£100m fund firm faces offshore blow

LEGAL moves in the Caribbean are threatening a London-based offshore fund management group controlling up to £100m. The crisis for Imperial Consolidated of Mayfair, central London, could come to a head this week.

The group's banking offshoot, Imperium, on the island of Grenada, is under official supervision because of doubts about its assets and liquidity. This means it cannot operate normally.

PricewaterhouseCoopers is investigating Imperium for the local finance ministry, which will decide within days whether its licence should be revoked. It is the effect this would have on the rest of the group that is worrying investors and creditors, some of whom are taking legal advice. Imperial is estimated to owe up to £4m to UK creditors.

Offshore regulators were alerted earlier this month after the group suspended redemptions from its mutual funds until November. The Financial Services Authority is monitoring the situation.

Imperial Consolidated runs the offshore IC Mutual and Alpha funds offering returns of up to 18%.

Several top British insurers issued bonds through offshore subsidiaries and independent financial advisers here and abroad used them to invest clients' funds with Imperial. Money was then funneled back through Imperium and companies in the British Virgin Islands to other Imperial companies in Britain lending to the low-paid and to claimants in 'no win, no fee' personal injury legal actions.

Imperial was run by Jared Brook, 32, and Lincoln Fraser, 30, until they quit last year. In February, both were banned for three years from being directors or being involved in the management of companies following their involvement in the 1995 collapse of a hotel company in Morecambe, Lancashire. Fraser was later made bankrupt.

An Imperial spokeswoman said the PWC probe would clear Imperium bank and assured investors that 'redemptions will be paid', but she did not say when.