GLOBAL - As the list of investors hit by Bernard Madoff's scam grows, it has emerged pension funds have also been hit by the alleged $50bn Ponzi scheme.

The £2.4bn (€2.8bn) Hampshire County Council pension fund said today it was concerned about £7.1m of its investments, which may be at risk because of the alleged fraud.

The fund renewed a £25m mandate with UK-based multi-manager Bramdean Asset Management last year - whose alternatives fund had 10% of its assets with Madoff - in a push for alternatives.

The fund had originally allocated up to 10% (£270m) - now reduced to £250m - of its then £2.7bn fund to alternative investments and is advised on this alternative investments portfolio by Bramdean.

The local authority fund has also directly invested £4.7m in the F2 Elite hedge fund, which is linked to Madoff investments, on the advice of Bramdean as part of the £250m commitment.

Councillor Ken Thornber, the leader of Hampshire County Council - the administering authority to the Hampshire Pension Fund - stressed despite the potential losses there is no risk to the fund's 46,000 contributors or 27,000 pensioners.

"The actual position remains to be seen and Hampshire's exposure is extremely small relative to other investors," said Thornber.

"Nevertheless, the Hampshire pension fund is very concerned that a small proportion of its investments may be at risk because of this alleged fraud."

The Merseyside Pension Fund, whose assets fell to £4.26bn (€5.47bn) in October, also invests through Bramdean but the fund could not be reached for comment.

Reports in the Netherlands today hinted the Dutch corporate pension fund of oil mammoth Royal Dutch Shell had direct investments in Madoff's scheme.

A spokesman for Shell said the fund does not publicly comment on its investments and hence declined to discuss the matter.

Shell announced last week in a letter to its members its cover ratio at the end of November stood at 85%, and the value of its investments had dropped by 40% since the beginning of this year.

Spanish bank Santander has revealed it may face a €2.33bn loss through its Optimal Investment Services fund of hedge fund; €2.01bn of this belongs to institutional investors and international private banking customers.

Other victims now include France's biggest bank BNP Paribas, Nomura Holdings, Swiss institutions such as Banque Benedict Hentsch and Neue Privat Bank.

Rick Di Mascio, chief executive and founder of Inalytics, the manager evaluation firm, commented today the alleged fraud by Madoff highlights a "fundamental lack of transparency" within the hedge fund industry.

"The outfall from the alleged Madoff Investment Securities fraud highlights a key issue - the fundamental lack of transparency within the hedge fund industry," said Di Mascio.

"The willingness of the industry to accept this state of affairs, whether tacit or overt, can and must change. This is a major event and needs to shock everyone into action."

He added the the situation stems from the lack of information and evidence which investors are provided with. 

It has been an unwritten rule that senior management will leave individual managers alone to ply their trade without answering to any higher power and without needing to provide disclosure, it has been suggested, and some hedge fund investors have had to resort to ridiculous methods such as employing detectives or investigators to try and establish what is going on as a result.

"This surely cannot be right," concluded Di Mascio.

Have Your Say: A spokesman for PaamCo, said:

"We are a $9bn fund of hedge funds firm that serves institutional clients. Like most of the institutional funds of funds we did not invest in Madoff. Consequently it appears pension funds have largely missed being impacted.

"In our view the thing that is interesting is that it is mostly groups driven by trades and distribution (HNW etc) who did "products" with Madoff and were thus conflicted.  If you look at the major institutional funds of funds (Blackstone, Meisrow, Quellos, Ivy, Grosvenor, etc), we did not - our DD process won't let us. It was precisely because there was no transparency that investors like PAAMCO did not invest.

"There had been rumours for years, presumably these other investors chose to ignore them and invest solely based on the numbers. Its also almost all European rather than US advisors that got caught."

If you have any comments you would like to add to this or any other story, contact Carolyn Bandel on +44 (0)20 7261 4622 or email