SWITZERLAND - A fund manager arrested for alleged fraud has seen a request for release rejected by the Swiss federal court.

The verdict on the appeal by the unnamed fund manager - arrested last year in the case surrounding alleged corruption at the public fund in the Swiss canton of Zurich (BVK) - was handed down last November.

The decision is now publically available under the reference 1B_361/2010.

The complainant had argued the case against him was based on speculation and that there was no evidence for management fraud or other wrongdoing.

He pointed out that even if he had received kickback payments, these would have been paid before the BVK made any investments.

However, the federal court said the timing of the kickbacks - amounting to several million Swiss francs - did not preclude the possibility of wrongdoing.

One argument is that the complainant should have forwarded this money to the clients he consulted as investment controller. The court said this could lead to additional charges of misappropriation and fraud.

It added that the complainant had so far refused to issue a statement on the nature of the payments, which, it said, "justifies the suspicion of management fraud". 

One of the funds the complainant allegedly recommended and in which the BVK invested approximately $70m (€48m) - one-fourth of the total fund volume - was liquidated 18 months after launch.

The public prosecutor said talks between the BVK and the complainant on possible investments prior to the complainant's establishing a new investment company, which later sold products to the BVK, have been confirmed by the former head of asset management at the BVK and a memo by the investment company.

The public prosecutor was quoted by the federal court as saying: "In this context, the complainant's argument is out of touch with reality when he says it had been a mere coincidence the former head of asset management at the BVK chose a company as controller whose head (albeit not officially named as chairman of the board) was responsible for the management of the fund."