Fund chief under scrutiny

Money manager featuring in Morgan Grenfell affair also invested in troubled AIM firm

A top fund manager under scrutiny following the Deutsche Morgan Grenfell/Peter Young affair has emerged as a key backer of a public company that features in one of Britain's biggest ever insider-dealing inquiries.

Stephen Bamford, the former head of US insurer Metropolitan Life's international investment arm, invested in Alpha Omikron, an Alternative Investment Market company under review by the Stock Exchange in the insider inquiry.

He also brokered a deal which left Alpha with one of MetLife's loss-making investments, Medical Underwriting Services Ltd (MUSL), a medical information company, in January last year.

MUSL was closed on Valentine's Day after abortive sale attempts and the sacking of its chief executive and staff without statutory severance pay.

Just four days earlier, Alpha's nominated advisers, Henderson Crosthwaite, also resigned and last week chairman Emmanuel Mastorakis was still trying to sign up new brokers to avoid losing its AIM quotation.

"We are in negotiations at the moment. I am not in a position to say anything more right now because of the sensitivity of the issue," he said on Friday.

Until they resigned without explanation in December, Alpha shared two directors, Brian Copsey and Anthony Alderton, in common with Greenhills, an AIM-quoted restaurant group which is in receivership.

Dealings in Greenhills are also being reviewed by the Department of Trade and Industry in a major inquiry into an alleged insider dealing ring operating in the City and offshore.

There is no suggestion that Mr Bamford, any of Alpha or Greenhills' senior management or advisers are implicated in the affair.

Mr Bamford's investments have been scrutinised by investigators probing disgraced fund manager Peter Young's investments, which left a pounds 180m "black hole" in DMG's funds last September.

MetLife's UK-based GFM International Investments, with $1.3bn of funds under management, pumped money into many of the speculative firms that attracted Mr Young.

These included Xavier, an oil firm prospecting in Russia; Princess Resources, a Canadian mining company; Optical Care, a Bermuda-based spectacles seller; Ashurst Technology, another AIM-quoted company advised by Henderson Cros- thwaite; and Isleinvest, an Alberta listed shell.

Mr Bamford, 46, left GFM last April to set up a 50/50 joint venture, Isleinvest Development Capital Corp, with Isleinvest.

Mr Young's losses, which are being investigated by the Serious Fraud Office, have prompted MetLife to call in accountants Price Waterhouse to review all of his investments.

Isleinvest is headed by Canadian financier Jacob Joseph Elkin, who until last November also headed Ashurst.

So far, DMG's investigators have focused on the role of two brokers, Fiba Nordic and Carnegie, in introducing deals to Mr Young. They are, however, intrigued by Mr Young's apparent links with Henderson, which also included another Russian oil prospecting client, JKX, in which DMG took an 18 per cent stake.

Henderson introduced Mr Bamford to Alpha, Mr Mastorakis said.

The broker has had an unsettled time of late. It has been criticised privately by the exchange over Alpha and last November Guinness Mahon, its merchant bank owner, merged its operations into its own. That led to the departure of chairman Peter Ross. Neither Mr Bamford nor Nigel Tofe, Alpha's contact at Henderson, could be reached yesterday.