Cost of fraud triples for Philips fund
NETHERLANDS - The €13.4bn Dutch pension fund of electronics major Philips has executed several sequestrations in relation to its involvement in the recent property fraud, which is now estimated to have cost the fund €150m.
Sources close to the fund confirmed to IPE this morning the fund has done "a number of sequestrations" for the damages the scheme suffered in the recent real estate fraud case.
Dutch financial news paper FD this morning attached a €150m price tag to the seizures - which have been placed on several assets including the private properties of two former directors of the fund - claiming it has part of the petition for the seizures.
It is understood the sum of the fund is now more than triple the previously circulating amount of €45m.
The fund has declined to publicly comment so far, in anticipation of the outcome of its own investigation into the fraud by law firm De Brauw and it is unclear why the fund has executed seizures before judgment on this investigation has been concluded.
The fraud case evolves around the donation of real estate in exchange for bribes, as two pension fund directors allegedly were bribed to deal Philips real estate for too high or too low a price. The difference between the transaction price and the real value then ended up in the pockets of others.
Following the investigation, the fund began dismantling its real estate portfolio at the end of last year, selling around 15% of its real estate holdings to Dutch real estate investment fund Vesteda for just over €200m in December and again selling "real estate objects" with an investment volume of €143m to Real estate fund Nieuwe Steen Investments (NSI) in March. (See earlier IPE story: Philips scheme dismantles real estate portfolio)
The Philips pension fund reported last month it saw a further drop in its assets and a decrease of its cover ratio as a result of negative returns of -1.7% during the first quarter of this year.
After a fall of its assets of €600m last year, its assets under management decreased by another €367m to €13.4bn during the first three months of 2008, mainly because of the negative returns on the equity markets, and its cover ratio also dropped by 6% to 131% during the same period, after a rise of 3% in 2007.
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