The administrators of collapsed minibond firm Asset Life plc released their latest quarterly update in February.
Asset Life plc raised £9 million from investors from 2014 onwards. It ran out of money and stopped paying investors in November 2018, and collapsed into administration shortly after.
Its Chairman, Martin Binks, was briefly a director of London Capital and Finance from October 2015 to August 2016. Binks is also a director of Anglo Wealth, a firm described as an “elegantly packaged scam” by a Crown Court judge. Binks has not been accused of any wrongdoing in relation to his work at LCF or Anglo Wealth.
Some of Asset Life investors’ money was funnelled to Anglo Wealth, in return for investments passed from Anglo Wealth to Asset Life plc to settle the resulting debt. The administrators stated in the initial report that they are investigating the relationship between Anglo Wealth and Asset Life, but have not specifically provided an update on this subject in the latest report.
At the time of its collapse Asset Life plc held two investments, a Kyrgyzstani gold exploration company and an Armenian iron ore extraction company. The administrators have not been able to find buyers for either investment and the only realistic prospect of selling the shares is to the other shareholders or connected parties.
The administrators are holding discussions with lawyers as to whether there are any other avenues for recovery but remain schtum on what they might be.
The administrators raise significant concerns about how Asset Life plc was run. The company did not even have its own bank account, instead running investors’ money through “a network of receiving and payment agents”.
There were “numerous movements between connected party bank accounts which do not appear to have an underlying business justification”.
They also continue to investigate the literature on which Asset Life’s bonds were promoted to investors, the “nature of the Company’s assets” and the “destination of the funds raised from debenture holders”.
The administrators’ initial report made no mention of the supposed “Lenders Guarantee” that Asset Life plc claimed would protect investors’ capital.
The latest update confirmed that the cover for Series A and B bondholders is in reality worthless. The insurance was with GEF Guarantee Equity Fund Limited, an Israeli subsidiary of GEF Guarantee Equity UK Limited. The UK company had already gone bust in 2015, despite Asset Life plc’s website continuing to advertise the supposed insurance contract with them.
Enquiries continue into the insurance arrangements in place for Series C bondholders. Whether this is the insurance with Klapton Insurance of Anjouan formerly mentioned on Asset Life plc’s website is not clear from the report.
According to the administrators, many of Asset Life plc’s investors “clearly do not meet the criteria of investors eligible to participate in these types of investments or to have the schemes promoted to them” – i.e. investors who meet the regulatory definition of sophisticated or high net worth.
UK regulations required Asset Life plc and any introducers to verify that their investors were in reality high-net-worth or sophisticated, if it wished to rely on the relevant exemptions for promoting unregulated investments (COBS 4.12.9 onwards).
The FCA issued a warning in May 2019 – after Asset Life plc had already collapsed in November 2018 – that Asset Life plc might be conducting regulated activities without authorisation. (What those activities might be is unclear – issuing minibonds is absurdly not a regulated activity.)
The FCA has taken no further action over the promotion of Asset Life plc’s bonds to ineligible investors that is publicly known.