A question for Mike Davies: ‘Why is this lying bastard lying to me?’

Posted on August 15, 2012

We Yanks like to think we excel you Limeys in most fields of endeavour. Heck, even our Ponzi schemes put yours in our shade. As we’ve already pointed out, the man who invented the concept, Charles Ponzi, was an American citizen (OK, he was born in Italy, which we hear is somewhere in debt-mired Europe, but we’ll overlook that for the present). And both Bernie Madoff and Allen Stanford, whose frauds were well into the billions of dollars, were Americans and now reside in our much-admired penal system. So you’ll forgive us if we can’t get that excited about Connaught, Tiuta and the various professional services firms and regulators that allowed their little scheme to prosper at investors’ expense.

The one area where we admit your little island has an edge is television: our Fox News and CNN are no match for your BBC. We’re especially impressed by that ornery old guy from Newsnight: somebody Paxman, isn’t it? Shucks, we just love the way he lays into politicians. Our broadcasters are much more deferential. We hear he tries always to keep one question in mind when interviewing them: ‘Why is this lying bastard lying to me?’

We wish your Paxo fella had been able to make Monday’s General Meeting. Heck, we’d have flown over in our Gulfstream jet to hear what he had to say. In particular we wish he’d had a chance to quiz that Mike Davies.

We hear Davies claimed that a report was made available to investors at the end of 2011 Q1 that reported significant losses. Investors claimed to have seen a different report that gave the fund the all clear. Davies denied everything.

We’ve now seen both versions of the report (click here for the original report  and  click here for the revised report) Jeez, some difference!

We now have some questions for Davies:

1. Do you now accept that you knew in Q1 of 2011 that Tiuta was experiencing financial difficulties, that you failed to inform investors and that you subsequently tried to cover your tracks by replacing the original report showing that everything was hunky-dory with one that said there were problems?

2. How much investment did the fund attract after it became aware of the financial difficulties, without disclosing those difficulties? Do you accept that this constitutes fraud?

3. Given that the revised version of the 2011 Q1 report acknowledges that the role of BDO was to ‘review [Tiuta’s] financial situation and structure’ – a process that, had it been performed competently, ought surely to have highlighted the group’s insolvency, the unapproved loans, problems with security and unauthorised movements of capital and resulted in the FSA and Police bring brought in to protect investors’ money – will Connaught now use its powers as GP over the Fund, the majority creditor of Tiuta International, to replace BDO so an independent auditor can secure whatever is left of the documents and assess whether TIL may have a claim for damages against BDO. Or don’t you want to bite the hand that is feeding your firm nearly half a million pounds a year to continue to manage the loan book that went so spectacularly wrong under your noses already? If investors have to wait for an administrator to be appointed over TIL to get BDO out and anything goes missing in that time, it ain’t gonna look good.

We hear that Davies blamed amnesia and even hypoglycaemia for his inability to answer some of the questions you guys asked him on Monday. So much for your goddam Socialist NHS! We hope whoever asks him these questions keeps in mind Paxman’s question: ‘Why is this lying bastard lying to me?’

And if Davies doesn’t like being thought of as a lying bastard, he should remember a saying we New Yorkers are rather fond of: ‘If it walks like a duck, and talks like a duck, must be a duck!’

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