Swedes chasing Falcon Funds pensions in Malta warn Norwegian director

Judicial protest by Swedish pensions authority warns Norwegian entrepreneur in Malta of responsibility for losses to pension fund

(Inset) Lars Beitnes. Main picture: Emil Ingmanson, who is said to have ultimately benefited from Swedish pensions savings in Falcon Funds that were invested in illiquid instruments (C) Kalla Facta/TV4.se
(Inset) Lars Beitnes. Main picture: Emil Ingmanson, who is said to have ultimately benefited from Swedish pensions savings in Falcon Funds that were invested in illiquid instruments (C) Kalla Facta/TV4.se

The Swedish pensions authority has filed notice in court warning a Malta-based entrepreneur from Norway that he will be held responsible for various losses Swedish pensioners incurred in the Falcon Funds bust.

The pension fund was run from Malta for Swedish savers, and used the services of another company, Temple Asset Management (TAM), to invest the money in the fund into blue-chip assets.

The SPA however warned Norwegian Lars Christian Beitnes it would hold him responsible for various losses incurred by Falcon Funds savers, over various investments made in particular assets he controlled.

The SPA specifically referred to illiquid investments that TAM made in investments in which Beitnes had some form of control, namely Oxxy Group plc, Rock Energy AS, Element ASA, and the White November Fund.

A report drawn up by auditors KPMG, appointed by the financial regulator to take control of Falcon Funds, shows that millions in Swedish savers’ money were invested in financial instruments to benefit particular individuals – without any guaranteed return to the savers. Some €60 million was poured into obscure investments layered under one company after the other, to benefit the mysterious Swedish entrepreneur Emil Ingmanson – the man who first promoted Falcon Funds to the Swedish pensions authority.

In its report, KPMG suspects that at Ingmanson’s behest, TAM invested heavily in assets in which Ingmanson himself had an interest, at inflated values, and specifically against the rules of the Falcon Funds prospectus.

Throughout the course of their investigation, Beitnes had contacted KPMG of his own accord, to inform them of the €60.2 million investments carried out in companies he represents, by TAM director Anthony Farrell. “These assets do not look suited for a UCITS fund,” KPMG said of the Beitnes assets that TAM invested money in. “Our initial indication is that we will not be able to sell these assets for more than 50% of their original price.”

In comments to MaltaToday, Beitnes said he has never met Ingmanson and said he would meet the Swedish pension authorities if they needed information. “The KPMG report contains several basic mistakes that could have been ruled out a long time ago. Both the alleged amounts invested, my assumed control of several of the companies, the supposed incurred losses and my connection to the Falcon Funds. These are simply not the facts and I take it very seriously that KPMG has stated this in their report.”

Beitnes also said that any investment decisions were not taken by him but by the asset managers based on the share price movements in the companies they invested in. “I wonder how it is possible they can claim they have suffered losses. The claims rest on unfounded merits and the lack of relationship to me. I could maybe understand the SPA's point of view since they have based their case on the KPMG report, but they are also, at the end of the day, responsible for the quality upon the facts they are basing their decisions.”

Falcon Funds was a €247 million pension scheme marketed to Swedish savers, that invested the cash in blue-chip investments. Although he was never its founder-shareholder, Emil Ingmanson had a formal role in setting up Falcon Funds, having attended 13 board meetings of Falcon Funds, whose directors were former finance minister Tonio Fenech, Ian Zammit and Joseph Xuereb.

However, financial services rules require that all investment decisions are vested in a firm independent of the fund’s directors, which in this case was Temple Asset Mangement.

After Falcon Funds was suspended from the Swedish pensions platform and taken under control, KPMG found “a clear connection” between Ingmanson and the Swedish energy company Werel AB, which it said was formerly known as Konsument EL Sverige – a company once entirely owned by Ingmanson. “We discovered in an informal discussion with Valletta Fund Services, that Ingmanson was very much involved in the fund’s operation, and that he effectively took decisions related to investments, which should have been TAM’s responsibility,” KPMG director Sarah Camilleri wrote in her report.

Specifically, the money was invested in ETIs (exchange traded instruments) marketed by another Malta firm, Argentarius, which is run by Austrian national Andreas Woelfl.

ETIs are used to create a chain of companies where the money invested in the first, ‘runs down’ to the ultimate beneficiary. “It looks like these ETIs were designed in such a way so as to make the initial investment appear liquid enough to merit the pension fund’s interest, despite the fact that ultimately the beneficial company at the bottom of the chain is illiquid,” KPMG said.

KPMG suspects that these ETIs were charging an inflated premium for the Werel shares. “TAM would invest some €20 million in two ETIs… for shares whose net asset value was €2.6 million. But the significant investment does not reflect the value of the Werel shares, so we cannot explain this high premium… We cannot understand TAM’s reasoning for investing such significant amounts in this company.”

The MFSA has fined TAM a total of €612,000 for breaches 23 different standard licence conditions and had its licence suspended. TAM and Emil Ingmanson – who has since been arrested in Sweden – are also being sued by Falcon Funds. Falcon directors Tonio Fenech, Ian Zammit and Joseph Xuereb were given an official reprimand for failing investors, and prohibited from accepting any new appointments which require MFSA approval for two years.