Ex-Lazards man jailed

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The Independent Online
Andrew Clive, a former investment director of Lazards Securities, a subsidiary of the blue-chip merchant bank, was jailed last week after pleading guilty in court to three charges of theft and false accounting Clive, educated at Eton and Cambridge, left Lazards eight years ago to set up his own investment company, RCI Portfolio Managers.

This weekend it emerged that some of the investors who have lost money with RCI, which is now in liquidation, are trying to pursue claims against Lazards. They have recently learnt that the scheme that was set up to protect them under the Financial Services Act, the Investors' Compensation Scheme, may not apply in their case.

In court it was said that Clive had been in charge of managing funds of around £10m at RCI, mainly on behalf of family and friends. He was said to have built up a portfolio of unquoted and illiquid investments for some of his clients and was allegedly forced into theft and false accounting in order to meet some of their claims. The charges he pleaded guilty to involved sums of around £22,000.

It appears that the Investors' Compensation Scheme (ICS) recently engaged an expert to form an opinion on the claims made against RCI. The expert then presented a report to the Scheme's board last month. The ICS has since accepted the expert's conclusions that the unquoted, illiquid shares were "totally inappropriate to the investors' needs".

However, the ICS is governed by rules that provide that compensation can be paid only where a liability arises from an investment business that is conducted after a firm participation date - in this case, 28 August, 1988.

The ICS has therefore told investors that it will not be able to offer compensation for losses arising from investments purchased before this date.

However, the ICS has given investors hope that they might be able to claim some losses from Lazards. According to a letter written by a manager of the Investors' Compensation Scheme, some of the investors' portfolios had been built up when Clive was employed by Lazards.

"In many cases investors' portfolios of unquoted, illiquid shares were built up by Andrew Clive whilst he was employed at Lazards," wrote the manager, Graham Davies.

He added that Lazards has confirmed to the ICS that they "are willing to consider investors' claims".

But Lazards said this weekend that the ICS letter had been sent out without the approval of the bank's investment arm, now known as Lazard Investors. "The Investors' Compensation Scheme's references to Lazards Investors were made without our appproval," a spokeswoman said. "Lazard Investors was not party to the ICS inquiry that was looking into the conduct of RCI and Andrew Clive.

"Those clients who were previously clients of Lazard Investors transferred their investments to RCI shortly after Mr Clive left their employment in 1986. We assume that their choice indicated their satisfaction at that time with Mr Clive's management of their investments during his employment while at Lazards."

Judge Harris heard at the trial, at Southwark Crown Court, that Clive had been on a teacher training course in an attempt to take up teaching mathematics.

The court also heard how attempts by Clive to liquidate some of his investors' portfolios went awry when a Canadian investor failed to come up with payment for shares in a company called Greenwell, which is listed on the Vancouver Stock Exchange.

The case was brought to court by the Crown Prosecution Service, following an investigation by the Company Fraud Department of the Metropolitan Police.

Clive, 54, a keen huntsman and a descendant of Clive of India, was disqualified from being a director for five years.

Lazards had a representative at the court.

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