Caught up in the Caymans: Diocesan School for Girls' $1m at risk

Diocesan School for Girls in Epsom, Auckland, has more than $1m tied up in a murky Cayman Islands investment fund at the heart of a large-scale fraud investigation. Photo / Jason Oxenham

An exclusive Auckland private school has more than $1 million tied up with a failed Cayman Islands fund manager now under Serious Fraud Office investigation.

Diocesan School for Girls, the country's wealthiest private girls' school, flagged in its latest accounts that its investment arm - the Heritage Foundation - had been made aware of a "significant discrepancy" in the value of $881,354 it had invested in the Penrich Global Macro Fund.

Penrich, a fund manager targeting sophisticated investors, is based largely in the Cayman Islands, with offices in London and Christchurch.

Its arms in all countries are now in liquidation, and in early April the Serious Fraud Office (SFO) announced it was investigating it.

Another entity connected to Diocesan, the Doris Innes House Trust, disclosed in its 2019 accounts it also had $327,759 with Penrich.

The Weekend Herald understands in excess of $10m of New Zealand investors' money are in the fund and at risk of significant losses.

The sums at risk at Diocesan represent around an eighth of the total investments held by the school and Doris Innes trust.

The Heritage Foundation helps manage Diocesan's donations and funds for capital expenditure at the school while the Doris Innes House Trust provides scholarships to boarding students.

David Gibson, chair of the Diocesan School Heritage Foundation, said in a written statement there were "robust governance and investment protocols in place".

Gibson said the school was, "along with a number of investors", awaiting the outcome of the SFO's and liquidators' investigations.

Sue Hornblow, chair of the management board at the Doris Innes trust, said she didn't know if the trust would get any of its money back.

"I would like to say yes, but I don't know," she said.

Hornblow directed further inquiries to Angela Anderson, director of AMA Capital, who she said "managed the fund investments for us".

Anderson, a registered financial adviser, Dio old girl, and former chair of the Heritage Foundation, said she hoped the SFO identified and prosecuted those responsible.

"I can't believe that those who are in a position of trust would abuse it like that," she said.

Each year at the schools' prizegiving the Angela Anderson Cup is awarded to a senior student for excellence in accounting.

Diocesan, in the central suburb of Epsom, has a roll of about 1500 students and charges more than $23,000 a year in fees.

Heather McRae, the Diocesan principal, declined to be interviewed by the Weekend Herald.

Red flags had been raised some years ago over Penrich, with retirement scheme Evergreen saying in its 2015 annual report that its trustee had requested it withdraw "due to the delay in the provision of audited accounts for the Penrich fund and the auditor's inability to verify the valuation of the underlying assets".

Penrich's structure appears to have had an office handling administration in New Zealand and another in Britain offering advice, while directing investments into several funds - the Macro Fund being the largest - registered in the notoriously secretive Cayman Islands.

The liquidator of Penrich Capital's New Zealand arm, McGrathNicol's Kare Johnstone, said the company handled only administrative matters and not investor funds. She was unable to comment further given the SFO investigation.

Penrich Capital UK's accounts filed to the British companies office said its Macro Fund "is the dominant source of income for the company" and had delivered "solid investment returns".

Filings in Cayman Island courts said the Macro Fund aimed to "deliver capital appreciation, over time, irrespective of prevailing market conditions" and sought to achieve returns in excess of 15 per cent per year.

Cayman Islands companies office filings do not record who ran the Macro Fund.