The cost of winding up another collapsed fund linked to Premier Group IoM will fall on the Manx public purse.

An interim report by the provisional liquidator of the Eco-Resources Fund has drawn some disturbing conclusions about its financial failure and how investors had been ’significantly let down’.

Eco-Resources Fund, managed and promoted by Premier Group IoM, was a diversified sustainable assets fund which included bamboo fibre plantations, investments in publicly traded stocks and funds as well as financial hedging instruments.

But its 189 investors have been told they are unlikely to get any of their money back after the fund was ordered to be wound up by the hgh court last month, following an application by the Financial Services Authority.

Eco had cash resources of just £12,545 but debts of £2.8m when it went under.

An interim report by the provisional liquidator and official receiver Gordon Wilson ahead of a creditors’ meeting on April 14 says it was likely that Eco and its subsidiaries ERF Ltd and EcoPlanet Bamboo IoM had been insolvent for some time.

He states: ’There will almost inevitably be a cost to the public purse of the Isle of Man in order to bring the affairs of the fund and its underlying companies to an orderly conclusion.’

Mr Wilson notes that while the public purse can cover reasonable liquidation costs including costs to investigate and if necessary take action against those accountable for a fund’s failure, the taxpayer cannot be expected to finance the costs of legal action to recover assets.

His report concludes that the fund’s financial woes were principally the result of a collective failure to manage the plantation assets.

It is alleged by Mr Wilson that this was due to a combination of over-reliance on the Eco Bamboo Group and its founder, US entrepreneur Troy Wiseman, his degree of control over EcoPlanet Bamboo IoM and failures to avoid conflicts of interest.

It is alleged by Mr Wilson there was an ’overly complex’ structure with a ’catastrophic mismatch’ between liquidity terms offered to investors and that associated with the underlying assets. Information flows were restricted, impacting on objective decision making.

Further, Mr Wilson alleges there was ’financial mismanagement’.

Mr Wilson notes: ’The financial difficulties can, in our view, be directly attributed to the decisions taken early in the life of this structure, in particular to give special redemption terms to the shareholder vehicles linked to Mr Wiseman which saw them redeem over half their shares in cash.’

Mr Wilson further notes that later acquisitions of plantations in late 2013 were intended to bulk up the asset value of the fund to attract more new investors. The result was that those who invested money will be unlikely to get any cash back until the mid-2020s, if they are to get anything back at all.

’Overall we feel that the investors have been significantly let down,’ says the liquidator.

He also raises questions about a claim that the plantation companies had been foreclosed on by a company called SAL. Mr Wiseman had indicated that SAL may be willing to sell the fund its plantations back for $10m.

The provisional liquidator believes Mr Wiseman remains involved with SAL as an investor and as either a ’controller or manager or influencer’.

He also has concerns about whether the result of a vote by Eco investors just before Christmas - when a majority voted against liquidation - had been ’swayed’ by individuals with a vested interest in SAL.

As iomtoday revealed last week, The Manx taxpayer is also funding the cost of the winding-up of another investment fund that was managed and promoted by Premier Group IoM, itself now in liquidation. New Earth Recycling and Renewables (NERR), part of the New Earth Group of Funds, went into liquidation in June.

We reported last month on a link between Premier Group, Eco-Resources Fund and the Panama Papers.

Ninety-nine out of Eco’s 100 management shares were held by Premier Group Distribution Inc, based at the British Virgin Islands office of Mossack Fonseca, the offshore law firm whose files were leaked.

* It has been suggested to us that the manner of our reporting in the above article may have given the false and incorrect impression that EcoPlanet Bamboo Group LLC (a Chicago based entity, trading as EcoPlanet Bamboo) is related to EcoPlanet Bamboo IOM Limited. For the avoidance of doubt, EcoPlanet Bamboo IOM Limited (the Isle of Man based entity) is not associated with EcoPlanet Bamboo Group LLC (the Chicago based entity), nor its subsidiaries. Further, neither Eco Resources Fund nor EcoPlanet Bamboo IOM Limited have any interest in EcoPlanet Bamboo Group LLC nor in any of its plantations. We apologise for any misunderstanding caused by the manner of our reporting.