Ministry of Economy Suspects Fortress of Money Laundering at Purchase of Lico Leasing

29/09/2014 El Confidencial

Fortress, a vulture fund that made a real deal on buying non-performing loans and unpaid debt in Spain, is now being interrogated by Money Laundering and Monetary Offences Prevention Commission of Spain (abbreviated to Sepblac), a department of the Ministry of Economic Affairs.

The authority demands a report on the identity of investors who put the equity for purchase of a financial division of savings banks – Lico Leasing. According to a notice sent by the Ministry, Fortres is obliged to prove internal proceedings applied to prevent money laundering and terrorism financing.

The investigation of Spain’s Central Bank has been triggered after finding out that the eleven affiliates through which Fortress is going to acquire Lico are based in Delaware (the U.S.A.) and the Cayman Islands – tax paradises witnessing transfers of money of suspicious origin. Most of the European countries excluded these murky areas in order to avoid tax evasion.

The transaction is going to be sealed through Valdivia Leasing Limited, a newly created Irish holding owned by some investment funds managed and controlled by Fortress Investment Group. Lico Leasing belonged to BBVA, Banco Sabadell, Mapfre, Ibercaja, Unicaja, CECA, Novagalicia, CatalunyaCaixa and Bankia.

Among the vehicles of Fortress supposed to pay €127.26 million for Lico, one may find Fortress Credit Opportunities Fund III and its five arms named A, B, C, D, E, as well Super FCO MALP,  FCO MA Centre Street and Worden Master Fund. The Ministry of Economic Affairs wants to know who really stands behind these funds. ‘The report must include information about banking entites, accounts and countries or jurisdictions through which the final equity injection will be done, from the beginning to the end’, Sepblac explains.

A Controversial Fund

Not only has Fortress acquired Lico Leasing but also Geslico, a debt collection affiliate for €220 million. Another noteworthy operation by the fund was the purchase of delinquent portfolios from Banco Santander for €1.1 billion in 2012. Furthermore, Fortress has become the principal lender of Realia by buying a €540 million debt share from Santander, CaixaBank, BBVA and Sareb.

Vulture funds like this one have transformed themselves into new owners of heaps of unpaid loans – estimated at €50 billion – proceeding from Spanish banks balance sheets, transferred at price much lower than their face value.

 

Original article: El Confidencial (by Agustín Marco)

Translation: AURA REE

132