Split-cap directors' £18m bonanza

DIRECTORS of a firm that said it could not afford to contribute to the Financial Services Authority's settlement fund for victims of the split-cap investment trusts scandal have been paid £18m in bonuses.

Documents posted at Companies House revealed the directors of BFS Investments, one of the four companies that were ejected from the split capital investment trust settlements talks, received the cash between 1996 and 2003.

The directors pocketed the cash despite thousands of customers losing their investments when the trusts collapsed.

The FSA unveiled a £194m package that took in 22 City firms involved in the split-cap investment trust mis-selling scandal on Christmas Eve. The FSA had initially wanted a fund of £350m to compensate the estimated 20,000 investors who lost around £600m when the trusts floundered.

BFS was one of four companies that said they could not afford to contribute to the fund and is now facing legal action from investors who lost money.

Principal director and founder Tony Reid said: 'Anyone who wants to make a claim against us, we will look at it, but we will rigorously defend it.'

Reid is believed to still be under the FSA's spotlight over his role in the scandal, as is David Bruce, who heads BC, one of the smaller splits companies, and who was alleged to have made £25m from the business.

Splits were sold from the late 1990s as 'safe' investments, carrying little risk. One offered by Aberdeen Asset Management even described itself as 'the one-year-old who lets you sleep at night'.