I want to raise the issue of Dolphin Trust with the Tánaiste this morning. It is a Ponzi scheme, a scam that has 1,800 Irish victims who are to lose up to €108 million in pension savings. These are not well-heeled or seasoned investors, but ordinary people, some of whom have lost all of their life savings and pensions.
This centres around a Germany company called Dolphin Trust, renamed the German Property Group, and its director, Mr. Charles Smethurst. Dolphin told investors it would use their money to buy derelict buildings across Germany, turn them into luxury flats and apartments and sell them to German buyers. They promised high-interest returns and their original capital back. Dolphin Trust has now collapsed and owes investors around the world in the region of €3 billion. In Germany, it was reported that the properties held by Dolphin Trust would only be able to recover €100 million. British and German media have reported that investors' money, the money that they invested in their pensions and savings, were used by the director and his family to pay for parties, fashion shows, luxury items and rent.
The nerve centre of this operation was in Ireland, through Dolphin International Group, based in Cork. It marketed and processed the loan notes from 2012 and distributed commissions throughout the world. In the bonanza years, brokers were earning commissions of 20% and more. For a decade the loan notes were administered by a company called Wealth Options Trustees Limited, with all marketing and distribution of the loan notes handed over by Dolphin to the associated Wealth Options company in 2018. These companies, under the Wealth Options umbrella, are based in Naas, County Kildare, co-owned and co-directed by two Irish individuals, with Charles Smethurst himself also a director of the two Irish special purpose vehicles, SPVs, which channelled theses investments. During this time the directors of Wealth Options received more than €9 million, and paid themselves more than €4 million from 2018 when the Ponzi scheme was clearly unravelling.
German authorities are now investigating this scheme as investment fraud. It involves the misuse of the pensions and savings of in excess of 1,800 Irish people and it was clearly a scam. As I said, these are ordinary people, not with hundreds of thousands of euro but €20,000, €30,000 or €40,000 to invest in pensions. It is unlikely that these people will ever see the full value of their money - for some their entire life savings - and that is heartbreaking for them.
With Ireland in many ways the nerve centre of this scheme, which has ripped off more than 20,000 people and their savings worldwide, there are questions that need to be answered. In 2016, Wealth Options was contacted by the Central Bank and asked to provide details of the products, in particular, these loan notes, it was selling. In other words, the Central Bank was aware of the risks as far back as 2016 - indeed, it was reported at that time - of these high-risk, unregulated products that were compromising peoples' pensions and savings. Why was no action taken? Why did the Central Bank not alert people in terms of a notice on its website that there was an issue here? It was even after this time that the sales of these loan notes went through the roof, with the directors of Wealth Options paying themselves more than €4 million in 2018 and 2019 when the Ponzi scheme was clearly unravelling.
At its heart this scandal is regulatory failure of a dramatic nature. Wealth Options were regulated by the Central Bank and the brokers who sold the products were regulated by the Central Bank, but the products they marketed, distributed and sold are not. This is the Wild West of the financial market with no sheriff in sight and now 1,800 Irish people may not recover their pensions or life savings.
When the Government of which the Tánaiste was a member become aware of this in 2016, what actions, if any, did it take? What actions does the Government plan to take in response to this scandal today? Finally, there are hundreds of millions of euro of pensions invested in unregulated, high-risk loan note products. What action will the Government take to bring this market into the light and these products under robust regulation?