Splits chief pockets record £3.5m

A FUND manager in charge of split capital investment trusts, where investors lost their shirts, paid himself a record £3.5m last year.

Tony Reid, chief executive and owner of 81% of BFS Investment Group, one of several firms in the scandal-hit splits sector, said: 'My pay is made up of a salary and the rest is basically an alternative to a dividend.'

After taking out his pay, the firm made £2.5m profit in the year to last September 30. It also lent £520,649 to Barrows Managed Forestry Limited, a company owned by Reid. BFS was visited by the Financial Services Authority, which is investigating alleged mis-selling in the sector and collusion among fund managers.

Splits use borrowed money on top of investor funds, giving the potential for high returns. But falling stock markets have taken a disproportionate toll on their value. Many were badly burnt by the bursting of the technology bubble. BFS, with 10 splits, has seen the value of some funds plummet. Its Geared Income fund, which Reid admits is 'an embarrassment', is trading below 1p. 'Obviously, we are very unhappy about what's happened,' he said.

Reid, 51, who has paid himself £6m in two years, said his salary would be 'substantially' lower this year.

His pay compares with £6.3m earned by Christopher Fishwick, Aberdeen Asset Management's investment director, who has also been embroiled in the split caps controversy.