An Onchan-based investor who lost £110,000 in the Louis Group collapse says he is not surprised the liquidators concluded there may be ‘taint of illegality’ surrounding the business in the island.
The investor, who wished to remain anonymous, said: ‘We all expected this outcome. I’m retired and I’ve lost my pension.
‘LGIOM was regulated by our Financial Supervision Commission. The FSC now choose to just abandon us. Why regulate it? This is not going to do the reputation of the island any good.’
Inquiries by liquidators PWC concluded Louis Group systematically mixed investors’ money, using new capital to service interest and pay old investors, often in completely different companies.
The liquidators concluded activity amounted to deposit taking for which the entities were never licensed: ‘If we are right about that, there is a taint of illegality across the vast majority of the business carried out by this group in the Isle of Man.’
Some 700 investors, a quarter from the Isle of Man, invested £60m in Louis Group Structured Fund (LGSF) and various property syndicates. Six island-based LG companies, including LGIOM and LGSF, were wound up in the high court last year.
The FSC said it had already begun investigations into the companies and the ‘conduct of certain indiduals involved’. But FSC chief executive John Aspden pointed out the majority of group’s activities conducted from the island were unregulated.
Liquidator Mike Simpson said there was no requirement for many of the LG entities to be licensed here as they were not supposed to be deposit takers: ‘Louis Group was licensed as a corporate service provider but other entities were effectively client companies.’
His investigations found evidence of widespread conflicts of interest, serious failings in corporate governance, substantial payments to Group head Alan Louis, and a ‘culture of absolute control, fear and intimidation’.