Tuesday, 17 December 2013

Arch Cru - letter to constituents who lost money in this scandal

On Friday, I am having a further meeting with some of my constituents in the Hexham office who have lost money in the Arch Cru financial scandal. I have recently written to all those who have contacted me, over the last 3 years, but have decided to reproduce most of the letter here for completeness, both because I am secretary of the All Party Group for the recovery of funds in Arch Cru, and also to help other MP's / possible victims. For the avoidance of doubt it is my reluctant view - as an MP, and not as a lawyer / advisor - that my constituents do accept the Capita settlement:

Re: Arch Cru Investment Scheme
Further to my letter of the 17th September 2013, in which I promised to write to you following the meeting of the All Party Parliamentary Group on Arch Cru on October 9th, I can now provide an update on the work of the group and that of Hugh Aldous, Chairman of the Board of the Guernsey Cells SPL Private Finance. I apologise for the delay of this reply but I had to wait for the confirmation of a few facts. Unfortunately, as always in this saga, this took longer than anticipated.

The mediation process in Guernsey
As you will all be aware, the mediation process in Guernsey is ongoing. The APPG met in the House of Commons and spoke to the mediator, Bill Woods QC, in June, to try to get an understanding of his hopes and plans. Unfortunately, he was unable to divulge any specific details or indeed, any particular information regarding the parties involved or progress. However, we understand that the legal proceedings are ongoing.

The work of the Board in realising assets
You will see from the table below that along with the Capita offer, some of the total investment of the scheme has already been realised and some is still to be realised. The table shows that the current projection for return of investment is 55% of the entire scheme. Although this figure can change it does highlight the stark fact that full compensation is not going to happen.

From the statement of the Board Chairman, Hugh Aldous, it is clear that although some progress is being made in disposing of the assets of the Guernsey Cells, the rate of that has slowed. This indicates the less liquid nature. In addition, the majority of the remaining assets are illiquid and a solution is being considered for dealing with these in some equitable form. The APPG will press for options to be developed to allow for a form of trading to take place of the remaining assets, after all liquid holdings have been disposed of to maximise the investor return.

The table below shows how the portfolio of cells and assets has changed over the last year:
As of July 2013 (£m)
Net Investment  463
Funds realised thus far 133.5
Capita settlement 54
Remains to be realised 65
Total  257.5
Percentage of Original Investment 55

The other APPG officers and I met with Hugh Aldous in early October. Most of Hugh’s update to that meeting can be seen in his attached Chairman’s statement. To summarise as he saw it, the negative side of the process was that most of the proceedings are under strict confidentiality agreements, which makes our work hard and the ability to update investors even harder. However, the positives were that the mediation process continues and that no single party has yet withdrawn from the mediation process, which suggests that all parties realise they are at fault to differing degrees, have a case to answer, and will not get off scot free. Hugh told us that they all wish to settle in some form.

The Capita offer
I realise that the deadline for the offer of compensation from Capita is imminent and that you will be making a decision shortly - if you have not already. The recent main focus of the APPG has been on the negotiated settlement, involving all parties, in Guernsey. This is an ongoing and confidential process and the APPG is continuing to press for options to be developed and explored.
I cannot specifically advise you on whether to accept the Capita settlement, although you know my views that this is an offer you should accept. I say this not as an advisor, but as an observer, and your MP. Two things seem obvious: firstly, that the deadline will not be extended again and, secondly, that the parties will not make clear the basis of the agreement before the current December deadline.

The APPG will be meeting again in January and hope to have an update on any further progress before Christmas. I will write again with that update.
Yours ever,

Guy Opperman
MP for Hexham
NB: I should add that if there are any of my constituents who have not contacted me on this issue but wish to do so then they should not hesistate to call either office, although Charlie in the London office is the chief point of contact. My apologies but I am not allowed to help non constituents. They should contact their own MP.