In the wars

By THIS IS MONEY
Updated: 19:00 EST, 26 October 2002

RETIRED pilot Herbert 'Tug' Wilson has led a full life. He fought in the Second World War, spent time as a prisoner of war and enjoyed a colourful career flying for African airlines. He deserves a comfortable retirement.

But Tug, 83, is one of thousands of investors caught in the split capital investment trust debacle. His £7,000 investment in the Aberdeen Technology & Income fund has plummeted in value to £20 in just two years.

Tug says: 'The investment decision was my own so I can't whinge too much. But these split capital trusts were marketed as safe investments, which now seems very wrong.

'What angers me is the arrogance of these fund managers who are still awarding themselves disgraceful bonuses even though they have left people such as myself with nothing.'

Former Aberdeen director Chris Fishwick, who is believed to have been at the heart of a 'magic circle' of split trust managers, was forced to resign earlier this month. Fishwick has collected bonuses totalling £7 million over the past two years and left with a £350,000 salary pay-off and a £700,000 bonus entitlement. He will be questioned by MPs at a Treasury Select Committee meeting on Tuesday.

Fishwick failed to turn up for a previous hearing when MPs asked Aberdeen bosses if they were 'snake oil salesmen'.

Earlier this week, the Treasury Select Committee quizzed the Financial Services Authority about its role in the debacle.

John Tiner, the authority's managing director, admitted that 'there may have been a gap in the regulations' and that investigations were 'likely to develop as we dig deeper'.

Split capital trusts were launched in the Nineties as a way of offering private investors the chance to take returns as either income or an addition to capital.

But they relied heavily on rising stock markets. When shares began to tumble a couple of years ago, many splits went into freefall.

A number of split trusts have now gone into liquidation, leaving investors with nothing.