Select Committee on Treasury Minutes of Evidence

Examination of Witnesses(Questions 620-639)



  620. Just less than 25 per cent.

  (Mr Fishwick) It is a lot less than 25 per cent.

  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 today?

  (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[27]—

  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 but—

  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 small sector.

  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

previous page contents next page

House of Commons home page Parliament home page House of Lords home page search page enquiries index

© Parliamentary copyright 2003
Prepared 29 January 2003