United Bermuda Party Senator Bob Richards has denied claims by Renee Webb that he too gained from commission on Government trades.

Ms Webb made the claim in the House of Assembly on Friday after The Mid Ocean News revealed she had made $200,000 through her firm Maximum Financial Ltd from such trading.

However, Sen. Richards said her statements about his investment management firm Bermuda Asset Management Ltd. (BAM) were incorrect.

Ms Webb said she and Sen. Richards both benefited when Government stipulated that 30 percent of its brokered overseas trades had to go via local companies who could take commission.

But Sen Richards said: "The policy to which Ms Webb refers pertains solely to stockbrokers, not investment managers.

"Bermuda Asset Management is not a brokerage firm, it is an investment management firm. So to include me in her web (pardon the pun) is wrong and misleading."

And he said the policy had been put in place in 2001 by the Bermuda Public Funds Investment Committee (PFIC) that, at the time, had profound conflicts of interest.

"Two members of the Committee were owners of local stockbroking firms and they did not recuse themselves.

"Indeed, Ms Webb was closely associated with one of the brokerage firms represented on the PFIC when this policy was enacted, and now we see there is a connection between her and the now chairman, Cal White, who was also on the PFIC at the time this policy was enacted."

He said stockbrokers took commission while investment management firms take fees, which vary according to the performance of the funds under management.

"The fee is less than one percent per annum."

He said BAM had been retained by the PFIC in 1990 to manage a very small portion of the public pension assets, $5 million, with two additional tranches of like amounts in 1992 and 1995.

"I did not solicit, nor did Bermuda Asset Management ever receive, any new business from Government after I was appointed a senator in 1997, or after I was later appointed a minister.

"In February, 2002, I officially, orally and in writing, objected to the policy being applied to BAM. As an investment manager for the Public Funds we would have had to redirect commission generated from transactions from overseas brokers, from whom we received research and analysis which helped us do our job effectively, to local brokers from whom we received no value.

"Less access to good research could have affected our performance. The policy was set up ostensibly to, 'Support the local investment industry'."

But he said as Bermuda's first independent investment firm, BAM was a part of that local investment industry.

"So requiring us to use local brokers was circular logic, and therefore nonsense.

"Moreover, we are global managers and much of our trading would have been in non-US securities and the only local brokerages efficient in this area, were the Bank of Bermuda and Butterfield Bank, major institutions not in need of assistance from Government."

Sen. Richards said it was ironic his business dealings with the PFIC were being used to justify actions under a policy he officially objected to.

He said Bermuda Asset Management was terminated as a manager in 2003 for poor performance, during what he said was the worst bear market since the great depression, and for not fully complying with the 30 percent policy.

"Well, our 11-year record was exemplary until the worst bear market since the great depression struck. During that time we suffered like other equity managers.

"But there were other managers that performed worse than we did and were not terminated.

"As for the 30 percent rule, well, I guess I didn't give the local banks enough commission business.

"Measuring the performance of a brokerage is very difficult indeed. The practical effect of this 30 percent rule is it is an open ended entitlement for local brokerages. Investment managers have no such entitlement."

Sen. Richards said an ethical breach does not occur when a member of government, in his or her private capacity, had business with the government, so long as that business is declared.

"A breach occurs when government officials manipulate the system for private gain.

"A breach also occurs if a Government minister and a chairman of a Government committee solicit investment management firms to use their brokerage firm when that investment manager is retained by that same committee, which in turn is a creature of that same Government. How can you refuse someone who can fire you?"

However, yesterday Ms Webb was unbowed.

She said: "What is clear about the statement below is that BAM has managed funds from the PFIC and was remunerated accordingly. It may be useful to find out how much his firm made as a consequence of managing the $15 million which he speaks to. Rest assured it is more than $200,000! It is also clear that as one of the investment firms that under performed he was fired along with other under-performers.

"While Mr. Richards states that 'the practical effect of this 30 percent rule is that it is an open ended entitlement for local brokerages. Investment managers have no such entitlement'.

"What he does not say is the Investment Managers, like himself, are paid nonetheless through a performance fee.

"Either way, the policy is successful in keeping some of the benefits of the pension fund investments flowing within the local economy, not just to the overseas investment managers, who receive the lion's share of the investment benefits of the funds.

"With respect to my firm's involvement, I think in the last paragraph Bob sets it out succinctly ? 'an ethical breach does not occur when a member of government, in his or her private capacity, had business with the government, so long as that business is declared'.

"As I stated on Friday, my being part-owner of Maximum Financial was declared in Cabinet, on the floor of the House, and in the Register of Members Interest which is a matter of public record."