have caused investors losses of £20m to £25m.
FTAdviser has seen a copy of the document, which states that the company made consistent and substantial trading losses throughout its life, along with the various entities connected to it.
“Losses were due primarily to a consistent lack of income sufficient to cover the costs and overhead structure created and was not due to unexpected events. Thus, it seems fair to attribute the failures almost entirely to poor management,” the report’s covering letter states.
It adds that investors were seriously misled, as while the funds incurred substantial trading losses throughout, what was actually happening was never portrayed in the promotional literature or periodic reports.
“There are grounds for concluding that fund raising and promotions were primarily focused on generating revenues in commissions and fees and not on the viability of future investment returns.”
The report adds that Robin Christie, founder of Propertybourse and chief investment officer of Mission XP - a company closely related to a number of its funds - has been “profoundly unhelpful” during the investigation, with a “common theme of delay and prevarication”.
The report has been sent to the police and regulators. Mr Fillmore told FTAdviser he was also waiting for feedback from the Guernsey-based joint liquidator, which should be able to give a clearer picture of the fate of the money invested.
Propertybourse promoted a range of property funds and a student let fund, which invested across Europe and the UK. A number were branded as ‘Mission’ funds and were related through a complex structure to two companies, Mission Corporate Finance and Mission XP.
Speaking to FTAdviser, Mr Christie denied that he had hindered the investigation and maintained that he was always happy to meet with Mr Fillmore, with emails stating this was the case as late as last September.
Mr Christie has been an outspoken critic of the administrator, whose appointment as joint liquidator of the failed Guernsey-based funds Mission Corporate Finance had initially attempted to block.
He said: “His statement that I have been obstructive is completely wrong. I suspect that the rest of the report also comprises wrong information and biased conclusions.
“Any form of examination or investigation is bound to be flawed if one fails to enquire about ‘the other side of the story’.”
Mr Christie added that there has been no attempt to do that by Mr Fillmore, adding that therefore the entire administration process is fundamentally flawed.
The case has a personal dimension, with complaints over personal property that was seised when assets of the business were retrieved. Mr Fillmore also acted in 2013 as liquidator of Muirfield, a property consultancy formed by Mr Christie.
The report states the two principal investment funds managed out of the Guernsey cell company, Mission Germany and Mission Tuscany, were both seriously flawed from their initial launch onwards, since neither ever attracted sufficient funding to perform as promoted.
“It is now evident that they were doomed to fail for this reason alone, even ignoring the issue as to whether the management of the underlying assets was inept,” read the report’s covering letter.
In response to accusations Mr Christie was not engaged, Mr Fillmore stated that they were in contact in the early stages of the investigation, up to four or five months ago. “I couldn’t get any sense or focus, so there was no point in continuing discussions and I decided to rely on documented facts”.
Mr Fillmore added: “I’m going to give the FCA a week or so to have a look at the report and will then suggest a meeting to compare notes. We need to find out who can be made responsible and where funds can be made from for compensation.”
peter.walker@ft.com
This article has been revised to make clear that the administrator’s interim report was circulated to various interested parties with a covering letter, not published to the public or filed in a court, and to reflect that Propertybourse only promoted one student accommodation fund.
