A counter protest in respect of the La Valette Funds SICAV Plc Multi Manager Property Fund did not rebut in any way the claimant’s assertions and claims, but rather in certain instances explicitly confirmed them, Finco said this morning in its reply to the counter protest.

Finco had accused the investment company, of which BOV is custodian, of misleading the investors of the La Valette Multi-Manager Property Fund.

In its reply, Finco rejected the assertion by the respondents to its judicial protest, namely Valletta Fund Management Ltd, Valletta Fund Services Ltd and Bank of Valletta plc that they did not have a juridical relationship with claimant.

It also rejected the allegation that its assertions regarding the lack of due diligence in respect of Belgravia Group was based on speculative newspaper reports.

Finco referred to the respondents’ statement that the decision to invest in Belgravia funds was based on the information available at the time and which it could rely on and said that the minimum one would have expected was for VFM and Insight to request the Belgravia fund directors to make available signed interim accounts before committing the Fund to such investments that amounted to more than €24 million and constituted at one point more than 41 per cent of the entire fund size and assets.

It denied the claim that the respondents had claim no clear obligations arising out of law to communicate any relevant information in relation to the fund investments.

Finco referred to the respondents’ assertion that they kept investors informed of developments and events, and without delay and said that this was not true.

“Whereas it is true that VFM sent several letters to investors and organised various meetings, the claimant reiterates that the information provided was of a formal nature that excluded altogether the underlying substantive negative developments particular to the Fund that were materialising such as for example:

- that Belgravia suspended the redemption requests of the Fund on a de facto basis in March 2008 (which fact has been disclosed for the first time in the counter protest of respondents of 19th August 2010, Para B20);

- that both a criminal and regulatory investigation into Belgravia was on-going;

- that the Jersey Financial Services Commission had suspended the Belgravia Funds because:

(a) each of the Suspended Funds are currently without adequate or effective management or financial or accounting controls in place; and

(b) the true and correct value of the investments or other assets of the Suspended Funds cannot currently reasonably and reliably be ascertained by the Belgravia Fund Manager.

“A typical example of VFM’s selective reporting is the report that the Belgravia funds had new directors without reference to the fact that the previous directors had been removed by Barclays Trustees and by the Jersey Financial Services Commission, that some of the said directors had been arrested and that others still had evaded arrest by fleeing to the Middle East.”

Finco noted that from the respondents’ own counter-protest, it resulted that the Belgravia European Property Fund could borrow “80 per cent of the gross cost of the property”, meaning that that the fund could borrow up to €80 for every €20 invested by the Fund out of its own net assets which equates to a gearing ratio of up to 400 per cent of net assets which exceeded by far the 100 per cent of net assets stipulated in the Fund’s Investment Restrictions according to its Offering Document.

Finco accused BOV, in its capacity as Custodian of the fund, of failing to monitor the Fund’s adherence to the Investment Restrictions in the Offering Document and in the Fund Licence at the very least with respect to the Belgravia European Property Fund, and this right from the moment such investment was made in February 2006.

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