LCR Honda's title sponsor, foreign exchange trading firm CWMFX, is the subject of a police investigation by the City of London police and Financial Conduct Authority, the UK body charged with regulating the financial services industry. Police raided the firm on 3rd March this year, arresting thirteen people for a range of fraud charges. Since last night, the CWMFX website has been offline, with only a contact form on the site.
The arrests come as part of a wider investigation into an offshore Ponzi scheme allegedly being run by Belvedere Management Limited. Research by independent financial advisors deVere Group, as well as the investigative financial services publisher OffshoreAlert revealed that $16 billion of investor funds was involved in the Belvedere scheme, which was based in Mauritius. Major investors such as hedge funds, life insurance, investment management and much more had started withdrawing their investments from the firm, bringing Belvedere to the brink of bankruptcy. CWM is believed have $130 million of investor's fund committed to one of the Ponzi schemes allegedly operated by Belvedere, and run out of the Cayman Islands. It is this involvement which has caused the City of London police to make the arrests and charge CWM staff with various fraud offences.
CWMFX acknowledged the arrests to London newspaper City A.M. last night, but said the arrests came as "a result of allegations for which we believe there is no sustainable basis". The loss of the CWMFX website was due to the partnership with trading platform Leverate ending, CWM said. The company claims that this partnership came to an end due to contracts expiring. Leverate is a Forex trading platform based in Cyprus, and therefore falling under Cypriot law, and subject to compliance and oversight by the Cypriot financial services authority.
This is not the first brush with the Financial Conduct Authority which CWMFX boss Anthony Constantinou has had. Constantinou was previously CEO of Aixia Limited, a financial services firm which was wound up after the FCA issued a warning that it was trading without authorization in the UK.
Whether the arrests at CWM affect the LCR Honda team's 2015 MotoGP project remains to be seen. MotoMatters.com has learned that both Honda and LCR studied the company closely before signing the sponsorship deal with the firm. It is customary in such cases to ensure that funding for the deal is secure before the start of the season, with payments made in advance, or at least spread over the season. Even if there were to be some kind of shortfall in sponsorship from CWM, the team should be able to manage for the rest of the year. The LCR Honda team still has a strong portfolio of secondary sponsors behind it, and with Cal Crutchlow and Jack Miller, two high-profile riders. Crutchlow is popular with British and American fans, and Jack Miller has a rapidly growing fanbase in Australia. Both riders are key assets for Dorna in helping to sell TV rights, and Miller has a three-year contract with HRC.
MotoGP was not the only sponsorship interest the firm had. CWMFX had been announced as a partner to English soccer club Chelsea FC in January, and also sponsored the London Boat Show earlier this year.