Arch Financial Products is being sued for £150m by the board of 18 Guernsey-listed investment vehicles for not exercising a fundamental care of assets and failing to account for "substantial secret profits", according to reports.
The board was appointed by Capita ,the authorised corporate director of Arch Cru's UK funds, to wind up the Channel Islands Stock Exchange-listed cells in which the money was invested.
A High Court writ claims Arch ignored conflicts of interest by using money from the cells to buy shares in Arch and Cru Investment Management, which marketed the funds in the UK, the Financial Times reports.
It adds around £2m was invested in Cru, valuing the company at £9m, even though the most recent audited accounts showed net assets of only £8,413.
Meanwhile, it also claims Arch made "secret profits" of £1.7m from an investment in oil tankers which had resulted in losses of $162m
The $167m investment, Arch's largest, was intended to finance the conversion of seven oil tankers into double-hulled vessels.
However, the writ alleges the ships were "old, of very poor quality and in very poor condition" and describes the investment as "exceptionally risky".
It also details how the Greek owner of the ships, Salamis Shipyards, had an outstanding bankruptcy petition against it, while the owner of the company had also been involved in three major shipping ventures that had failed.
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