Trust gets licence after split with PGC

THE Financial Markets Authority has awarded a full licence to the managers of Perpetual Trust’s corporate trust business, but only after they left the employment of Pyne Gould Corporation.

Managers and staff of Perpetual’s corporate trusts division have bought out PGC, set up their own company – trading as Foundation Corporate Trust – and were yesterday awarded a new licence just two days before the FMA’s licensing deadline.

The new company is owned by former Perpetual Corporate Trust risk management executive Kim von Lanthen, who had been with Perpetual less than a year.

Foundation is likely to take all of Perpetual’s corporate trust staff and about 300 trusteeships, but leaves behind what new chairman and former PGC chairman Sam Maling called the “legacy problems” of Perpetual.

A director of Christchurch share brokerage Hamilton Hindin Greene, Grant Williamson, said the corporate trust business was not a good fit with PGC’s new ownership and strategy.

But he believed the FMA had also considered the role of PGC chairman George Kerr in governance of the Perpetual Trust subsidiary.

Perpetual Trust is still under investigation by the FMA over a $28 million related-party loan. The loan is from one of Perpetual Trust’s smaller funds to the Torchlight Fund, which is run by George Kerr, and the loan was authorised by PGC.

The High Court in a decision released in June confirmed that the FMA had grounds to suspect a potential breach of Perpetual’s duties as trustee and a possible breach of s58 of the Securities Act.

What remains of PGC-owned Perpetual Trust has been granted a limited licence so it can manage the receiverships and liquidations of former finance companies, the potential liability for which is being left under the Perpetual name.

Williamson said there had been ongoing difficulties between the FMA and PGC and he felt the FMA would have ‘‘looked very favourably that the tie between Perpetual and George Kerr and PGC was broken’’.

The FMA’s licensing regime for corporate trusts was brought in as a result of finance company collapses through which public investors lost billions of dollars.

Perpetual Corporate Trust acted as a trustee for several failed firms, including Hanover Capital, Dominion Finance and Lombard Finance.