Swedes report Tonio Fenech’s pension fund to police

Swedish pensions authority claims Malta pension fund cannot pay back €247 million in savings because of ‘major investment fraud’ • Falcon Funds denies claims, ‘disposing of €240 million worth of assets takes clearly more the two weeks’

Former finance minister Tonio Fenech
Former finance minister Tonio Fenech

Former finance minister Tonio Fenech is facing a criminal investigation in Sweden after the country’s pensions authority reported to the Swedish police a Malta-based fund he is a director of – allegedly for its inability to pay back Swedish savers their monies.

It is the culmination of a saga that this week made headlines in all major Swedish newspapers, as the ‘Pensionsmyndigheten’ – the Swedish pensions authority (SPA) – decided to take the matter to the country’s economic crimes police.

Falcon Funds, a pension fund licensed by the Malta Financial Services Authority, stands accused by the SPA of being unable, or unwilling, to pay back a total of €247 million (2.4 billion Swedish kroner) in savings to 22,000 investors.

The SPA said that while the MFSA has directed Falcon Funds to start paying back the cash, “millions are still missing. This raises a strong suspicion that the events that have transpired are part of a major investment fraud”. This suspicion has been corroborated by anonymous reports and documents turned over to the authority in the last weeks.

The SPA also said that Falcon Funds had also lost various court proceedings challenging the pensions authority’s decision.

“The responsibility rests heavily on the board of directors of Falcon as they have persisted in breaking the rules and damaged the pension savers through grossly unsuitable investments,” the SPA’s legal director, Michael Westberg, said.

“We now expect them to comply with out request and carry out an orderly and responsible redemption, in order to return as much of the savers’ money as possible.”

Falcon Funds, through its public relations agency, has said it has returned €67 million so far and that it plans to return more in the coming week.

“A total divestment of the funds will be made in an orderly fashion to safeguard the value of the pension savers’ investments,” Falcon Funds said, saying the money would be returned “within a few months”.

But the SPA is insisting that 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 has retorted that the SPA’s insistence that €154 million are held in “illiquid assets” – meaning securities that cannot be easily sold or exchanged for cash without a substantial loss in value – was an exaggeration. “All the funds’ investments are UCITS-eligible. The directors of Falcon Funds Sicav plc do not share the SPA’s concern over the value of the funds. The board will cooperate fully with any investigations that may be undertaken.” 

But the SPA told MaltaToday that Falcon Funds appealed, and lost, in three administration courts, as well as having sued the SPA in a Stockholm district court. The SPA has counter-sued Falcon Funds. “Since 15 June we tried to establish a dialogue with them so that they follow the redemption order. Unfortunately, we have seen nothing that resembles a redemption plan yet. And no money.”

The authority’s spokesperson added that it would be up to the police to determine the culpability of individuals involved in Falcon Funds. “We gave a very thorough statement of facts to the Swedish economic crimes authority. We described events that we believe are of a criminal nature.”

Falcon Funds was deregistered from Sweden’s private pension platform in August, and its three sub-funds will be removed from pension savers accounts in November, with these holdings transferred to the government-owned fund AP7. The SPA said that if there are insufficient funds, it will be savers who will bear the risk for their accounts. “As the SPA has already sued Falcon at the Stockholm district court, individual savers don’t need to do anything. We sue the company on their behalf and any damages the lawsuit results in, will automatically be allocated to their accounts as compensation.”

Misled savers

The Falcon Funds saga became a matter of national concern in Sweden when news TV programme Kalla Fakta (Cold Facts) reported the claims from savers that they were misled into switching their private pension accounts, by operators of the call centre Konsumentkraft.

The television exposé  revealed that Konsumentkraft workers would call pension savers and identify themselves as members of the pensions authority, to encourage them to switch over to the Falcon Funds pension fund.

Even more suspicious was the fact that a mysterious Swedish entrepreneur, Emil Ingmanson – who also has business interests in Malta – was said to have been connected to these abusive call centres, ostensibly in obtaining a database of other pension fund clients.

It later turned out that Falcon Funds had invested at least €31 million of its pension savers’ money, into three sub-funds that the pensions authority believes are connected to Ingmanson’s own beneficial interest.

Conflict of interest

Even worse, the SPA was alarmed over the incestuous relationship between Ingmanson and Falcon Funds.

