Issue link: https://maltatoday.uberflip.com/i/887355
maltatoday SUNDAY 15 OCTOBER 2017 News 13 tors in the fund, they would raise enough cash to take over the rede- velopment project. But the IOR now claims that, unbeknown to the committee, an offshore company in Dubai called Holdabco set up the Luxembourg firm Cougar Real Estate – just nine days after the decision to buy the loan – so that Cougar would buy out a 90% share of the company that owned the Exchange Palace. While Cougar acquired the loan for €20.4 million, the money in the Kappa fund – which included other investors' cash – was used to buy up all Cougar's shares for €32 million. This resulted in an instant €11.6 million profit, which IOR claims ultimately went to Cougar's own- ers – Holdabco and another minor- ity shareholder, a Panamanian firm called Alpininvestissements. On its part, Futura used another of its sub-funds, Newton, to buy out the non-performing loan for €20 million, and then assigned the loan to Kappa for €20.4 million. Enraged by the revelations, the IOR claimed it was misled, believ- ing its money was being used to buy shares in Kappa that would have been invested directly in the Buda- pest development. "None of these developments was ever communicated to the Ad Maiora committee… the effect of these transactions was to deviate nothing less than €11.6 million of the IOR's cash invested in Kappa, through a structure that is devoid of any economic reasoning," the IOR's lawyers in Malta said. "It is clear that the IOR has been abusively caught up in a menac- ing web of intrigue and suspicious transactions." Instead, Futura's directors – amongst them the Italian banker Alberto Matta, himself also a di- rector of Cougar – used the money differently, apart from inflating the price for the Hungarian loan. "There is a clear conflict of inter- est: Matta is a director of Optimum and Futura… Matta is also one of the principal, if not sole beneficiary, of Optimum Management. Matta and Girolamo Stabile are, or at least were, directors of Cougar. No men- tion was ever made of Cougar's in- volvement or inflation of the Buda- pest palace's price in the meetings of the Ad Maiora committee." When the IOR realised it had been misled on the price of the non-performing loan, it also found out that its €21 million was invest- ed in Kappa's 'class B' shares, which carried the entire risk of the equity. Other investors in Kappa's 'class A' shares were earning a 7% annual return. But when in 2015 the IOR de- manded its money back, Futura suspended any redemptions from the Kappa fund. Vatican left contrite in offshore scandal with Malta at its heart The Vatican's case in Malta is an interesting piece in a jigsaw puzzle of financiers misusing the IOR finances • In 2014, the IOR opened judicial procedures at the Vatican tribunal against its former directors – Paolo Cipriani and Massimo Tulli – holding them responsible for the loss of €27.8 million invested in the Ad Maiora fund • One of the directors of Futura Funds Sicav, which is registered in Malta and run by Futura Investment Management, is Joseph Xuereb (pictured) – a director of Falcon Funds, the pension fund delisted by the Swedish pensions authority and recently reprimanded with a two-year ban on new directorships • Futura Funds' request for an upgrade in 2014 to become a full alternative investment fund manager (AIFM) in Malta has been frozen by the MFSA, ostensibly over Futura's links to the problems faced by Banca Popolare di Vicenza, which had an artificially high share price. When the ECB ordered the bank to reduce the value, many retail clients lost millions in savings. The bank also invested €350 million in funds run by Optimum, which, in turn, invested in assets managed by Futura. That cash was in a circular investment to buy shares on the secondary market from the Banca Popolare di Vicenza. As a result of the MFSA's decision, Futura's Malta- based funds cannot take on new business or have assets under management over €100 million. The company is contesting the ruling. • Witnesses in the Maltese case will include IOR representatives, the Maltese FIAU, representatives of PriceWaterhouseCoopers, Bank of Valletta and Valletta Fund Services, and Prof. Paolo Colombo to explain how Futura Funds deviated €11.6 million to Cougar Real Estate • The case is against Futura Funds, Futura Investment Management, Optimum Evolution Fund and Optimum Asset Management, Alberto Matto and Girolamo Stabile. Unholy finances Italian banker Alberto Matta: his request for an MFSA upgrade of his licence in Malta has been frozen Pope Francis made financial reform a keystone of his papacy, appointing various oversight committees and introducing tighter management inside the Vatican Bank 'It's clear the IOR was abusively caught up in a menacing web of intrigue and suspicious transactions'