MTCL provided corporate services to 23 of the sub-funds of the failed Arch Cru fund. Its responsibilities included forming the companies, acting as nominee shareholder of the companies, providing directors and administration services.
MTCL is not affiliated with Marlborough International Management, a fund management company also based on Guernsey.
Regulator fines and bans
The Guernsey Financial Services Commission (GFSC) levied a fine of £100,000 ($123,861, €116,717) on MTCL, plus individual fines for four of the directors, ranging from £10,000 to £35,000.
The directors – Nicolas Hannah and Adrian Howe – have been banned from performing the functions of director, controller, partner or manager for five years; while David Enevoldsen has been banned for a period of two years and six months; Benjamin Tustin also faces restrictions.
The GFSC found that the directors’ management and administration of asset-holding companies had serious breaches of the minimum licensing criteria for licensing.
During their time administering the special purpose vehicles (SPV), there was “a complete failure to lay down and record responsibilities at board level and by the individual directors to ensure that any delegated powers were properly monitored and controlled”.
Backdated and falsified
The directors also backdated record and falsified board minutes, and failed to create written advisory agreements. The GFSC concluded that they did not have the necessary experience to administer the schemes – which were in complex investment areas, such as shipping and fine wine.
When the Arch Cru failure emerged, in 2010 and 2011, the directors did not come forward to the regulator to declare their role.
The GFSC concluded: “The failure to report to the Commission and to carry out a timely and full review was serious given (a) the publicity and size of the Arch Cru debacle; (b) the faults and failings which have emerged.”
That said, the commission also concluded that the directors were not directly responsible for the failure of the scheme.
However, it added: “The directors MTCL provided to the companies gave no meaningful consideration to proposed investments recommended by the investment adviser. This included investments relating to wine and shipping over which the directors’ knowledge and experience was negligible.
“In relation to the wine asset holding company, recommendations were often made by the adviser and approved by the board of the SPV within minutes of the recommendation having been made without any due consideration on whether this was a good investment for the fund or not.”
Eight interlinked companies have so far been found to have played a role in the Arch Cru failure.
Others included Bordeaux Services, London Carbon Neutral Ltd, Blakeney Bridge Wine Ltd, Savi IT Ltd and KMD Energy Solutions Ltd.
