New IFSC company to pursue cash

A GLOBAL debt collection firm, believed to be the first of its kind, is to set up business this December in the International Financial Services Centre, Dublin.

Interclaim will pursue hundreds of millions of pounds hidden in offshore accounts around the world, according to its chief executive officer, Mr Martin Kenney.

It will buy debts which have been written off by the banks, for a fraction of their value, and then mount court actions in different jurisdictions around the globe, with a view to freezing hidden assets and forcing debtors to make a settlement.

The company has already purchased or is in negotiation concerning $400 million (£250 million) worth of debts, according to Mr Kenney.

The company was formed in the end of April, in Bermuda, and was last week awarded a licence to trade from the Irish International Financial Services Centre.

Interclaim was assisted by Gandon Capital Markets in getting the licence approval.

Chief operations officer with Interclaim, Mr Irving Cohen, said the company was in the process of raising $18.5 million (£11.6 million) through private placements in the US, Canada and Britain. Some of this was already raised.

"We will be pursuing assets that are under the control of people who owe large sums of money, principally to financial institutions but occasionally for Fortune 500 companies and governments," Mr Kenney said. The company will not be pursuing revenue monies owed.

Interclaim will either purchase the debt from its owner at between 0.5 to 6 per cent of its putative value, with agreement to hand over between 10 and 20 per cent of any monies recovered or, without making any up-front payment, sign an agreement with the bank to share any monies recovered.

"We are not after drugs money or the fruits of organised crime," said Mr Kenney. "We will pursue white collar criminals who are not violent. Such people tend to be pragmatic and settle.

Mr Kenney and Mr Cohen, both attorneys, met five years ago when representing opposing parties in a courtroom battle over unpaid debts.

Mr Cohen was representing the debtor.

They say that financial institutions tend to have little success (four out of every 100 cases) when pursuing large-scale debts. This, the legal costs involved, and banking regulations about writing down debts which are unlikely to be recovered, have created the opening for Interclaim.

Interclaim only buys debts worth in excess of $5 million (£3.1 million), and will spend five to 10 per cent of that amount on each case. One successful case can pay for a number of unsuccessful ones, the two attorneys point out.

They claim that as attorneys working for the banks they have had a 20 per cent success rate, through their policy of making in-depth and secret investigations into the debtor's lifestyle and finances, and then launching multi-pronged legal actions, many of them in offshore locations.

Mr Kenney said the secrecy laws in such locations as Panama, the British West Indies, Gibraltar, the Channel Islands, the Isle of Man, Liechtenstein, Switzerland and Mauritius, were "flawed".

The contract of deposit was not valid when the money in question does not rightfully belong to the depositor. Interclaim's activities could have "the offshoot" of revealing the weaknesses of the secrecy laws of the so-called offshore banks, he said.

The company looked through $6 billion (£3.75 billion) of paper debts, $1 billion (£0.625 billion) of which they decided was "viable" and $400 million of which they then selected for purchase. The debts are being bought from financial institutions all over the globe.

Viable debts were ones which had an identifiable owner, and were taken against an individual who was likely to have assets hidden somewhere in the world, said Mr Kenney.

The new company is scheduled to begin operating from the IFSC in December and plans to hire 10 to 12 people initially. These will be accountants, lawyers, or investigators, and around half will be Irish.

Mr Kenney said they decided to locate in the IFSC because of the tax advantages, the availability of suitable employees, and because of costs.