By Ben Butler From THE AUSTRALIAN

Macquarie has launched legal ­action in London on behalf of ­investors in Van Eyk funds as part of an international hunt for ­millions of dollars belonging to the failed ­finance empire.

The target of the lawsuit is Cayman Islands fund Artefact Partners Global Opportunities, which Macquarie alleges breached its investment powers by ­tipping Van Eyk money into an “illiquid” fund, Torchlight, run by New Zealand businessmen George Kerr and Russell Naylor.

Artefact founder Richard Boon, himself a Kiwi, told The Australian that Torchlight stopped paying back money it owed investors after Macquarie lodged the lawsuit in May.

Van Eyk’s Blueprint International Shares Fund had about $30.9 million stashed with Artefact in September last year, when a nervous Macquarie decided to pull the plug and redeem the ­investment after becoming concerned about Artefact’s exposure to Torchlight.

Mr Boon said Torchlight paid back about $20m but still owed Artefact $10.9m. Macquarie’s claims are outlined in court documents filed by Mr Boon early last month in which he asked the Grand Court of the Cayman Islands to relieve him of responsibility for winding up Artefact and appoint independent liquidators.

The Australian became aware of Mr Boon’s lawsuit during research to respond to a complaint letter sent by Mr Kerr’s lawyer, Jonathan Milner of Arnold Bloch Leibler.

It is separate from a case revealed by The Australian last week in which investors in Torchlight asked the Grand Court to wind the fund up and alleged it had been mismanaged by Mr Kerr.

Torchlight has been registered in the Caymans since 2012, when it moved there from New Zealand.

Mr Kerr declined to answer The Australian’s questions. “Unfortunately many of the statements you make are wildly inaccurate so I will not be making any further comments prior to my rebuttal in court,” he said.

However, in his complaint, Mr Milner denied Mr Kerr had done anything wrong and said “Van Eyk is not and has never been an investor in Torchlight”.

Mr Naylor also denied any wrongdoing in a letter from his lawyer, Stuart Naylor of Macrossan & Amiet.

Mr Boon told the Grand Court he wanted official liquidators appointed because he was also a target of Macquarie’s London lawsuit, raising the risk of “at least the appearance of a possible conflict of interest”.

“For my own part I deny (Macquarie’s) claim insofar as it includes damages in excess of its redemption, and intend to defend the UK proceedings,” Mr Boon told the court.

He told The Australian Artefact became involved with Torchlight after investing in Local World, a local paper group spun out of the Daily Mail group in 2012.

“Artefact is a hedge fund with broad investment powers and after initiating the Local World investment subsequently agreed to assign its shares in Local World to Torchlight in partial consideration for an investment in Torchlight,” Mr Boon said.

He said that until Macquarie served its legal proceedings in May, “I reasonably believed the full redemption amount would be paid to the fund by the end of August 2015”.

This was because he had been working closely with Torchlight’s manager, or “general partner”, an entity controlled by Mr Kerr and Mr Naylor, which was making “repurchase payments out of its own free cash balances determined after each month end”.

Mr Boon said this changed after the Grand Court approved the appointment of FTI Consulting as joint official liquidators.

“Since the launch of proceedings and the appointment of joint official liquidators those working arrangements have broken down and Torchlight have not, to the best of my knowledge, continued to make monthly repurchases of the outstanding redemption amount,” he said.

“While I believe the full balance of the outstanding redemption amount of $10.9m will be repurchased by Torchlight it now seems unlikely this amount will be completed in full by the end of August.”

He said the amount repaid to Blueprint investors would be reduced by the fees charged by the new liquidators, who were now responsible for collecting the money from Torchlight, and the cost of the Macquarie court case.

It is believed Macquarie has so far recovered about 90 per cent of the money owed to Van Eyk investors.

The $30.9m pumped into Artefact was the larger of two routes by which money flowed from Van Eyk to Torchlight.

Separately, a smaller amount, which The Australian has not been able to quantify, flowed from three Van Eyk diversified funds into its Bear Real Opportunities Fund and on to Torchlight.

Van Eyk collapsed in September last year after Macquarie withdrew its mandate to manage the Blueprint series of funds, which provided about 60 per cent of its fee income.

For more on this story go to: http://www.theaustralian.com.au/news/macquarie-sues-cayman-fund-artefact-over-van-eyk-failure/story-e6frg6n6-1227463922531

See also iNews Cayman story published July 20 2015 “Van Eyk asset hunt: investors take legal action in Cayman Islands” at: http://www.ieyenews.com/wordpress/van-eyk-asset-hunt-investors-take-legal-action-in-cayman-islands/

IMAGE: www.afr.com – Advocate Partners, which owns a slice of van Eyk, called for Van Eyk MD, Mark Thomas’s resignation. Photo: Tamara Voninski