Multi-millionaire fund chief is forced to quit after corruption probe
ONE of Britain’s leading fund managers has been accused of breaking investment rules to secretly bolster his own fortune.
In the latest scandal to rock the industry, Mark Denning has been forced to quit Capital Group amid allegations that he breached the firm’s ‘code of ethics’ designed to prevent corruption.
According to an investigation by the BBC’s Panorama programme, leaked documents appear to show he had been quietly buying up shares for his own benefit in the same companies as his funds had invested in.
Mr Denning, 62, helped to manage around £230billion of investors’ money for the Los Angelesbased fund management giant, whose European headquarters are based in Mayfair. Although he relocated to Los Angeles in recent years, the 62-year old father-of-six was part of a team that managed around £800million in two funds sold in the UK.
His stellar career has enabled him and his family to afford a fabulously lavish lifestyle.
In 2010, he paid £13.6million for a seven-bedroom house in Chelsea, which is now worth an estimated £21million.
Mr Denning had already bought the Victorian Grade IIlisted mansion Morebath Manor in North Devon for £3.5million in
2007. It has nine bedrooms and 21 acres of land. The same year, he told an online magazine how he ‘invested an awful lot of money’ in a 120ft racing yacht called the Alexa of London with a friend. It is chartered out for almost £40,000 a week in the Mediterranean. He also has a £1.35million oceanfront villa in the luxury resort of Albany in the Bahamas – whose co-owners include Tiger Woods. His social media boasts of frequent luxury holidays – with the last year including fishing in the Bahamas.
But the veteran’s stock-picking career has now been derailed by a corruption scandal. Fund managers are not meant to invest in the same companies as their funds. This is because investing huge sums from clients can help drive up the share price in the companies where fund managers have personal investments. They can then sell their personal stakes at a profit.
This gives fund managers an incentive to choose stocks which benefit themselves rather than offer investors the best returns.
Mr Denning, who has denied any wrongdoing, allegedly bought the shares via a fund based in Liechtenstein. The fund was named after Morebath Manor.
He left Capital Group on September 9 after 36 years. Capital said it had taken ‘immediate action’ when it was informed by Panorama about the alleged behaviour, which breached its strict ‘code of ethics’.
The BBC investigation obtained leaked documents which show Mr Denning’s Morebath Fund Global Opportunities invested in a medical research company called Mesoblast, an Indian film company called Eros International, and a gold mining company called Hummingbird Resources, which was set up and run by his son-in-law.
Capital Group funds invest in all three companies, while investments in Mesoblast and Eros were made by the funds that Mr Denning helped to manage.
The stakes in the three companies were ultimately held through the Kinrara Trust, an offshore entity which was set up and controlled by Mr Denning.
His lawyers deny that he owns the shares in the companies because they say he is not a beneficiary of the trust. A spokesman told the BBC: ‘Our client did not declare his interest in the Kinrara Trust to his former employers because he had been irrevocably excluded as a beneficiary. He believed that he complied with all of his relevant duties.’
‘Fabulously lavish lifestyle’