Pyramid scheme of Interbolsa laid bare
As the fallout from the collapse last month of Colombia’s largest brokerage firm rumbles on, details have emerged of the scale and complexity of Interbolsa’s operations which contributed to its downfall. Colombia’s Inspector General, Alejandro Ordóñez said that the company was the case of a “typical six layer pyramid”.
Brokers of Interbolsa S.A have admitted to being pressured to recruit clients to invest money in the firm’s Premium Captial Fund in Curacao. A client has alleged on Portafolio.co that several brokers have admitted to selling a non-existent products to clients, and that they held little information about how the money was being used in Curacao despite receiving hefty commissions for securing capital from investors for the Premium Capital Fund on the island.
Once the capital had reached Curacao, it was then invested in a number of different subsidiaries in the Bahamas, each with specific specialities, across several countries (including four tax havens). The carousel appeared to be working smoothly until a single broker, Italian Alessandro Corridori, manipulated Fabricato repo transactions and caused the roof to cave in on the company.
A special agency has been set up by the Inspector General to oversee the criminal proceeding against senior Interbolsa figures. The crimes alleged include the misuse of funds, apparent laundering and unauthorized operations, and the agency will ensure due process and the rights of victims and other parties.
Meanwhile, the inquest has begun over the government’s apparent failure to regulate the actions of Interbolsa over recent years protect against the firm´s collapse.
Former Finance Minister Juan Carlos Echeverry, has moved to defend his actions against the accusations made by Liberal Party Leader, Simon Gaviria that he failed in his duty to regulate Interbolsa due to his former role as a board member of the firm (prior to taking office).
Echeverry claimed that he obtained a ministerial waiver so as not to deal with anything relating to Interbolsa for fear of conflict of interest. Speaking to the Financial Times’ blog beyondbrics, he claimed that he was “legally unable to act on regulatory and supervisory actions related to Interbolsa”, and as such the Minister for Trade and the Minister for Mining acted on his behalf.
In further development this week in the on-going drama around the firm, shareholders in Interbolsa SA elected to fire Chief Executive Officer Rodrigo Jaramillo and Chief Financial Officer Jorge Arabia on Friday.
