Henderson is facing claims of negligence, according to this morning's Times, as the fund manager looking after the nest eggs of 2.3m Pearl policyholders put money into an Italian fitness clubs business whose chief executive is facing fraud charges.
According to the Times newspaper, it is alleged altogether Henderson Group has lost more than £100m by investing Pearl policyholders’ money in a number of "disastrous private equity deals" and the €20million investment in Wellnet, the fitness clubs venture, was one of those written off.
Henderson is said to face suggestions it used Pearl policyholders’ money to expand aggressively in areas such as private equity and there are apparently also questions over the amount of due diligence conducted on transactions such as Wellnet.
The paper says at the time of such transactions Henderson owned Pearl's closed life fund. Hugh Osmond, whose Sun Capital took over Pearl in December 2004 for £1.025bn, is now considering demanding more than £50m in compensation from Henderson for its alleged negligence.
He told The Times: “These are serious issues over and above explicable underperformance. These were not just unlucky bets.This is not sabre rattling. We will go the whole hog (in pursuing Henderson), though we hope they enter more constructive discussions.”
Henderson declined to comment, but The Times claims Henderson is confident its revenues are secure because of the solidity of a ten-year contract signed with Pearl.
ELSEWHERE, THE REST of the morning’s papers are discussing the number of child trust fund vouchers which have not yet been cashed.
According to The Financial Times, the government has ruled out major changes to its child trust fund initiative despite statistics which revealed on Thursday nearly half a million parents had failed to open an account for their children.
Under the scheme, children born since September 2002 have received vouchers for at least £250 which must be placed into a long-term savings or investment account. Children cannot access the money until they turn 18.
But on Thursday the government revealed of the 1.76m vouchers sent out before the scheme was launched in April last year, nearly a third, or 480,000 were not cashed. These vouchers are now likely to be placed into default accounts chosen by the Revenue & Customs on the child’s behalf.
However, Ivan Lewis, economic secretary to the Treasury said he was pleased 72% of parents, or 1.2m, had made a choice and this was beyond what many had forecast for the scheme.
Lewis rejected calls from some Child Trust Fund providers to shorten the time period which parents have to open an account for their child from 12 months to 6 months, to push parents to act sooner.
He said there were many reasons why parents hadn’t opened accounts, including time pressures or the fact they didn’t know what to do with the voucher.
The vouchers are valid for 12 months, and many unused vouchers sent out at the start of last year have already expired, reports The Guardian.
From this month, Revenue & Customs will start opening accounts for these children by passing on the details to one of 13 financial companies that have agreed to operate these so-called allocated accounts.
The taxman will then write to the person who receives child benefit for that youngster to let them know where they have opened the account and to encourage them to contact the company so they can take charge of it.
Over the next few weeks, the taxman is likely to have to open up to half a million child trust fund accounts on behalf of parents who failed to do it themselves.
The government also named the 13 companies that will operate allocated accounts. They range from high-street banks such as Abbey and NatWest to lesser-known companies such as Schoolteachers Friendly Society and Foresters.
EUROPEAN CENTRAL BANK officials yesterday moved to quell inflationary pressure in the eurozone economy by raising the cost of borrowing by a quarter point to 2.5% reports The Scotsman.
It was the second time in four months the ECB have hiked eurozone rates after two and a half years at 2%. The move, which was universally expected and had little effect on the financial markets, follows a series of upbeat economic surveys including a surge in German retail sales in January.
Jean-Claude Trichet, the ECB president, said the increase did not signal a long series of rate rises but cautioned that the ECB was ready to take "whatever steps needed to control inflation".
Despite recent evidence of a revival in the eurozone economy, many commentators fear the ECB is too obsessed by inflation and that higher rates will derail the fledgling recovery.
Economists point out GDP growth in the 12-country eurozone fell to just 0.3% in the last three months of 2005.
If you have any comments you would like to add to this story or would like to speak to its author about a similar subject, telephone Nyree Stewart on 020 7968 4558 or email [email protected]IFAonline
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