Kuwait Investment Authority, the fourth-largest sovereign wealth fund, is caught up in a legal dispute with former managers at its U.K. office over accusations of inflated bonuses.
The fund alleges that Simon Hard, who oversaw fixed income at its London branch, and two other managers “blew the whole budget” by raising salaries and bonuses while a senior executive was away. It’s filed a claim for more than 1 million pounds ($1.3 million) in damages. Hard denies the allegations and said he was victimized and faced age discrimination.
The case, which was reported earlier by the Financial Times, was heard at a London court Monday. The Kuwait fund was ordered to postpone its damages claim until a separate lawsuit brought by Hard takes place at the employment tribunal. The fund has asserted diplomatic immunity in the employment case.
Adam Solomon, an attorney for the fund, said it was alerted in the middle of last year to the alleged misconduct by the country’s State Audit Bureau, which raised “serious concerns” about the pay increases in London. It discovered that Hard and two other managers hid a hike in bonuses of more than 50,000 pounds, the fund said in a March legal filing.
A lawyer for the Kuwait Investment Office, the KIA’s London branch, said the fund planned to seek permission to appeal.
Hard’s attorney, Sanjay Patel, said salaries in London were raised by the rate of inflation and the fund had tried to intimidate the former executive since his firing for gross misconduct in January. He said the fund’s legal letter had warned Hard that “If you take us on, you will have the fight of your life.”
The fund is set to fight the jurisdiction of the employment tribunal claim in September.
“KIO’s position appears to be that it can use the courts of this country to pursue actions against its employees but hide behind the cloak of immunity when its employees seek to vindicate their employment rights,” Patel said in a court filing.
The fund manages the OPEC member’s General Reserves Fund and Future Generations Fund, the latter designed as a buffer for when its oil reserves run out. It’s the world’s oldest sovereign fund and has stakes in ports, airports and power distribution systems around the world.
The Kuwait fund, which started as a Bank of England account dedicated to receiving oil money in 1953, now has assets of $534 billion, according to the Sovereign Wealth Fund Institute. Its high-profile investments include a stake in Daimler AG, and it also holds a 5.2% passive stake in BlackRock Inc.
(Adds comment from Hard’s lawyer in eighth paragraph)