By Ben Butler From THE AUSTRALIAN NOVEMBER 14, 2015 12:00AM

ASIC alleges Avestra paid $5.6m to Cayman company Bridge Global CMC Source: Supplied
Troubled Australian fund manager Avestra sent millions of ­dollars to a Cayman Island entity linked with scandal-plagued ­Malaysian sovereign wealth fund 1MDB at the expense of retail ­investors, a court has heard.

The corporate watchdog alleges Avestra paid $5.6 million in cash and Malaysian stocks from its Advantage Fund to Cayman company Bridge Global CMC ­between February and July.

The Advantage Fund plunged 80 per cent in value in August, with its unit price falling from 43c to 7c, according to a Federal Court affidavit filed by Australian ­Securities & Investments Commission investigator Glenn Childs.

Bridge Global CMC, which Mr Childs said held 86 per cent of the Advantage Fund before the redemptions started, is a portfolio of Cayman Islands company Bridge Global Absolute Return Fund SPC (BGARF).

BGARF is named in Malaysian and Singaporean media reports as playing a key role in a complex deal allegedly used to cover up a $US2.2bn ($3.1bn) hole in a joint venture between 1MDB and ­PetroSaudi, a company owned by Saudi royal prince Turki Abdullah Al Saud.

The 1MDB scandal has gripped Malaysia amid allegations hundreds of millions of dollars found their way into an account held by Prime Minister Najib Razak at Ambank, a Malaysian bank a quarter owned by ANZ. Mr Razak denies any wrongdoing.

Mr Childs said there were ­“numerous apparent discrepancies” in documents produced by Avestra and fund administrator Apex Australia relating to BGARF’s ­redemption of its stake in the ­Advantage Fund.

“However, it appears that the Bridge Global CMC fund redeemed all of those units between February and July 2015, at unit ­prices between 63c and 42c,” he said in an October 13 affidavit.

He said Avestra “may have ­enabled the Bridge Global CMC fund to redeem its units in the ­Advantage Fund ahead of the fall in unit value”.

“Alternatively, the Bridge ­Global CMC fund’s redemptions may have caused or contributed to the fall in value, to the detriment of the retail investors who comprised the remaining 14 per cent of the fund.”

Mr Childs said Bridge Global CMC may also have been overpaid by $445,000. Apex operations ­manager David Potter declined to comment, citing ­“client confidentiality”.

Avestra executive Clayton Dempsey, who could not be reached by phone or email yesterday, told the court that on legal ­advice he would not respond to ASIC’s allegations.

“I am concerned that criminal charges may be proffered against me and other current and former directors of (Avestra),” he said in an October 15 affidavit.

It is not known who benefited from Bridge Global’s redemption. Federal Court judge Jonathan Beach denied The Weekend Australian access to ASIC evidence detailing ownership and control of the Cayman Islands structures.

According to an earlier affidavit filed by Mr Childs, as of August last year BGARF’s directors were Avestra executive Paul Rowles and Singaporean businessman Samuel Goh Sze-Wei.

BGARF was owned by Bridge Global Asset Management, also of the Cayman Islands, which had the same directors and ran the Bridge Global CMC fund.

Avestra held 40 per cent of Bridge Global Asset Management, with the remainder belonging to Connect Capital Group.

Hong Kong company records show a company of that name, owned and controlled by Mr Goh, was registered in December 2013 and voluntarily deregistered on May 29 this year.

Two companies associated with Mr Goh — UAE-registered Merrill Capital and BVI-registered Shariott Investments — own 16.7 per cent of Avestra, Mr Childs told the court.

Mr Goh could not be reached.

IMAGE: Water lapping at the shore at Seven Mile Beach, Cayman Islands. (Pic: Thinkstock)

For more on this story go to: http://www.theaustralian.com.au/business/financial-services/avestra-paid-millions-to-cayman-island-company-court-told/story-fn91wd6x-1227608413067