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Capita pays £18.5m to resolve Connaught fund case

Capita pays £18.5m to resolve Connaught fund case

Capita paid £18.5m to settle the claim against it brought by the liquidator of the Connaught Income Series 1 Fund.

According to Capita’s half-year report, the company has incurred £1.1m in professional fees in relation to Connaught and Arch Cru so far in 2016.

Earlier this year, the company revealed that during 2015 it had spent £21.7m handling the Arch Cru and Connaught cases.

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The FTSE 100 outsourcing firm acted as authorised corporate director for both the Connaught and Arch Cru funds.

Capita’s half-year report said: “The parties to the CF Arch Cru Funds litigation have entered into a full and final settlement of the proceedings on confidential terms. It is expected this matter will be completed by the close of 2016.”

In relation to Connaught it pointed out that the Financial Conduct Authority (FCA) had decided to formally review the activities of both operators of the fund.

The report added: “At this time no conclusion has been reached on whether any wrongdoing has occurred and whether any enforcement action will be taken.

“While there can be no certainty that a liability will arise in respect of this matter, the group is unable to determine what the outcome of the FCA review might be, and as such, no provision for a potential outflow of funds has been made.

“Due to the requirement to await the outcome of the formal review commenced by the FCA, the likely timeline for conclusion of this matter is uncertain.”

In March 2015, the FCA said it decided to investigate the activities of Capita and Blue Gate in connection with their roles as operators of the fund.

It also announced it had withdrawn from negotiations aimed at securing an agreement to address the losses for investors in the Connaught fund.