By Rob Horgan From Olive Press

Gregory King is among four Scots accused of syphoning £400 million through the crashed Gibraltar-based hedge fund Heather Capital

A hedge fund manager, knighted by Pope Benedict XVI, is facing a probe into the embezzlement of millions of pounds.

Gregory King, 46, is among four Scots accused of syphoning £400 million through the crashed Gibraltar-based hedge fund Heather Capital.

The fund’s liquidator Paul Duffy, of Ernst & Young, has launched several legal actions to try and reclaim investors’ cash.

Heather’s liquidator, has suggested in court documents that loans made by the hedge fund were ‘nothing more than a fabrication and a sham’.

“The liquidation of Heather Capital and its feeder funds is a complex, multi-jurisdictional assignment,” a spokesman for Ernst & Young said.

“The initial dearth of information hampered progress with the liquidator having to engage with a number of third parties in order to establish a clearer picture of events.

“Matters are progressing, with the liquidator maintaining regular contact with creditors.”

At it’s height, in September 2007, Heather Capital was valued at £400 million.

By December 2009 it had folded and liquidators were left confused as to where the money had gone.

In the same year, auditor KPMG flagged £100 million worth of loans that the fund made between 2006 and 2007 to Gibraltar-based companies, some of which were connected to King.

King – who was honoured by the Pope in Gibraltar in 2008 – had a number of high profile friends, including the corrupt priest to the stars, Father Michael Seed.

Known for converting Tony Blair to Catholicism and accepting thousands of pounds in bribes for papal knighthoods, Seed recommended King for the honour after he paid for repairs to a Vatican embassy.

King, who owns a luxury villa in Marbella, established the hedge fund in 2004, promising a ‘very-low risk’ to investors.

“There’s no projects that we’ve lent on, which you wouldn’t want to lend your own money on,” he said in a YouTube promotional interview.

“We see ourselves as a very low-risk lender in these markets.”

Hedge-fund expert and personal friend Santo Volpe admitted that King ‘didn’t know anything about hedge funds’ when he set up Heather Capital.

IMAGE: ACCUSED: Gregory King

For more on this story go to: http://www.theolivepress.es/spain-news/2015/02/23/knighted-hedge-fund-manager-embroiled-in-embezzlement-probe/