Michael Abraham comments on the Citywire article.
Q. There has been an article published on Citywire regarding the liquidator of the Shepherds Select Fund taking action against you through the Isle of Man (IOM) Court. You made no comment at the time of the article. Do you have a comment to make now?
A. When contacted by the journalist at Citywire I had not received any documents so I was unable to comment. Now that I have seen a copy I can.
Q. What is your initial reaction?
A. I am pleased that after almost 6 years I will have the opportunity to put the record straight, but on the other hand I am annoyed by the receiver’s cynical manipulation of this matter.
Q. What do you mean by “cynical manipulation”?
A. The liquidator took over the fund mid 2004 but nothing has changed in regard to my actions or the actions of others linked to this court case since that time. So I have to question why this case has not been raised before now. The only apparent reason is that as the liquidation itself moves to a close this is one way of the liquidator extending the life of the liquidation and therefore maintaining his fee income, this is surely cynical! Perhaps I am wrong, but no other reason occurs to me.
Q. What are you thoughts about the case itself?
A. I am happy to have the opportunity to respond to the issues raised. The case itself revolves around the accusation that I took commissions from MBC that should have been passed to the fund. This is incorrect and I believe there is no case to answer.
Q. What do you mean by “no case to answer”?
A. There are three specific points which make up the accusation; each of these points can easily be shown to be incorrect. Unfortunately I am unable to make further comment as the matter is now with our lawyers. In summary, I can say that all those involved on this side of the argument believe that the liquidator is ‘flying a kite’ in the hope that he will squeeze some money out of our insurers, whilst of course maintaining his fee income.
Q. Could it also be argued that the liquidator is simply seeking to increase the recovery for shareholders?
A. Of course the liquidator will argue that he is seeking to increase the cash recovery but the question maintains why now and not anytime during the last 5years or so?
Q. What would you say to shareholders who are still seeking to recover their losses?
A. I fully sympathise with investors, we have all been victims of the fraudulent behaviour of MBC. I wish we had never dealt with them.
Q. You chose to use MBC so investors see you as responsible for their losses.
A. Whilst undoubtedly true I hardly think it fair or correct. We chose to use MBC for a valid reason, to achieve spread of risk by buying parts of policies giving us exposure to many lives, this logic maintains. Should we have known they were crooks? Possibly but it’s all very easy to be clever in hindsight.
Q. What is Mr Leach’s involvement in the case?
A. In my view Mr Leach has been badly treated in all of this. He was not the Managing Director when the fund started and the MBC contract was negotiated. He had no influence over the structure of the fund. I brought him to the company in July 2003 to replace Alan Morgan Moodie who was the Manager Director at that time . He joined a board that included Andrew Walters and Mark Hindle and Sales Manager Mike Simmons. After the collapse of the fund, these three people were sued in the High Court and found guilty of a breach of fiduciary duties and obligation of loyalty. It is they that should be included in this action and NOT Mr Leach.
