A draft document posted on Lifemark’s website shows that it paid BVI firm LAS Global Limited £38m as part of an agreement giving it 10 per cent of all client funds invested in the vehicle’s life settlement bonds for advising on and introducing distribution opportunities.
Lifemark, which was set up by Keydata founder Stewart Ford to continue the investment product behind the Keydata secure income bonds 1-3, also paid Keydata, which Ford also founded, £20m in total up-front fees. Lifemark paid Keydata £21.5m of trail commission between 2006 and 2009 with a further £29m due to be paid between 2010 and 2019.
Keydata received an upfront 2.5 per cent commission for funds invested in the bonds and 2 per cent per annum for interest on income payable for each bond. Keydata paid IFAs 3 per cent initial commission and 0.5 per cent trail. Over £40m in total fees and commissions were paid from Lifemark to Keydata up until 2009.
Keydata International, the offshore sales arm of Keydata was paid a 5 per cent fee of all funds invested through initial commission charges and trail.
LAS Global, whose ownership has not been confirmed, is a company incorporated in the British Virgin Islands and is described in the document as a go-between for Lifemark, tasked with negotiating contracts for administrative parties, introducing and advising on distribution opportunities and providing support on “operational matters” related to the bonds.
KPMG Luxeumburg expects to publish confirmation of the fees and commissions paid once they have been audited in the coming days. However, neither it or PricewaterhouseCoopers UK could confirm the identify of the beneficial owner of LASG.
Keydata accounts show that salaries and bonuses paid to the firm’s directors totalled £3.7m at the end of September 2008 and £4.1m a year earlier. The highest paid director was paid £2m in aggregate for the two consecutive years.
Around 23,000 Keydata clients invested £349m in Lifemark through plans including the secure income bond 4, secure income plan and the defined income plan. Lifemark has halted income payments to investors to preserve liquidity and maintain the value of the policies.
High Court documents filed on July 17 revealed that Luxembourg regulator, the CSSF, had been aware since the start of 2009 about a predicted “liquidity gap” from 2012-2013 in relation to the Lifemark bonds.
US hedge fund CarVal is understood to have provided Lifemark with short-term funding to help sustain the company and preserve the value of policies held by thousands of Keydata investors.