The Central Bank has insisted that companies owned by businessman Sean Quinn must cover losses in troubled investment funds that bought properties in Ukraine during the boom.The Central Bank and Financial Regulator have been investigating the Leonardo Property Fund, which was controlled by Quinn Life on behalf of 186 people, mostly close associates of the Quinn family and employees of Quinn Group companies.
The fund borrowed significant sums from Anglo Irish Bank to buy buildings in the Ukrainian capital of Kiev, which subsequently collapsed in value, leaving a deficit in the fund.
Following its investigation, the Central Bank is insisting that the losses will be covered by the Quinn companies that employ the individual policyholders, and not by Quinn Life.
The companies involved are understood to include Quinn Insurance, which has been in administration for the past year due to solvency issues. It has emerged that Sean Quinn sent a letter to the policy holders in 2006, offering them a guarantee on their promised investment.
In a statement, the Central Bank said: ‘‘The Central Bank can confirm it has directed Quinn Life Direct Limited (QLD) to contact affected policyholders in relation to insurance policies invested, through QLD, in the Leonardo Property Investment Fund and the Leonardo Property Pension Fund.
Policyholders are being contacted to confirm that the guarantee associated with their investment in the funds will be met by their employer and that it is not a liability of QLD."
The Leonardo Fund is the only property-linked fund operated by Quinn Life, which writes savings, investments and pension policies.
It invested in commercial properties in the Ukraine on behalf of the 186 policyholders, who are understood to include employees of Quinn Cement, Quinn Glass and Quinn Insurance.
The properties rose in value and Anglo advanced funds on the strength of the increase, with the money secured against the properties.
When property prices collapsed, the unit-linked fund was left with a significant deficit and Anglo faced losses on its loans.
The Central Bank investigation looked at the role of Quinn Life, Anglo and the other parties in the deal.
The latest figures for Quinn Life show it had almost €133 million in funds under management at the end of 2009.
However, its premium income fell by more than 20 per cent to €18.7 million that year and it made a loss of €1.7 million, ‘‘reflecting the turbulent market conditions’’.
Meanwhile, a decision on the sale of Quinn Insurance will fall to the new government, which will be formed this week.
The frontrunner is a joint bid from Anglo and US firm Liberty Mutual. Under its proposal, Anglo is expected to hold onto a share in the insurer for a number of years, in a bid to recoup money owed by Quinn, and then dispose of its interest.
Tuesday, March 8, 2011
Quinn companies liable for losses on Kiev properties | The Post
via thepost.ie
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