Emeralds riddle of a bond that’s far from sparkling
W.L. writes: I invested in a bond issued by Cauta Capital Limited. The bond scheme is now finished, but I cannot get redemption of my capital or payment of interest that is due. I am told this depends on a sale of emeralds that suffers from constant delays.
THE calculations you sent me show that Cauta Capital owes you £25,000 on the redemption of your bond, and almost £5,000 in unpaid interest after payments dried up in 2021.
On paper, none of this should be a problem. When you invested in 2017, the company’s own accounts show it was worth £69 million. Even as recently as 2022, while it owed £11million – mostly to bondholders – its assets stood at £19million.
Since then, the company has filed no accounts, making it impossible to judge whether it is still solvent. This is an offence, and officials at Companies House have begun proceedings to have Cauta Capital struck off.
Yet there were no warning flags when you lent your money. Its bonds were promoted with a whole list of assurances. Cauta would lend money to other businesses only if they pledged their own assets to Cauta, and projects would be financed only if the asset value of the project was far greater than the loan itself. Better still, Cauta appointed an independent trustee to hold a legal charge worth more than £28million of its assets as a safety net. So how did you end up being owed thousands of pounds? And how did Cauta end up speculating in emeralds with your money?
I put this to the company’s owner and sole director. He is William Abundes, an American living in Luxembourg, who played a major role as a campaigner for Donald Trump, recruiting Americans in Europe to vote for him in the 2016 presidential election.
He told me: ‘The shift towards trading in precious stones, specifically emeralds, was a strategic decision made in response to unexpected losses the company incurred following an investment made in a European property development.’
When I pressed Abundes on how this could be allowed, given that no such gemstone trading was ever mentioned when the bonds were launched, he replied that the investment terms do mention ‘secured joint ventures’. That description is so vague it could be used to justify investing in land on the moon.
I repeatedly asked Abundes where the company’s assets had gone, what had happened to the £28million safety net and why no accounts had appeared. Abundes failed to answer.
Its trustee to protect bondholders’ interests is accountant Graham Arnott. He has carved a niche for himself as an administrator and trustee for fringe companies that issue bonds.
He told me: ‘We were not aware of the change from company investments to gemstones... I was only made aware when it sought assistance from an insolvency practitioner last year.’ An insolvency practitioner! Now there is something that Mr Abundes had not mentioned, and it puts into serious doubt whether Cauta Capital actually has the millions of pounds supposedly guaranteed to make investors feel secure. Graham Arnott has now asked Companies House not to have the company struck off and dissolved. He told me: ‘We will follow this very carefully and instruct our solicitors if necessary to protect the integrity of our legal charge.’
Let me add to this by suggesting the Insolvency Service take a close look at Cauta Capital. A company worth £69 million, which then borrows millions more from investors, only to sink into a mess so bad that it now can’t say what it is worth, warrants inspection.
As for the invisible Cauta accounts, boss William Abundes should follow the advice of his hero Donald Trump – who was asked about the information he would have to disclose if he ran for office: ‘I look very much forward to showing my financials... because they’re huge.’
I doubt the same could be said for Cauta Capital.