GIBRALTAR (GibChronicle/Brian Reyes) Over 100 local financial services companies will each have to pay up to £36,000 to cover hefty costs stemming from the collapse of local law firm Marrache & Co and its group businesses. The Financial Services Commission has invoked special legal powers to raise £800,000, in a move approved by the Gibraltar Government. The money will pay for the cost of the administration of a number of FSC-licensed companies linked to the law firm, which is at the centre of a multi-million pound fraud investigation. The so-called Special Levy will affect 101 FSC-licensed companies active in investment services, insurance intermediation, money services and fiduciary services.>Each will have to pay between £1,500 and £36,281, depending on the services they offer and the volume of business they handle.
The FSC has this week written to the companies informing them of the charge.
The fees collected will go toward paying costs arising from the administration of Gibland Secretarial, Cabor Trustees, Meridian Trustees and other licensed entities linked to the Marrache group.
In February this year the FSC suspended the licences of these companies after uncovering evidence of "serious and persistent" breaches of financial legislation.
The move prompted a major fraud investigation by police, which is still ongoing.
In the meantime the FSC appointed Freddie White, managing director of Grant Thornton, as authorised administrator in a bid to protect the interests of clients at the troubled firms.
Since then, Mr White and his team have worked to ensure clients had continuity, transferring some 13,000 accounts to over 40 other companies in Gibraltar. The administrator's team included staff from the Marrache companies, all of whom have now found new work. Mr White's costs include their salaries, as well as fees for both his own staff and legal and other costs associated with the administration.
Under Gibraltar law, Mr White can cover those costs using the monies and assets of the company he is administering. But where the company has insufficient funds, the costs are paid by the FSC. The FSC can itself raise the necessary money from its licence holders through a Special Levy.
"The costs of the current process have now reached the level where the Commission believes it necessary to seek a special levy," the FSC said in an explanatory note. "Whilst the Commission has sought to keep expenditure to a minimum (including the use of our own staff where possible), the extent of the work undertaken has resulted in both recoverable and irrecoverable costs."
"It is also unlikely that significant funding will be available from the companies themselves although we will seek to maximise what there is."
"The FSC are also negotiating with Administrator to further reduce costs."
Keeping costs down has been a key aim throughout the process, with FSC staff seconded to help Mr White with the work. The team sought to maximise revenue from the companies in administration and is now based in the FSC office in Atlantic Suites in a further effort to keep costs down.
The FSC said the Special Levy had been structured so as to obtain as wide a contribution as possible in the "most equitable manner".
All companies licensed under the Financial Services (Investment and Fiduciary Services) Act 1989 will have to pay a flat fee of £1,500, with the balance paid by the Fiduciary Services Sector on a pro-rata basis. The FSC calculated that 32 firms will pay the flat rate of £1,500; 58 firms will pay between £2,358 and £14,172; and 11 firms will pay between £15,228 and £36,281. The companies will be able to pay the levy in four instalments spread over 12 months, with the first payment due on December 1. Payment is compulsory.
Officials believe that no further levy will be necessary and that the £800,000, coupled to money already paid by the FSC prior to Mr White's appointment, should cover all the costs due.
The FSC has this week written to the companies informing them of the charge.
The fees collected will go toward paying costs arising from the administration of Gibland Secretarial, Cabor Trustees, Meridian Trustees and other licensed entities linked to the Marrache group.
In February this year the FSC suspended the licences of these companies after uncovering evidence of "serious and persistent" breaches of financial legislation.
The move prompted a major fraud investigation by police, which is still ongoing.
In the meantime the FSC appointed Freddie White, managing director of Grant Thornton, as authorised administrator in a bid to protect the interests of clients at the troubled firms.
Since then, Mr White and his team have worked to ensure clients had continuity, transferring some 13,000 accounts to over 40 other companies in Gibraltar. The administrator's team included staff from the Marrache companies, all of whom have now found new work. Mr White's costs include their salaries, as well as fees for both his own staff and legal and other costs associated with the administration.
Under Gibraltar law, Mr White can cover those costs using the monies and assets of the company he is administering. But where the company has insufficient funds, the costs are paid by the FSC. The FSC can itself raise the necessary money from its licence holders through a Special Levy.
"The costs of the current process have now reached the level where the Commission believes it necessary to seek a special levy," the FSC said in an explanatory note. "Whilst the Commission has sought to keep expenditure to a minimum (including the use of our own staff where possible), the extent of the work undertaken has resulted in both recoverable and irrecoverable costs."
"It is also unlikely that significant funding will be available from the companies themselves although we will seek to maximise what there is."
"The FSC are also negotiating with Administrator to further reduce costs."
Keeping costs down has been a key aim throughout the process, with FSC staff seconded to help Mr White with the work. The team sought to maximise revenue from the companies in administration and is now based in the FSC office in Atlantic Suites in a further effort to keep costs down.
The FSC said the Special Levy had been structured so as to obtain as wide a contribution as possible in the "most equitable manner".
All companies licensed under the Financial Services (Investment and Fiduciary Services) Act 1989 will have to pay a flat fee of £1,500, with the balance paid by the Fiduciary Services Sector on a pro-rata basis. The FSC calculated that 32 firms will pay the flat rate of £1,500; 58 firms will pay between £2,358 and £14,172; and 11 firms will pay between £15,228 and £36,281. The companies will be able to pay the levy in four instalments spread over 12 months, with the first payment due on December 1. Payment is compulsory.
Officials believe that no further levy will be necessary and that the £800,000, coupled to money already paid by the FSC prior to Mr White's appointment, should cover all the costs due.
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