Investment funds get order for bank to release assets

TWO IRISH-LISTED investment funds have secured court orders requiring the Irish arm of banking giant HSBC to release sums of more than $14 million (€10.8 million) and more than €500,000 held on the funds’ behalf in HSBC accounts.

Both funds were said to have assets of up to €1 billion in late November, much of which was said to have been channelled through HSBC to companies linked to $65 billion fraudster Bernard Madoff.

Arising from the Madoff bankruptcy, Thema International Fund plc and AA (Alternative Advantage), both of Fitzwilton House, Wilton Place, Dublin, brought proceedings last November against two HSBC companies – HSBC Securities Services (Ireland) Ltd and HSBC Institutional Trust Services (Ireland) Ltd, of Grand Canal Square, Dublin.

Yesterday, John Gordon SC, with Ben Ó Fhloinn, for Thema and AA, asked Mr Justice Peter Kelly for orders directing the HSBC companies to return assets in transit and other accounts of HSBC. HSBC had told the court it was making no claim itself over the monies, and was not opposing the orders sought.

Its counsel, Michael Cush SC, said there was a concern over whether payment of some of the monies sought would be in accordance with the articles of association of the company.

In his ruling, Mr Justice Kelly noted the HSBC defendants had initially expressed concern the sums sought would be subject to orders by the US courts in the Madoff bankruptcy, and could be subject to clawback actions by the US trustee handling the liquidation of the business of Madoff.

This week the trustee had told the court in a statement that he was not joining the action, and also set out principles to be applied in deciding whether the funds were covered by the US order appointing him as trustee.

The judge said the trustee had now effectively dropped off the scene and, in those circumstances, the application for release of the monies was unopposed.

He noted, however, that the defendants had raised a concern as to compliance with articles of association in the context of application for release of the AA fund monies. In his view there was compliance.