Issue link: https://maltatoday.uberflip.com/i/992522
10 maltatoday | SUNDAY • 10 JUNE 2018 MATTHEW VELLA A new light has been shone on the way a Maltese pensions fund sold to Swedish savers was used by dubious financial services practitioners to siphon money into an energy com- pany. A report drawn up by auditors KPMG, appointed by the finan- cial regulator to take control of Falcon Funds, shows that mil- lions in Swedish savers' money were invested in financial in- struments to benefit particular individuals – without any guar- anteed return to the savers. Some €60 million was poured into obscure investments lay- ered under one company after the other, to benefit the mys- terious Swedish entrepreneur Emil Ingmanson – the man who first promoted Falcon Funds to the Swedish pensions authority – through the alleged knowledge of Falcon Funds' own investment managers, Temple Asset Management (TAM) of Floriana. In its report, KPMG suspects that at In- gmanson's behest, TAM's Anthony Farrell (pictured) invested heavily in assets in which Ingmanson himself had an interest, at in- flated values. Ingmanson was the original promoter of Falcon Funds, a €247 million pension scheme marketed to Swedish savers, that invested the cash in blue- chip investments. Although he was never its founder-share- holder, Ingmanson had a for- mal role in setting up Falcon Funds, as well as having at- tended 13 board meetings of Falcon Funds, whose directors were former finance minister Tonio Fenech, Ian Zammit and Joseph Xuereb. However, financial services rules require that all invest- ment decisions are vested in a firm independent of the fund's directors, which in this case was Temple Asset Mangement. KPMG has now found "a clear connection" be- tween Ingman- son and the Swedish en- ergy company Werel, which it said w a s f o r - merly known as Konsument EL Sverige – a company that once was entirely owned by Ingman- son. "We discovered in an infor- mal discussion with Valletta Fund Services, that Ingman- son was very much involved in the fund's operation, and that he effectively took decisions related to investments, which should have been TAM's re- sponsibility," KPMG director Sarah Camilleri wrote in her report. Indeed, Ingmanson's role was so overbearing that Falcon's original investment manag- ers Calamatta & Cuschieri re- signed their role. "At one point Ingmanson wanted them to in- vest in Formula 1 just so that he could get the free F1 race tick- ets that investors get." When KPMG took control of the pension fund, they found there was not enough informa- tion and analysis carried out by TAM justifying the invest- ments in various financial in- struments that ultimately ben- efited the company Werel. Specifically, the money was invested in ETIs (exchange traded instruments) marketed by another Malta firm, Argen- tarius, 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 beneficiary. "It looks like these ETIs were de- signed in such a way so as to make the initial investment ap- pear liquid enough to merit the pension fund's interest, despite the fact that ultimately the ben- eficial company at the bottom of the chain is illiquid." In fact, it was in this manner that Werel AB managed to get some €60 million in cash from Falcon Funds, through invest- ments made in Boardwalk Real Estate ETI, Nordic Power ET- IC, LX Viceroy Industies, LX Median Trust, and Reditum. "These investments were made specifically to allow the fund to acquire shares in Wer- el, an unlisted company, which was not even eligible as an in- vestment for such a pension fund," KPMG said. "The investments in the top companies hid the level to which the fund was exposed to Werel, which was hidden un- der a number of investments… it is clearly that TAM did not follow the rules imposed by Falcon Funds, by investing sig- nificant amounts, indirectly, in Werel." However, KPMG suspects that the Falcon investments were made in ETIs that were charging an inflated premium for the Werel shares. "Effectively, TAM would in- vest some €20 million in two ETIs… for shares whose net asset value was €2.6 million. But the significant investment does not reflect the value of the Werel shares, so we cannot ex- plain this high premium… We cannot understand TAM's rea- soning for investing such sig- nificant amounts in this com- pany." KPMG said that not even Argentarius's Andreas Woe- lfl could explain the high pre- mium charged by the ETIs for what turned out to be Werel shares. According to Woelfl, it was TAM "who gave us in- structions to structure this in- vestment with these values." KPMG's Sarah Camilleri said she could find no evidence that TAM had ever requested a val- uation of the ETIs and their un- derlying investments, so as to be able to calculate their net as- set value. "This is highly irregu- lar, because without this valua- tion, TAM could not establish the value of Falcon Funds' in- vestment." NEWS era.org.mt Environment & Resources Authority Hexagon House, Spencer Hill, Marsa. The Chief Executive Officer, Environment and Resources Authority (ERA) notifies that electronic submissions in respect of the following notice will be received on the day and time indicated below: Up to Friday, 3rd August 2018, at 12.00 p.m., for: Advt. No. PMC# 002. Preliminary Market Consultation for consultancy services to conduct a packaging waste characterisation survey. The purpose of this Preliminary Market Consultation (PMC) is to acquire a proposal outlining the approach to apply in conducting a packaging waste characterisation survey on a national level. Preliminary Market Consultation documents are free of charge and are to be viewed or downloaded and submitted ONLY through the e-tenders website (http://www.etenders.gov.mt). PRELIMINARY MARKET CONSULTATION Boardwalk Real Estate ETI AI Undertaking III €15m €5m €12.5m Nordic Power Inc. Palatine Werel LX Viceroy Industries Nordic Power ETI Energy Everything Investments DB7 Prime KPMG reveals clear link between Malta pension fund and Swedish crook Anthony How €60m in savings went to unlisted Swedish energy firm