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Gibraltar law firm's rocky business

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Editorial Staff
chiefofficersnet

It's almost six months since prosecutors in Gibraltar arrested Benjamin and Solomon Marrache of law firm Marrache and Co, alleging false accounting. That's a nice term for lying - and doing it in writing. But it's a little more complicated than that.

The Gibraltar authorities arrested the brothers in February, alleging that in January Solomon Marrache signed documents purporting to show that Marrache & Co held euro1.8 million on behalf of a company, Portino Comercio Internactional. It is also alleged that Benjamin Marrache signed an authority, addressed to Nat West Bank to send the funds to a bank in Ireland.

But, prosecutors say, the documents were fraudulent and that, although the bank account exists, it held a balance of less than euro 9. Yes, that's 9 without any zeros. There was, prosecutors say, no credit facility. Simply, the money wasn't there.

It's taken a while for the prosecutors, who secured stringent bail conditions for the brothers, to find out what happened. And still they are not sure.

The immediate response of the Gibraltar Financial Services Commission was to cancel the licences granted to the firm and its associated companies.The consequence of that is that the clients' accounts have been frozen.

Marrache & Co has offices in the Czech Republic, England, Luxembourg, Spain and Portugal however, it is reported that these offices do not share any partnership or management, being simply an example of brand-spreading.

About two weeks later, prosecutors added more charges: it was alleged that a further CDN5.6 million belonging to Malory Holdings and euro2.1 million belonging to Remus Enterprises is also missing.The brothers' bail was revoked and they were held in custody. Then, in early June, they were released on bail.

The authorities alleged the involvement of a third brother, Isaac. He was out of Gibraltar when the raids took place. He did not make a prompt return.

As a result, the regulators intervened in the practice, appointing Grant Thornton's Gibraltar affiliate as administrator to deal with client affairs. Then, on 17th March - only five weeks after the allegations first surfaced - the Gibraltar court appointed the Gibraltar office of PriceWaterhouseCoopers and the London office of Chantry Vellacott as liquidators.

It was in March 2008 that the Marrache Gibraltar firm announced that it was to enter into a joint venture with UK merchant bank, Close Brothers. It was announced that the new institution, to be known as "Close & Marrache" would be 51% controlled by Close Brothers and the Marrache family's "Marrache Group" would own the remainder. It was planned that it would be a bank and wealth management business based in Marrache premises, targeting expats in Gibraltar, Spain and Portugal. But the scheme never quite got off the ground and, in February this year, Close Brothers formally withdrew from the project: no licence had been granted. However, with a little bit of deep-link research, it remains possible to view some of the website at closemarrache.com.

The domain was registered in December 2007, proving that negotiations for the Gibraltar bank had been taking place for several months before the announcement was made. It was registered by Close Brother's Guernsey Wealth Management division.

Isaac and Benjamin Marrache were joint senior partners of the Gibraltar firm - until the Chief Justice, as head of the legal profession suspended (not revoked) their practising certificates when the investigation went public. Isaac appealed but he withdrew that appeal. It has been suggested that the decision to withdraw the appeal because he remained outside the jurisdiction. But in May, Isaac was arrested after returning to Gibraltar from the UK.

Isaac's prompt response was mitigation by media: "I'm mortified by what's happened to my practice which I built up over 30 years.. and entrusted to my brothers," Gibraltar media quoted him as saying the day after his arrest."

By April, just two months after the case began to develop, it was reported that creditors were looking for more than GBP30 million. In May, a former employee was arrested in connection with the investigation, it was reported.

Receiving orders were made against Benjamin and Solomon and, later bankruptcy notices were issued against all three brothers. On 5th May, Benjamin and Solomon were declared bankrupt - which opened up the prospect of international recovery. Isaac was also declared bankrupt but was given leave to appeal.

Benjamin and Solomon consented to a judgment in favour of Portino Comercio Internacional - so did Isaac but he has since tried to withdraw that consent, again seeking to distance himself from his brothers.

Additionally, it is alleged, there was a 2007 formal complaint made about the firm by a UK business man. The Gibraltar Chronicle, has reported that it has seen correspondence sent to the Gibraltar Bar Council in September 2007. But nothing happened. The Bar Council is trying to find out if the letter actually arrived.

Banks are of interest: NatWest/RBS, Jyske, Barclays and SG Hambros all held clients' accounts for the firm which had an estimated 300 clients and 50 staff (including independent lawyers working under its brand). All of the accounts are alleged to have "no significant balances."

 


 

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