MPs have called on the Guernsey government to help settle the compensation row over the collapse of Arch cru to avoid a lenghthy and expensive legal battle in the Guernsey courts.
In January, the board of 18 Guernsey-listed investment vehicles launched legal action against Arch cru financial products for £150m for failing to exercise fundamental care of assets and a failure to account for “substantial secret profits”.
This morning, MPs from the 80 strong all-party Parliamentary group on Arch cru met with States of Guernsey chief executive Mike Brown and the island’s head of international relations Steve Wakelin.
Speaking to Money Marketing after the meeting, APPG co-chairman and Conservative MP Alun Cairns says a lengthy court battle would reduce compensation returned to investors.
He says: “We would like a negotiated settlement rather than see them fight it out through courts over next two or three years. This would mean a quicker resolution to the scandal and mean the various organisations on the island can retain an element of credibility and integrity by helping bring that about.
“Significant failures in the whole complex structure of Arch cru products were related to regulated activity in Guernsey. I therefore believe Guernsey could play a role in bringing all these bodies to a negotiated settlement, in the same way the FSA can support the process in the UK.”
In June last year, the FSA, Capita Financial Managers, BNY Mellon Trust & Depository Ltd and HSBC Bank all agreed a £54m fund which will be used to make payments to the eligible investors in the CF Arch cru funds.
Cairns said although court action will continue while Guernsey considers what the MPs told them about the collapse of the funds in March 2009 and its impact on the 20,000 affected investors, he hoped a resolution could be found.
“For now the court action is going to carry on. But, I am hopeful Guernsey considers the case we have made and recognises a negotiated settlement would mean any insurance against failure would compensate investors rather than paying legal bills,” he says.