Between 2002 and 2006, AIB sold a series of speculative investments in UK commercial properties, known as the Belfry funds. Belfry Investment Fund 1 realised a significant return of around 250pc but five later funds generated losses due to the global financial crisis and the downturn in the property market.
The failure of the funds to make returns left investors suffering significant losses. Around 2,500 customers invested in the funds.
In 2021, AIB announced it would carry out a case-by-case review to determine if refunds and compensation were due to some of the investors. Investors had the right to appeal to an independent panel.
Hong Kong based lawyer Bertie Mehigan and his wife Olivia were awarded compensation under that process but believe it is inadequate.
Earlier this month, the Mehigans succeeded in getting a US court allow them to issue demands for documents to IBM and its consulting subsidiary Promontory Financial Group about their work with AIB on the Belfry funds.
Promontory was appointed as an independent third party to examine key aspects of AIB’s Belfry fund review and make recommendations to the programme.
Documents sought by the Mehigans in the US included the agreement between AIB and Promontory as well as any communications that reflected the terms under which the consultant was appointed.
Having only heard from the Mehigans, the US Judge granted them an order that will allow them to issue subpoenas for the documents. IBM and Promontory can still challenge the request.
In response to questions from the Sunday Independent , Bertie Mehigan said he was now planning to launch a court case in Ireland against AIB.
Mehigan, who wants the documents for the Irish case, claimed the initial review and independent appeal process of the Belfry Funds were both “deeply flawed and undertaken in bad faith”.
Mehigan, who invested in Belfry fund 4, received compensation from AIB, but feels that no fair account was taken by the bank of the “time value of money”, which would compensate investors for not having the benefit of the money invested in the fund.
The Belfry investor said he feels he and his wife did not receive fair compensation. He also claimed AIB has been put on notice about the Irish court action.
In response to questions, AIB said the review assessed the suitability of the Belfry funds for investors and also involved checking investors’ objectives, experience and that their financial position appropriately aligned with putting money into the funds. It also examined whether documentation provided to investors was clear.
Review outcomes and payments have been communicated to 99.8pc of investors, the bank said.
AIB added that where the review concluded the investment was unsuitable, investors received a full repayment plus additional compensation. Where the review concluded there was an error in the process, half of the investment was returned plus compensation.
If the review found the investment was suitable for the investor, no payments were made.
AIB’s annual report revealed around £214m was invested in the Belfry funds. The Sunday Independent understands AIB had made repayments to investors worth €207m to date.
