Falcon Funds | MFSA puts pension fund under auditors’ control as Swedes mount pressure

Malta’s financial regulator has appointed auditors KMPG to take control of a Maltese pension fund which owes millions in savings to Swedish pensioners.

Falcon Funds, whose directors include Nationalist MP and former finance minister Tonio Fenech, is being investigated by the Swedish Economic Crime Authority over allegations by the Swedish pensions authority (SPA) that the fund is unable to pay back a total of €247 million (2.4 billion Swedish kroner) in savings to 22,000 investors.

The Malta Financial Services Authority has now announced that to ensure savers’ protection, it has appointed KPMG Malta to take charge of the assets of Falcon Funds, assume control of the business, and periodically report to the MFSA.

“This measure is being taken with specific reference to the scheme following an ongoing investigation on the scheme and the termination of the Investment Management Agreement between the Scheme and Temple Asset Management Ltd, the former investment manager of the Scheme. These measures will remain in place until such time as the MFSA directs otherwise,” the MFSA said.

The decision effectively curtails the powers of Falcon Funds’ three directors, and accords KMPG’s auditors the responsibility to safeguard the value of the savings.

Falcon Funds has already returned at least €67 million in savings, and wants to carry out the total divestment of the funds in an orderly fashion so as to safeguard the value of the pension savers’ investments.

Directors Tonio Fenech, Joseph Xuereb and Ian Zammit said in a statement that they welcomed the decision, adding that they had suspended Temple Asset Management from acting as the SICAV's manager over decisions that had negatively impacted the investments of the SICAV. "Falcon Funds SICAV instituted legal proceeding against Temple Asset Management and Emil Ingmanson. In the circumstances the directors of the SICAV agree with the appointment of KPMG. The directors of the SICAV will assist KPMG in the execution of their mandate."

With KPMG taking the reins, it means the MFSA wants to ensure that the liquidation of the investments do not suffer any loss in value.

The SPA on the other hand has insisted hat the value of savings inside Falcon Funds will “in all likelihood” have a lower value than originally invested because of “harmful investments” that inflated the value of the savings.

Falcon Funds are now suing Temple Asset Management (TAM) the fund manager whose responsibility was to invest the money in blue-chip stocks. They have also sued Swedish businessman Emil Ingmanson, who acted as an introducer for Falcon Funds with the SPA and when it took on Swedish clients from another private fund merger.

Falcon says TAM invested at least €10 million in financial instruments in which Ingmanson had an interest in, and then used to issue loans to other companies at high interest rates.

The Swedish TV programme Kjalla Fakta (Cold Facts) also revealed emails showing that TAM was paving the way for Ingmanson to take over as Falcon Funds’ investment manager, with his own company Falcon Asset Management. The MFSA has since refused Ingmanson an investment licence.