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Vesttoo notes some creditors question independence of its internal investigation


In a statement released by the beleaguered insurtech, Vesttoo notes that some of the creditors to its bankruptcy are questioning the independence of the initial investigation, which it only notes “has been commenced”, suggesting it is not yet over and there will be more information to come.

vesttoo-collateral-loc-fraudThe company is attempting to drive home the fact that the interim report that was released recently confirms the source of the letter of credit (LOC) fraud that is alleged to have occurred.

As readers will be all too aware, that report identified two of the co-founders and a number of executives involved with sourcing investors and capital for Vesttoo reinsurance deals, as all complicit in a web of fraud that involved forged documents, fake names and phone numbers, possible staff from international banks and millions of dollars disappearing.

As we reported earlier today, Vesttoo is now seeking to recover a significant sum of money from those parties that have been named, in a Tel Aviv court.

The statement released this afternoon is a little unusual, as it does not add anything in terms of facts or additional discussion points, only serving to remind people that some parties have questioned the independence of the investigation that has been undertaken.

As we also reported in recent days, a difference of opinion has emerged between creditors to the Vesttoo bankruptcy estate, with the Official Committee of Unsecured Creditors taking a different tack to the joint provisional liquidators to Aon’s White Rock Insurance (SAC) Ltd.

As our article stated, the Official Committee of Unsecured Creditors said it is “deeply concerned that, given the Debtors’ current board and management, the Debtors have conflicts of interest that preclude them from investigating credibly the full extent of the apparent wrongdoing and any failures to detect the same.”

As a result of which, the Committee wants to conduct full legal discovery to gain access to all of the documentation necessary to conduct its own investigation.

Remember also, that the other creditors to the Aon transaction-related cells have also been keen for their own discovery to be allowed, and for the cells in question to be liquidated.

The Committee of Creditors also highlighted that Vesttoo claimed all culpable parties in the fraud had already been identified and that its investigation was almost complete, saying that investigation of a global fraud of this nature would normally take a significant amount of time.

The Creditors stated, “One potential explanation for the Debtors’ seemingly rushed approach is that members of its current management have personal incentives to stop the investigation before they are implicated. For example, Ami Barlev (“Barlev”), the Debtors’ Interim CEO, has been on the Debtors’ board of directors since June 2021.”

Vesttoo’s statement today appears a direct response to this opinion of the majority of creditors to the Vesttoo bankruptcy case.

The insurtech says that its interim report already confirms the source of the letter of credit allegations.

Ami Barlev, Vesttoo’s interim CEO, commented, “The Special Committee’s mandate was clear and unequivocal; find the truth and identify culpable parties, whoever they may be.  I am fully confident that they fulfilled this obligation and we now using the results of that investigation to hold those responsible for these fundamental lapses of trust and law accountable, while positioning the Company for the future.”

“Certain creditors have, without any support, questioned the independence of the investigation conducted by the Company,” the statement goes on.

Barlev added that, “At every turn we have been transparent with our stakeholders around the world, and we will continue to do so.   There is an enormous amount of information that has been collected and analyzed, and while I can understand the concern of our partners, we are committed to working with all of creditors to ensure that they are brought up to speed on the results of the investigation and the Company’s go-forward business plan. The Company will continue to work openly with the Official Committee of Unsecured Creditors and our counterparties, and provide regulators with any information that is required.”

We’re not aware, at this stage, that anyone was questioning the findings from the report that had been released so far.

Its independence has been questioned in the bankruptcy court though, and perhaps the best way to respond to that would be to publish the full report findings as soon as possible, and to make it very clear that external parties undertook the investigation and not to re-write it, or abbreviate it in any way.

Discovery is also going to happen at some stage in this case, via the bankruptcy court proceedings, so it might perhaps be better to accelerate that as well and allow the work to take place. It seems about time.

The question of the cells and who their proceeds, if there are any, should benefit, now appears to be a bit of a sticking point that could cause the process to drag.

Read all of our coverage of the alleged fraudulent or forged letter-of-credit (LOC) collateral linked to Vesttoo deals.

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