MIAMI, July 23 (UPI) -- The value of mining rights in economically crippled Argentina will determine the true financial condition of the UK-based Imperial Consolidated Group, which has collapsed amid allegations of fraud and liabilities of over $335 million.
More than 50 percent of Imperial's total assets -- on paper -- are in holdings in Argentine mining ventures, said a spokesman for the group's court-appointed administrator, Mazars Neville Russell Services.
Mazars Neville has sent staff to Argentina to assess the extent of the operations so that a credible valuation can be determined for Imperial's holdings.
It will need to be substantial, however, since the spokesman said the total liabilities of the Imperial Consolidated Group are approximately £220 million ($336 million). Most of Imperial's debts are owed to people around the world who invested in its offshore investment vehicles, which were registered in the scandal-ridden Caribbean island of Grenada.
All of the investments made in these vehicles were loaned to a single British Virgin Islands-registered "paper" company called Commercial Lending Corporation Ltd., said a Mazars Neville spokesman.
Commercial Lending Corp. distributed the cash according to the instructions of Imperial's senior management, with most of it ending up -- on paper at least -- in Argentina.
This came as a shock to at least one former salesman of Imperial's products and several investors in its mutual funds who had believed that most client funds were invested in businesses in the UK.
As Mazars Neville starts looking for assets to pay off creditors, five detectives from two separate British police forces have been in Grenada looking for evidence of criminal activity.
One group was headed by Detective Chief Inspector Ben Swanson, head of Money Laundering Investigations, UK National Crime Squad, and the other by Detective Chief Superintendent Chris Cook, of Lincolnshire CID (Criminal Investigations Division).
They are, inter alia, investigating whether the mining ventures in Argentina were legitimate business deals or, as some suspect, primarily vehicles for insiders to siphon off investors' funds.
O ne of Imperial's business partners in the mining ventures was Syrian-born arms dealer Monzer al-Kassar, whose past includes a conviction in the UK for drug smuggling and a trial -- and acquittal -- on accusations that he masterminded the hijacking of the Achille Lauro cruise ship in 1985 in which wheelchair-user U.S. citizen Leon Klinghoffer was murdered.
Despite Imperial's collapse and the ongoing police investigation, its former management are continuing to operate investment schemes and other businesses under other names.
After being disqualified as company directors in the UK, effective February 2002, Imperial co-founders Lincoln Fraser, a former bankrupt, and Jared Brook simply moved their business interests under the umbrella of a partnership. Brook has been linked to an investment fund called Property Assets (BVI) Inc., trading as Property International, which is registered in the British Virgin Islands but is operated from the UK. Moreover, before Imperial went into administration, its management set up a new fund group called Alpha Toronto Series Inc., offering the same products from the same offices with the same staff.
Although Imperial has previously denied it, an ex-employee confirmed to United Press International what other evidence indicates, i.e., that Alpha is effectively Imperial under another name.
The collapse of Imperial Consolidated is yet another stain against Grenada's offshore financial industry and, in particular, its former chief offshore regulator, Michael Creft.
It was during Creft's tenure that Imperial Consolidated moved its offshore investment division to Grenada in the first quarter of 2000 after being kicked out of the Bahamas.
The Bahamas Securities Commission wrote a letter to Creft's office at the time warning about credibility issues concerning Imperial. However, the warning was ignored and Creft allowed Imperial to set up an offshore bank -- called Imperium Bank -- and so-called mutual funds even though Grenada has no mutual fund legislation.
A source who is involved in investigating Imperial said Creft had personally given Imperial permission to establish the mutual funds even though he apparently had no legal authority to do so.
Creft left office in 2001, not long after another offshore bank, the First International Bank of Grenada, went into liquidation with estimated liabilities of US$473 million. Since then, he has been overseeing the construction of a 2,400 square foot new home for himself in a prime location on the island that overlooks the ocean and has access to a private beach.
The first auditor of FIBG, accountant Lauriston Wilson, was so concerned about Creft's behavior that he wrote to the Grenada Prime Minister Keith Mitchell in 1999 accusing Creft of being "apparently corrupt."
Over the last 18 months, Grenada has closed down most of its offshore banks, whose fraudulent activities are estimated to have cost their international clients an estimated $1 billion.
