New sleuth put on the trail of Langbar's £365m deposits

By Robert Miller
December 5, 2005
The Daily Telegraph

Serious Fraud Office lawyer Stephen Myers will take over as case controller today of the formal investigation into Langbar International, the suspended Aim-listed company. One of his first tasks is to meet senior officials from the Stock Exchange and the Financial Services Authority, who are working hard to limit the Langbar case damaging investor confidence in London's junior market.

At the heart of the investigation is what has happened to an estimated £365m-worth of cash deposits that Langbar and its newly installed chief executive, Stuart Pearson, told shareholders was held by the company in September.

Mr Pearson, a former Baker Tilly corporate financier, travelled to Brazil and met officials at the Banco do Brasil who, he said, confirmed in writing that the deposits existed. Subsequently he reported through the London Stock Exchange that $294m of this had been transferred to the Dutch bank ABN Amro and would be used to invest in Spanish and Portuguese property developments.

Until the cash verification notice, Langbar, which changed its name from Crown only this summer, had been a cash shell whose only assets were promissory notes and certificates of deposit. These had been issued by the Barcelona-based Lambert Financial Services, which had a 60pc stake in Crown paid for by a £142m certificate of deposit lodged at Banco do Brasil, after Crown announced it had won a contract from the Argentinian government to build public works.

Lambert, whose president is listed as Dr Rivka Meir with Abraham Avi' Arad as chief trustee, is an investment firm that manages money on behalf of some 2,000 wealthy Jewish settlers in Latin America and Israel.

When it was reported in September through the Stock Exchange that Langbar, whose share price was languishing at around 50p, had net cash assets of £300m or more it attracted a surge of investor interest, particularly on internet bulletin boards.

Some of the City's top fund managers now appear on the shareholder register including Gartmore, Merrill Lynch, Henderson and the Universities Superannuation Fund as well as thousands of private investors.

In October Mr Pearson asked the London Stock Exchange to suspend Langbar's shares and he appointed risk consultants Kroll Associaties to verify its cash deposits with Banco do Brasil and ABN Amro. Within weeks Kroll reported "it appears likely that the company has been subject to a serious fraud".

The SFO investigators must establish the whereabouts of Langbar's money. To do this they will need to make a formal request to the Brazilian authorities, where the money trail started as certificates of deposit and promissory notes at Banco do Brasil, and Bermuda where Lambert, like Langbar itself, is incorporated. The fraud office will also want to talk to Langbar's Spanish auditors Gironella Velasco.

Meanwhile, David Greene, of law firm Edwin Coe, who acted for private shareholders in the recent Railtrack court case, is heading an investors' action group. "We are seeking an urgent meeting with the company to understand what has happened. It is important to move swiftly to recover any assets we can.

Labels: Kroll