The Pensions Authority has taken legal action against a Kildare company linked to the high-profile collapse of Hanover-based German Property Group (GPG) that resulted in 1,800 Irish investors losing as much as €107 million.
The watchdog lodged papers with the High Court on Tuesday, according to court filings, against Wealth Options Trustees Limited (WOTL), based in Naas, which administered Irish investments in GPG, formerly known as Dolphin Trust.
GPG, which was set up in 2008 by German-British businessman Charles Smethurst to buy listed German buildings and redevelop them as apartments, imploded last year after taking €1.5 billion from investors in the Republic, the UK, Asia and elsewhere. Mr Smethurst's home was raided by German police in March as part of an ongoing investigation into suspected investment fraud.
The Pensions Authority's case is scheduled to come before the courts on June 28th. A number of affidavits have been filed. These include statements from Grace Guy, head of supervision at the authority; Lydia Leonard, another watchdog official; Laurence Murtagh, principal officer for large cases in the Revenue Commissioners' high-wealth-individuals unit; Ross Curran, a member of a group of brokers whose clients lost money amid GPG's implosion; and Michael Madden, a pensions trustees expert.
WOTL, run by directors Eanna McCloskey and Brian Flynn, confirmed to The Irish Times that it has received court papers, but declined to comment further.
While case details list the Pensions Authority as the defendant in this case and WOTL as the plaintiff, a spokesman for the authority confirmed that his organisation is the petitioner and WOTL are the respondents. He declined to comment further.
The Irish investments were channelled to GPG through two special purpose vehicles (SPVs), MUT 103 and Dolphin MUT 116, registered to the same address and each sharing the same two directors as WOTL. A third director of all three companies, Paul Dunne, died last 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 at the end of last month.
The Pensions Authority has only had authority to investigate WOTL, a Revenue-approved pensioner trustee, in relation to Dolphin MUT 116, the pensions vehicle.
A spokesman for the authority confirmed late last month that it was “investigating if there are any pension scheme trustee duty issues of concern” in relation to the GPG implosion.
Meanwhile, The Irish Times reported on Wednesday that the liquidator of the MUT 103 vehicle, Myles Kirby of Kirby Healy Chartered Accountants, had highlighted in an update for investors and creditors that delays he was experiencing in receiving answers on queries on the company's statement of affairs before its liquidation are "unsatisfactory".
He added that it is also “unsatisfactory” that WOTL had not yet responded to his questions on its legal relationship with MUT 103 “and on various other matters, including commissions, fees and division of responsibilities”.
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 believes 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.