Updated: Paul Bonello - Shame! BOV saga worsens
The MFSA has bungled the issue regarding La Vallette Management Funds since 2005, Finco Director Paul Bonello told di-ve.com when asked to comment about the last development of the La Vallette Investment Fund saga.
'What has happened has further increased the problem,' Mr Bonello told di-ve.com, explaining how it took him five days to uncover the breach of restrictions yet it took MFSA five years. He also pledged that he will reveal holes within the MFSA and the criteria which they have applied in this case. Bank of Valletta was made to pay the price of €1 to 25% of the La Vallette Management Fund investors, Finco Director Paul Bonello claimed, continuing that, “my position is the same as it was on day one. We are not tal-monti. BOV breached the investment restrictions prospectus and did everything possible for investors not to find out”.
He reiterated that MFSA should insist that BOV issued false reports as confirmed by MFSA in June, 2011. He argued that the MFSA should never have used the formal test of $50,000 when other MFSA tests already exist. “In fact we have proof of previous judgements which held that the bank had to pay back the full investment in addition of interest due to the investor not meeting any of the eligibility criteria”. The example of another investor was given, where the MFSA concluded that La Valette Multi Manager Property Fund’s 'fact find' did not clearly list the investors list of investments five years prior to purchase of the fund invested $50,000 so there is no way the advisor could have known or assumed that you were an ‘experienced investor’. In both circumstances, BOV refused the recommendations of MFSA; however in a number of cases the clients had accepted the BOV’s offer of 75c.
When asked about the definition of ‘experienced investors’ Paul Bonello quoted the glossary of MFSA investment services rules of investment, which states that an experienced investor is one that has the expertise, experience and knowledge to be in a condition to take his own investment decisions and understand the risks involved. Someone investing a million euros, might still not be considered an experienced investor, he held, and “even if all of these were experienced investors, none of them received proper advice from BOV, in fact external auditors Price Waterhouse and Coopers, were obliged to highlight breaches regarding the investment prospectus to the MFSA but they didn’t”.
He called the execution documents which investors were made to sign scandalous, claiming that the clients did not know what they were doing. “It’s scandalous that these people were made to sign execution only documents as they do not know what they are doing. In addition, he pointed out that investors are protected by EU rights; however these rights are not enforced.
Audit firm Mazars was told to look at the fact find, he explained, which shows that people who invested over a certain price are experience whilst others are not. “This is not enough as you cannot say someone is an experienced investor just because he invested a specific amount, especially if you are considering as an investment even government bonds which could have been inherited. There need to be more checks and balances for conclusions to be made.”
Bonello’s company Finco will be approaching all parties including the Prime Minister and the Opposition to address this issue. “The Opposition promised, that if elected they will do their best to start serious negotiations with investors,” Paul Bonello said, adding that, “Finco still has many legal options left to consider.”
He concluded that in the statement BOV released this morning the bank showed no remorse for its actions.