The Falcon SICAV is not owned by Tonio Fenech, but as one of its three directors, he runs the fund, which invests the pension savers’ money in blue chip stocks like BMW, Allianz and Michelin. These decisions are taken by the SICAV’s investment manager, Temple Asset Management.

But as it turns out, Emil Ingmanson was planning to become the investment manager of Falcon Funds instead of Temple Asset Management, whose Floriana office until recently was hosting ‘Falcon Asset Management’, a company of which Ingmanson is its ultimate beneficial owner.

This only confirmed the SPA’s worst fears, when it saw that Falcon Funds had invested cash in funds like Solid Venture P2P ETI and Boardwalk Real Estate ETI – which happen to bear similar names to companies Emil Ingmanson set up in Malta (Solid Gold Venture) and the Isle of Man (Boardwalk LLP), respectively.

In August 2016, after MaltaToday’s reports, Falcon Asset Management ceased operations when it failed to obtain an MFSA licence to become a UCITS manager.

The SPA has accused Falcon Funds and Temple Asset Management of being aware that they invested in instruments for the benefit of Ingmanson, “which constitutes a conflict of interest… [these instruments’] design is purposely non-transparent in order to veil any further analysis of the underlying assets and their risks.”

“The agency concludes that the investment into the ETIs is in breach of the obligation of Falcon Funds to act in the best interest of its shareholders and in breach of its obligation to carry out its assignment in a prudent and professional manner.” 

Fenech has defended Ingmanson in the past, saying he was the subject of an unfair press in Sweden, and that the funds Falcon invested in are all UCITS-eligible. “The claims made of the links with Ingmanson are to the least speculative. He is known to the board as a person of repute, was involved in the setting up of the fund due to his Swedish experience and introduced us to Stellum [the distributors of Falcon Funds in Sweden]. He has no involvement in the selling or investments decisions of the fund,” Fenech told MaltaToday in June.


In a right of reply, Falcon Funds denied claims that it could not pay back its investors or that it had lost any court cases, as stated by the SPA. The fund has a pending case before the Stockholm civil court, whose first hearing is set for December, and has a pending complaint with the Swedish ombudsman.

“We have no objection to authorities enquiring on the workings and actions of the Fund, and as directors we will co-operate fully, including any police investigations,” Falcon Funds said.

Falcon Funds said it had paid out €80 million of the €240 million it says it owes savers. “The process of disposing of €240 million worth of assets takes clearly more the two weeks purely because of the logistics involved in placing assets with brokers, getting bids, settlements, conversions etc. The manager projects that by the end of next week the Fund would settle with the SPA over €80 million and will continue to do so until all dues have been settled.”

Falcon Funds said the role of its directors was “to ensure this process is executed in an orderly manner and in the best interests of investors. That is, not to rush in selling but to get the best prices possible to make sure they do not lose value of their assets.”

The board said it had taken immediate notice of the MFSA director to redeem monies and “not to keep investors tied in a legal battle that could take years.”

It took issue with what it said were “superficial pronouncements” by the SPA on the alleged risks to the value of its investments. “There are obvious logistical practicalities that make it impossible to wind up €240 million in two weeks as the Swedish Pension Agency expected. The legal obligation of the directors is to ensure this is done [in an] orderly [way] to ensure that when assets are sold this is done in the best interest of investors, i.e. not to create unnecessary losses. Unrealistic time-frames work against the interest of pension savers.”

Falcon Funds also accused the SPA of preventing it from merging into another fund, as allowed at law, and instead pushing it to redeem its clients’ cash. “Our belief is that the SPA did this precisely to try to prove wrongdoing at the risk of pension savers suffering losses because of the pending court case.”

Falcon Funds said allegations of unlawful use of client IDs were found to be baseless by the Swedish prosecutor, and accused the SPA of using media pressure against it.

The SPA proceeded with the delisting of Falcon Funds from the Swedish pensions platform irrespectively of the SICAV’s complaint to the ombudsman. “The Fund went to the Administrative Court to seek remedy, which the court however referred to the Civil Court, and that is where we are today.”

Falcon Funds’ directors said they were committed to honour their obligations and repay the monies due, but said the SPA was making wrongful claims “on matters that are supervised by competent financial authorities in Sweden and Malta and not by them. These assertions damage not only the reputation of the Fund but also the interests of investors when it comes to dispose of the investments as market offers take advantage of the situation.”

Falcon also stated that the MFSA does not share the SPA’s view that the pension fund invested money in ineligible investments.