Examination of Witnesses(Questions 620-639)|
TUESDAY 29 OCTOBER 2002
620. Just less than 25 per cent.
(Mr Fishwick) It is a lot less than 25
621. There have been conflicting figures.
(Mr Gilbert) £110 million
(Mr Fishwick) Out of £840 million.
622. How much is that portfolio of splits worth
(Mr Fishwick) It is a very small book
because we sold it down. It is worth about £15 million. We
have sold quite a number of investment trusts in recent months.
623. £15 million! Why is that?
(Mr Fishwick) The sector has fallen 80
per cent, Mr McFall.
624. This is a disastrous performance and much
worse in the general performance of income shares. Did you use
that money to support a crumbling edifice of other income shares
rather than investing in higher quality funds that have performed
far less badly?
(Mr Fishwick) We did not.
625. Okay. So over the two years to 1 October,
your Progressive Growth Unit Trust managed to turn £1,000
into £240 while the Investec Capital Accumulator Fund, which
also invested in a basket of zeros, was returned £820. Was
this bad luck in picking zeros?
(Mr Gilbert) It does not invest in a
basket of zeros. It invests in
626. It does and we will challenge that in later
evidence. Was this just bad luck in picking zeros or was it incompetence?
(Mr Fishwick) Our fund performed
627. £820 and £240: was it bad luck
or was it incompetence?
(Mr Fishwick) No, I think Alastair Mundy
did a fantastic job of running that fund.
628. Or were you deliberately buying the lower
quality zeros, firstly to ensure successful launches of other
funds that in turn would invest in your next launch and latterly
to buy into the rescue issues of failing funds, thus throwing
good money after bad?
(Mr Fishwick) Categorically, no.
629. Mr Gilbert, again I surf the net and I
get a quote from you in The Financial Times of 23 April
this year. It says: "We did actively encourage other fund
managers to launch funds in other areas of investments and we
sent them support funds with different investment briefs".
Is that correct?
(Mr Gilbert) Yes and no, Chairman.
630. So The Financial Times, The Glasgow
Herald and Reuters are all wrong?
(Mr Gilbert) It is a bit unfair
631. This is from The Financial Times.
(Mr Gilbert) It is a very good newspaper
632. The reporter is sitting here.
(Mr Gilbert) I see the reporter and it
was to that very same reporter I think what I said was
633. You do not want a headline saying, "Martin
Gilbert disowns his quote", do you?
(Mr Gilbert) I am quite happy to have
that headline. What I actually said was that we encouraged diversification
of the portfolio, and that was what that quote was about.
634. That is the quote and that is what the
whole world thinks Martin Gilbert said because it was in The
Financial Times and it is a pukka newspaper and it would not
quote you if you had not said it. That is how I feel. When you
launched these new splits, did you take much higher stakes in
the funds that would themselves invest in other splits than those
which stated they would stay clean of all cross-investments?
(Mr Fishwick) No. We had as big a stake
in funds that had no cross-investments as we had in cross-investments.
635. Was this not just a way of ensuring the
merry-go-round kept on spinning, with each new launch creating
guaranteed demand for the next one with management charges, which
were very hefty?
(Mr Gilbert) No, it was not created that
way. The reason that these funds were created was because we were
trying to diversify away from having investment in one very, very
636. Did you tell another fund manager that
they would be rewarded for taking a stake in a fund that you were
launching and that Aberdeen was taking a very significant stake
in their next launch?
(Mr Fishwick) You are putting that to
me? The answer is "no".
637. You never have done that? We will go round
to the whole industry and we are going to ask questions like that,
so we just want you to be very sure of your answers.
(Mr Fishwick) I am very sure of my answers.
638. That is fine, but it certainly looks like
it by the stakes that you are taking. Were you ever involved in
corrupt buying practices?
(Mr Fishwick) I do not think I have been
involved in anything corrupt but I am not quite sure what you
mean by that.
639. Do you know what corrupt means?
(Mr Fishwick) No.
27 Note by Witness: The Investec Capital Accumulator
Fund has substantial exposure to endowments, structured products
and synthetic zeros. The latter are unquoted and presumably do
not trade at a discount unlike the rest of the zero market. Back