A former treasury economist whose purported $400m hedge fund collapsed and is now the subject of a Serious Fraud Office probe is expected to soon learn his fate.
Penrich Capital, a boutique fund run out of the Cayman Islands by Christchurch man – and one-time London investment banker – Kelly Tonkin, suddenly imploded last March as liquidators were appointed and investors scrambled to quantify and recover their losses.
The SFO opened an investigation into Penrich in April, and an update to investors from Cayman liquidators R&H Restructuring said this probe was “into the activities of the former director of the company, Mr Kelly Tonkin” and the SFO had advised them “that those investigations are due to be finalised shortly.”
A spokesman for the SFO would only say their investigation was “ongoing”.
Further details around this Cayman catastrophe – potentially larger than the Ross Asset Management ponzi scheme – are scant, due to the relatively small number of fiercely private high net worth victims, and gagging agreements put in place by both criminal investigators from the SFO and Cayman Island liquidators.
Tonkin did not respond to requests for comment, but last year told the Weekend Herald “I haven’t been charged with anything, yet” and said the collapse of Penrich had left him penniless and unable to even afford a defence lawyer.
He had developed a national profile during the 90s as an economic commentator before moving overseas to work at the likes of Lehman Brothers.
Tonkin also took primary responsibility for the Penrich catastrophe, saying: “There’s is no one else, there’s just me.”
Monthly investor statements obtained by the Herald show Penrich was reporting its flagship fund – making bets on currency and interest rate changes in Norway, Sweden, New Zealand and Canada – claimed returns of 13.9 per cent since its 2004 inception.
It is understood financial accounts for the fund to the year to December 31, 2016, provided to investors showed a claimed US$253m – then equivalent to around $400m – of client funds were under management. But what was really happening at Penrich had yet to be revealed. The audit report for those 2016 accounts – on BDO Cayman letterhead – appears to have been forged.
A spokesman for the Financial Markets authority said they were in contact with the SFO and the Cayman liquidator, “however we cannot comment further on these matters”.
In September the Weekend Herald revealed entities associated with elite Epsom education institution the Diocesan School for Girls, largely set up to manage donations to the private school, had over $1m invested in Penrich. School accounts flagged the sum as at-risk after a “significant discrepancy” was found.
Financial adviser Angela Anderson of AMA Capital, who steered Diocesan investment funds – and those of a number of her other clients – into Penrich, said she still enjoyed
“the full support of my client base” and no longer had anything to do with Diocesan governance after concluding her term on their investment committee at the end of 2020.
A spokeswoman for Diocesan School for Girls said they “will not be providing further media comment on this”.
Lawyer and Penrich investor Adina Thorn, who in September began soliciting fellow victims to marshall a class action to explore recovery actions, has not returned Herald inquiries for months.
Thorn had previously told the Herald this about Penrich: “It had an impressive website. The documents are impressive, the names were impressive. And actually it was really just a few guys running around in Christchurch running a very dodgy structure in the Cayman Islands.”
R&H Restructuring, who to date have refused comment, in October last year appointed Chris Browne of Wilson-Harle as New Zealand legal representatives with a view to launching recovery action.
In late January the High Court at Auckland provided orders recognising the Cayman liquidation proceedings as a “foreign main proceeding”, effectively extending R&H’s jurisdiction to New Zealand and enabling powers available to local liquidators under the Companies Act.
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