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6 maltatoday | SUNDAY • 7 MARCH 2021 NEWS MATTHEW VELLA A Swedish court has sentenced two men to six years, nine months in prison for having defraud- ed a Maltese pension scheme that lost millions in Swedish savers' money. Max Serwin, who operated in Malta under the alias of Emil Amir Ingmanson, and co-conspira- tor Afram Georgo, misappropriated the savings in Falcon Funds into suspicious 'loans' to other Swedish companies. The Falcon fiasco cost Bank of Valletta in Mal- ta €26.5 million in a settlement with the Swedish pensions authority, which held it liable for the pension as one of the guarantors of the fund. Over €247 million was lost in 20,000 savers' monies, resulting in the shuttering of Temple Asset Management in Malta, the financial ser- vices firm tasked with taking investment deci- sions for Falcon Funds. Additionally, Temple director Anthony Farrell faced criminal action in Sweden; a two-year MFSA ban on holding approved positions for Falcon directors Tonio Fenech, the former Nationalist finance minister, and Ian Zammit and Joseph Xuereb; and further court action in Malta from BOV against a host of entities involved in siphoning off cash from the pension fund. In the Stockholm court, the Swedish prose- cutor accused Serwin of funnelling the Falcon savings into large investments in a worthless e-commerce company called Werel for 5,000 times the original value, which then issuing new shares to him. The prosecutors called it a "well-planned and systematic attack on the Swedish pension sys- tem" and are holding Serwin responsible for the return of millions in stolen cash. Serwin, who lived in a luxury Sliema apartment, was the original promoter of Falcon Funds when it was set up in Malta with €247 million in Swed- ish savers' money. It was supposed to invest the cash in blue-chip investments. Although he was never its founder-sharehold- er, Serwin did have a formal role in setting up Falcon Funds, having attended 13 board meet- ings with its directors. He also set up Falcon As- set Management, with a view to take control of the pension's investment decisions despite the glaring conflict of interest. Financial services rules required that all invest- ment decisions be vested in a firm independent of the fund's directors, which in this case was Temple Asset Management. But in an investi- gation by auditors KPMG, Serwin was found to have been "very much involved in the fund's operation, and that he effectively took decisions related to investments, which should have been Temple's responsibility." Serwin's role was so overbearing that Falcon's original investment managers Calamatta & Cus- chieri resigned their role. "At one point 'Ing- manson' wanted them to invest in Formula 1 just so that he could get the free F1 race tickets that investors get." When the MFSA finally put KPMG as control- ler of the shuttered fund, the audit firm found that Temple had invested the cash in the ETIs (exchange traded instruments) marketed by an- other Malta firm, Argentarius, which is run by Austrian national Andreas Woelfl. ETIs are used to create a chain of companies where the money invested in one, 'runs down' to the ultimate ben- eficiary. "It looks like these ETIs were designed in such a way so as to make the initial invest- ment appear liquid enough to merit the pension fund's interest, despite the fact that ultimate- ly the beneficial company at the bottom of the chain is illiquid." It was in this manner that the worthless Werel in Sweden managed to get some €60 million in cash from Falcon Funds, through investments made in Boardwalk Real Estate ETI, Nordic Power ETIC, LX Viceroy Industries, LX Medi- an Trust, and Reditum. "The investments in the top companies hid the level to which the fund was exposed to Werel, which was hidden under a number of investments… it is clear that Tem- ple did not follow the rules imposed by Falcon Funds, by investing significant amounts, indi- rectly, in Werel," KPMG said in its report. "Effectively, Temple would invest some €20 million in two ETIs… for shares whose net asset value was €2.6 million. But the significant in- vestment does not reflect the value of the Werel shares, so we cannot explain this high premium." The MFSA fined Temple a total of €612,000 for breaches 23 different standard licence condi- tions and had its licence suspended. Prison sentence for Malta pension fraudster in Sweden Falcon Funds fraudster convicted six years nine months in case that cost Bank of Valletta €29.5 million settlement Max Serwin: imprisoned Supply pushes cocaine price down, as heroin users grow older KARL AZZOPARDI HEROIN users in Malta are getting older and are the ma- jor demographic of problem drug users seeking rehabilita- tion services, a national drug situation report released this week shows. The highly addictive drug has one of the lowest usages among the adult population, but users of the drug are the majority of cases admitted for detox programmes. Of the 1,943 people who sought treatment for their addiction, 1,126 were heroin users. The report also shows an ageing population in heroin users; however 41% entering rehab are younger than 35 in 2019, which is down from 45.5% in 2018. The study estimates Mal- ta has an average 1,049 dai- ly opiate users, down from 1,161 in 2018 – again a sign of the downward trend in the drug's usage. The former coordinator of Caritas's Drug Rehabilitation Programme, psychotherapist Mariella Dimech, says drugs' popularity remain influenced by price and availability, a factor that informs the 2020 National Report on the Drug Situation's findings on the increasing usage of cannabis and cocaine. "Cocaine in the 1980s was a rich man's drug," she says of its high price and its short supply. "As the drug started making its way into Europe, its cheaper version – crack cocaine – was also created, and trends shifted with users making wider use of the drug. "People tend to underes- timate how availability and price can lead to addiction. But it's not just the sub- stance itself that influence addiction: personal trauma, psychological and mental is- sues, genetic predisposition and peer pressure all have a role to play in how users get hooked on illicit sub- stances… we must analyse the conditions in which one finds themselves consuming drugs." Analysing the drug market, the report showed how can- nabis is the most frequent- ly seized drug by the police, with the substance being the only illicit drug known to be produced in the country. Resin is also imported from Morocco via Tunisia and Libya. It also the most fre- quently used drug among the adult population. Apart from cannabis, the police also seized 747.3 kgs of cocaine in 2019. Dimech points out that an- nual data in reports such as the 2020 National Report can only shine a light on problem users who have approached detox services. "What about those who didn't come for- ward? What about those who are still consuming substanc- es without seeking help?" Dimech also said a lack of follow-up on users who made use of rehab services, hamper proper analysis. "We never had a programme that looks at what is happening 10, 20, 30 years after they leave the rehab programme. Why? Isn't it in our interest to see what is happening to these people?" Dimech's own study of 80 addicts in their first phase of detox found many of them facing a prison sentence a year after their attempt to kick drugs. "Why is this hap- pening? These organisations must and deserve to answer a question like this through science," she said. "This is an opportunity to know what is happening to users, how ef- fective our programmes are and how we can improve the treatment."