View the article online at http://citywire.co.uk/new-model-adviser/article/a381634
Capita's ignorance of Arch Cru assets is unacceptable
by Daniel Grote on Feb 10, 2010 at 14:36
Capita has exposed its shortcomings as administrator for the disastrous Arch Cru funds in a statement to BBC Radio 4’s Moneybox programme.
Capita’s statement paints a picture of a company that simply didn’t know enough about the funds it was being paid to administer as authorised corporate director. It is now reacting with misplaced outrage when confronted with some of the astonishing investment decisions that were made.
So it highlights what we revealed was a £92 million investment Arch made into a fleet of seven ships through the Guernsey cell companies in which the Arch Cru funds invested. Only now is it looking for answers:
‘CFM [Capita Financial Managers] is concerned about the information that has only recently emerged regarding the shipping assets of the cells, which have declined significantly in value, and is pursuing this urgently with Arch and the board of the cells,’ it states.
Recently emerged? As Citywire made clear when we revealed the investment last month, Arch first started putting money into the fleet back in 2007. But Capita told Citywire it only became aware of the assets when it commissioned a review of the assets of the Arch cru funds following their suspension.
How could Capita have remained ignorant about an investment that accounted for a quarter of the funds that they were administering for so long?
But as the statement to the BBC makes clear, Capita amazingly didn’t see it as their role to know what the Guernsey cells were invested in.
‘It is simply not the case that the FSA, Ernst and Young (the auditor to the UK funds) and CFM were “the only people who knew or had access to…knowledge” regarding the assets of the cells,’ it states.
‘CFM was not responsible for the investment decisions taken by Arch as investment adviser to the cells,’ it says, adding that it was responsible only for the management of the UK Oeic funds.
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