FAKE BOND SCAM IN GIBRALTAR, REPORT CLAIMS

Several companies in Europe have been used in a scam by which criminals have sought to raise funds by providing fake bonds as share capital for insurers in Gibraltar, reports the Gibraltar Chronicle. In December De Vert Insurance sought a winding-up order from the Gibraltar Supreme Court, having ceased to trade last August. It was the third insurer in Gibraltar to go bankrupt since the middle of last year, having only received a licence in February 2012. It sold just 56 high-value policies, largely covering construction contracts, with a total premium of £250,000. It has been alleged that a false Finnish sovereign bond to the vale of £6m were put forward by De Vert as surety. De Vert asserts that it too was a victim of a scam. At about the same time as De Vert stoppe trading, Gibraltar-based Hill Insurance Company went into liquidation when it was discovered that the bonds that it used as shareholder equity either did not exist or did not belong to the company. Referring to De Vert, Marcus Killick, CEO of the Gibraltar Financial Services Commission (FSC), told the Gibraltar Chronicle that "the FSC instigated a full review of the capital base of all of its licensed insurance companies writing business, especially those with similarities to Hill, such as type and location of business and or the use of bonds as a major part of the insurer's capital base". Mr Killick noted that "while, as expected, no widespread issues were discovered with the capitalization of Gibraltar insurers, the FSC's investigation raised suspicions as to the authenticity of government bonds that had been used to capitalize De Vert Insurance Company Limited. The FSC therefore instructed that an investigation be carried out by De Vert's Gibraltar insurance manager". The local directors were unable to get Italy-based Alliance SIM to confirm the validity of the bond it had supplied to De Vert, leading the insurer to cease trading in mid-August, ahead of an instruction so to do from the FSC, which was issued on September 3 2012. De Vert directors Paul Cole and Colin Peters said that "a denuncia has been filed with the Roman Court against the alleged perpetrator of the fraud. The directors of De Vert Insurance Company Limited will be providing all necessary assistance with this and any other investigation."