Author: Dr. Angelika Hellweger 1 March 2023
A UK fund manager and a Swiss banker have been jailed for defrauding a Libyan fund out of millions of dollars.
Frederic Marino, former chief executive of FM Capital Partners Ltd, and Yoshiki Ohmura, who had been a banker with Julius Baer Group AG, were sentenced to prison in their absence for defrauding the sovereign wealth fund, the Libya Africa Investment Portfolio. Marino was given a sentence of seven years and six months by a judge at Southwark Crown Court. Ohmura was sentenced to three years and six months.
Their co-defendant, former FM Capital Partners chief investment officer Aurelien Bessot – who attended the sentencing hearing — was given 15 months, suspended for two years, for his part in the scheme.
The men were convicted after abusing their positions to divert profits away from the sovereign wealth fund to themselves.
Marino, 56, and Ohmura, 47, were convicted of conspiracy to commit fraud. Warrants for their arrest have been issued. Bessot, 47, had pleaded guilty to the same charge before the trial.
The three men conspired to divert $14 million and €1.3 million ($1.4 million) of the fund's money into offshore companies controlled by Marino and Bessot between 2009 and 2014. Marino and Bessot had set up FM Capital in 2009 as a joint venture with the Libya Africa Investment Portfolio to manage $800 million on behalf of the fund.
Approximately $250 million of the fund’s money was invested in structured financial products. But Marino and Bessot secretly arranged for a proportion of fees from four investments made by the fund to be paid to themselves through the offshore companies. Ohmura left Julius Baer to act as a go-between and was paid a 10% cut.
This is a case that illustrates that sovereign wealth funds can face a high risk of becoming victims of fraud. This is due to the fact that they involve a huge amount of money and investments that are overseen by various asset managers. These asset managers are often dealing with different types of investments in various legal systems. This situation can create both an opportunity and motive for fraud. It is crucial, therefore, that sovereign wealth funds have good corporate governance and strong fraud deterrence in place.
Angelika is a specialist in international, high-level economic crime investigations and large-scale commercial disputes. She has widely-recognised expertise in representing corporates and conglomerates in Europe, the Middle East, Africa and United States.