Investment promoter ‘made €8m secret profit’

More than 100 Irish and UK investors in a property in China have brought court proceedings over an alleged “secret profit” of €8m made by the promoters of the investment.

It is claimed €30m, plus €4.5m in fees, was raised from about 110 Irish and UK investors in 2006 and 2007 for the purchase of a block of 26 apartments in Shanghai, functioning as an apart-hotel.

The investors claim they later learned about €22m was paid to the seller of the shares of the company that owned the apartment block, and “a material secret profit” of some €8m was made by Vantium Ltd.

About 100 investors are seeking damages totalling €18m in their proceedings against Vantium Ltd, with registered offices at Upper Pembroke St, Dublin; Mark Carroll, of Picton Place, London, and his wife, Patricia Kerrigan.

Kelly Smith, counsel for the defendants, opposed the proceedings being fast-tracked in the Commercial Court. She said Mr Carroll had made a substantial response to the serious claims made and mediation was a more appropriate way to deal with the dispute.

The parent company of the current tenant of the property had reiterated an offer to buy the property for a sum equating to about €44m which was beyond a price mandated by the investors in 2010, counsel said. If the property was sold, that would yield a 20% return for the investors, she added.

Counsel for the investors, Eoin McCullough, said previous attempts to mediate had proven unsuccessful as his clients had taken the view Mr Carroll was not being honest with them. His side was sceptical of any purchaser produced by the defendant, he added.

Mr Justice Peter Kelly agreed to Mr McCullough’s application to admit two sets of proceedings by the investors to the Commercial Court list but stressed that decision did not prevent any further mediation. He also approved a timetable for the exchange of legal documents and returned the matter to March next.

The judge directed one set of proceedings involving 12 investors and a company will proceed while the second action will await the outcome of the first.

The case proceeding is by Financial Plaza Shanghai Ltd, registered in the British Virgin Islands, and 12 investors, against Vantium Ltd; Mr Carroll and Ms Kerrigan. Mr Carroll was described as the principal and director of Vantium and, with his wife, is a 99.7% shareholder of Vantium through a Luxembourg company.

The investors are seeking some €18m damages to include repayment of the alleged €8.19m difference between the purported purchase price of some €30m and the actual price €21.8m price paid. The €18m also includes repayment of the finder’s and conveyancing fees, plus costs and repayment of some €7.1m rent arrears which, the investors claim, had been written off.