Manita Khuller outside the Guernsey courthouse

Manita Khuller won her appeal against Guernsey-based trustee FNB International. 

In November of last year I published details of the scam she suffered and her court claim for restitution (which she lost). Shortly after I published an open letter from barrister Niall Coburn

Dear Bailiff Collas,

I write to you as former Head of Enforcement and regulator and lawyer who has worked internationally and attended the Trial of Manita Khuller vs FNB Trustees on the 18-21st of November.

As a Barrister of 30 years, I am totally ashamed at this unfair judgment which not only misrepresents the facts as disclosed in court  but actually failed to provide an analysis of the case competently as presented; where ample evidence was provided of FNB’s gross negligence . 

The court completely failed to identify that FNB appointed and retained an unlicensed and unqualified adviser (PPI Advisory) without the most basic of checks such as licensing and regulation.

This is despite the evidence presented in the form of letters, investor alerts and emails from the Thai Securities and Exchange Commission. 

FNB Trustees failed to respect Ms Khuller’s  investment risk profile and with a “quick glance” doomed her pension savings to known failures of a major fund such as LMMPF.

It was clearly shown during trial that the LMMPF was not only unregulated but also “unregistered” and this was in the Fund prospectus that FNB had from the outset. It‘s was not a case of “hindsight” at all.

Matching fund risks to those of the investor investment profile is the most basic of due diligence that FNB did not do, and this is gross negligence that was causative of the loss. These were not funds meant for retail investors, which Ms Khuller is.

The causation is clear from then onwards. 

The evidence displayed is  that FNB was grossly negligent as a regulated trustee and fiduciary and that you very well know but you chose to “protect your turf”.

This is a totally incompetent decision of the highest order and I know that you will all not sleep well in its delivery.

Clearly, you put the implications for Guernsey before Ms Khuller, who was wronged by FNB. 

There is no justice in Guernsey, but men protecting secrets. 

Manita Khuller sued FNB last year after she lost £330,000  from her pension pots.

Khuller claimed she was “mis-advised” by an unregulated adviser while she was living in Thailand, resulting in transferring her two UK defined benefit (DB) pensions into a QROPS. 

The money was put into a Royal Skandia wrapper and invested in three funds, one of which was a property fund run by LM Investment Management, which turned out to be a Ponzi scheme. 

The case was first dismissed by the court in Guernsey, prompting Khuller to seek an appeal. 

The appeal 

Manita Khuller failed to prove that FNB’s reliance on the investment adviser it appointed, showed gross negligence. 

The case is reported on the website of Guernsey Fiduciary – Concept. I have it from Manita that Roger Berry’s  reporting is accurate

“In the appeal, the appointment of the adviser was seen to be reasonable, as certain checks had been made by the trustees, and thus the original decision was undisturbed. 

But the decision concerning breach of duties, regarding the choice of investments, was overturned as it was concluded that a mistake had been made in the original decision, as to the position to which the adviser was appointed.  The appointment was as an adviser not as an investment manager, and a clear delegation of the trustee’s responsibilities was not achieved.

In reality, the adviser made direct instructions to the bond holder without prior knowledge of the trustees, who saw themselves unable to choose investments as they were not investment professionals.  The appeal court concluded the trustees had acted with indifference to its duty and the identified risks, which qualifies as being grossly negligent.

It remains mysterious what checks had been done on the adviser.

Justice is done…

Manita Khuller is  finally seeing justice done , seven years after the LM Fund failed and she started  her complaint against FNB International Trustees, Guernsey. 

She may finally see some restoration of her lost UK DB pension, which was transferred to a Guernsey Qrops in 2011. The quantum of damages has yet to be determined

but questions remain.

Berry concludes

This case demonstrates that whilst some offshore advisers may have acted poorly for their clients, the deeper pockets of the trustees may be accessible to claims if the trustees have not properly delegated their responsibilities or used reserved powers trusts.

The Guernsey Court found against a firm of trustees that has First Rand , a major South African Bank behind them. The Trustees actually held an offshore investment bond which wrapped the failed fund.

But there is another organization with deep pockets involved here, an organisation regulated in another offshore jurisdiction , this time the Isle of Man. Manita Khuller found her DB transfer values invested with an insurance company in the Isle of Man called Royal Skandia.

Questions have to be asked about what was Royal Skandia’s role in this case. If the Trustees were negligent in accepting instructions from a rogue adviser, what about Royal Skandia?

Royal Skandia has since been rebranded Old Mutual International and finally Quilter International but all were or are part of what is now called Quilter. Quilter advertise their ethos here

“Shared Prosperity through Responsible Business” is the message to the customer.

Quilter market in the UK through Old Mutual Wealth and  Old Mutual Wealth  continue to market offshore bonds through what is now Quilter International

We must hope that the quality of investments allowed within these bonds is subject to more scrutiny than was the case with Manita Khuller.

We must hope that Quilter International today are more selective about the advisers using their products.

Lessons learned?

Manita Khuller was primarily let down by her adviser, but questions remain not just of the Trustees, but of why she had to spend 7 years fighting this case- winning it only on appeal. Niall Coburn’s letter has even greater force today.

Finally questions need to be asked of Quilter International and their owners.  Consumers purchasing bonds from a life insurance company are likely to consider the term “bond” implies some form of protection, but this bond seems to have provided Manita Khuller with no protection whatsoever, indeed it seems to have obscured the underlying investment.

When selling  a wrapper, it pays to look at what’s inside. The case suggests , for all the organisations supposed to be protecting the customer, no one looked inside.