Receivers hold assets connected to Grand Island Fund

(CNS): With hedge fund collapses common in the wake of the worldwide global crisis Cayman’s own most high profile fund collapse was back in the news this week following the arrival of seized funds into this jurisdiction. According to a statement from the Joint Voluntary Liquidators, PwC Corporate Finance and Recovery (Cayman) Limited had recovered an undisclosed sum from Canadian accounts.

Raising considerable controversy when it collapsed, the fund, which was reportedly established by Naul Bodden and involved numerous local people and companies in its management and investments, is now the subject of a police investigation. One man was arrested in connection to the funds’ collapse and the Royal Cayman Islands Police Service (RCIPS) Financial Crimes Unit says it is working on the case.

Pwc Corporate Finance and Recovery (Cayman) Limited, acting in their capacity as Court Appointed Receiver overmonies held at ScotiaMcLeod, Canada, said yesterday, 23 October, on behalf of the Grand Island Funds and other investors, that they had obtained recognition in the Ontario Supreme Court of the Grand Court  Order on 16 September 2008.

This enabled the Receivers on 25 September 2008 to repatriate monies previously held by Scotia McLeod to bank accounts controlled by the Receivers in the Cayman Islands.

“The monies will remain in Cayman Island bank accounts until such time the Grand Court orders the Receivers to distribute the monies to the beneficial owners,” the JVL said in a statement. “In addition to repatriating the monies to Cayman Islands, the Receiver also obtained books and records from Scotia Mcleod.  These books and records, along with other books and records obtained by the JVLs to date, will assist the JVLs to further progress their investigations into the affairs of the Grand Island Funds.”

The statement also noted that the JVLs recently held meetings with the Grand Island Funds shareholders to keep them updated on progress of the liquidation to date.  “The JVLs are also updating various stakeholders with the progress of their investigation, which is ongoing and still at an early stage."

However, so far, few if any actions or details have been disclosed to the wider public about how the fund collapsed, who is responsible and accountability regarding directors. There are numerous questions of good governance circulating in Cayman’s finance community about the fund in relation to its management, regulation and direction. There are also allegations of a number of conflicts of interest surrounding recent appointments connected to the management of the collapse.