Liquidator of Dolphin-linked firm queries ‘significant’ salaries and fees

Directors ‘deny any wrongdoing in how investor funds were used’ – spokesman

The liquidator of a Kildare company linked to a Germany property group that collapsed last year, resulting in losses of up to €107 million for Irish investors, has queried the “significant” level of salaries, fees and expenses paid out by the Irish firm before it became insolvent.

Hanover-based German Property Group (GPG), formerly known as Dolphin Trust, collapsed last year after taking €1.5 billion from investors in the Republic, the UK, Asia and elsewhere since it was set up by businessman Charles Smethurst in 2008. Mr Smethurst's home was raided by German police in March as part of an ongoing investigation into suspected investment fraud.

Irish investments were channelled to the German group through two special-purpose vehicles (SPVs) – MUT 103 and Dolphin MUT 116 – set up in Naas, Co Kildare, in 2011-2012 by Wealth Options Trustees Limited (WOTL), of the same address. All three companies share the same directors: Eanna McCloskey and Brian Flynn. A third director, Paul Dunne, died in October.

MUT 103, an investment vehicle for €41.3 million of retail savings, was put into liquidation in March; and Dolphin MUT 116, responsible for €65.8 million of pension savings, entered liquidation in May. Liquidators of both SPVs are dealing with GPG’s insolvency administrator in Germany.


MUT 103's liquidator, Myles Kirby of Kirby Healy Chartered Accountants, said in an update for investors and creditors on Friday that he had raised questions about fund flows at MUT 103.

“In the early years the entire funds raised from investors were transferred out of the company and on to GPG,” he said. “However, that changed and in 2018 and 2019 there is a significant difference between the funds received from investors and the amounts transferred out to GPG. That difference arises from salary payments, fees and other expenses discharged directly by the company.”

‘Wrongdoing’ denied

Mr Kirby said that the directors of MUT 103 have defended the use of funds and have asked him to set out his concerns in more detail. The liquidator said he remained in correspondence with the directors.

A spokesman for the directors said “they deny any wrongdoing in how the investor funds were used and they are continuing to engage with the liquidator on this topic and the overall liquidation process, including assisting with the associated costs”. They are constrained on commenting in detail, he said.

Meanwhile, the GPG insolvency administrator is selling 20 properties held by the failed group. Some of the properties are assigned to the Irish SPVs, and Mr Kirby described talks with the insolvency administrative on the treatment of sale proceeds as “constructive”.

However, he warned: “It is increasingly clear that the German properties will only realise a fraction of the total investment. The issue is the extent of the shortfall and the options available to me to recoup that shortfall.”

When it first emerged in July 2019 that Dolphin Trust had missed interest payments in the UK, WOTL issued a letter to brokers highlighting how Irish investors were protected, saying it passed on money to Germany only “when we have security in place for a value in excess of the funds loaned”.

When Dolphin Trust told WOTL in late 2019 it would miss interest payments due to Irish investors, the Naas-based firm hired a number of advisers, including law firm Dentons, to try to protect the interests of investors in the Republic.

However, Dentons' advice provided to the High Court in March said the GPG insolvency administrator believed that all of the loan claims of the Irish MUTs against the German group's companies are "subordinated and therefore the granted securities could be challenged". The liquidation of GPG is expected to take years.

Joe Brennan

Joe Brennan

Joe Brennan is Markets Correspondent of The Irish Times