A peek behind the closed doors of private family finance

it’s a sector that relies on discretion, and for good reason, says Chris Blackhurst, but every so often a case like Belen Clarisa Velutini’s rears its head

A recent case at London’s High Court reads like a novel (Getty/iStock)

Among professional services there is one area that remains tightly closed to prying eyes.

It’s family finance, that section of investment advice and wealth management that relies on total discretion and privacy. Its practitioners are invariably smooth, urbane, immaculately presented and oh-so tight-lipped.

Fair enough – we’re talking about the monetary affairs of individuals, not publicly quoted corporations or charities. They’re rich people and in many cases well known. More reason, then, for tight security.

So, to be afforded a glimpse into this closed world can be fascinating – rather like those TV programmes that go behind the scenes of luxury hotels and superyachts. Even more so when what you discover does not conform to the stereotype, and instead reads like a lurid thriller.

In the High Court in London last summer, judgment was handed down in a case brought by Belen Clarisa Velutini, the 98-year-old head of the Velutini banking dynasty, which opened its first bank in Venezuela in the 16th century. It’s reported now as the costs have only just been awarded.

The Velutinis are extremely wealthy, one of the richest families in Latin America. Belen has no children, no immediate family. She has health, sight and mobility issues but is mentally agile.

The law case, Belen Clarisa Velutini Perez v Equiom, centred on $50m (£40.5m) worth of Velutini assets held in trusts. They were managed by an English peer, Lord (Roderick) Balfour. His father’s uncle, Lord (Arthur) Balfour, as foreign secretary, issued the Balfour Declaration in 1917 declaring Britain’s support for the establishment of a Jewish homeland in Palestine.

Roderick was educated at Eton and London Business School. He co-founded Virtus Trust in 2005, then merged it with Equiom in 2017. He’s got 40-plus years’ experience in private client investment and financial planning and was named one of Britain’s best “offshore experts for high-net-worth individuals” by Spear’s in 2022.

Balfour was introduced to Belen by Charles Rack, a distant relative of hers, in the early 2000s. Rack worked at Banca Mora-Boreal and he provided investment advice to her and Balfour.

Despite the glamour and polish, underneath it all, private family management can be as grubby, if not grubbier, than the businesses it chooses to look down upon

Velutini was keen to invest in a major property development in Caracas called Paseo La Castellana. Relatives of Belen were pushing her to back the mixed residential, retail and office project; Balfour and Rack were not keen and refused the funding. She then sought to have the family trusts redrawn to give her power to direct where the cash went.

In September 2021, a frustrated Rack left a voice note for Rebeca Campos, Velutini’s personal assistant: “On the other hand, perhaps, to solve the problem, it would be better for her to catch Covid and die soon, and that will solve a lot of problems. We can keep her inheritance because with her alive we won’t keep any of her inheritance. Perhaps it is a solution for her to die now.”

Velutini told the court that when she listened to the voice note she was shocked. Rack wished her dead so he could keep her inheritance and to stop her pumping cash into Paseo La Castellana. Said the judge, Master Kaye: “Ms Velutini explains she had lost trust and confidence in Lord Balfour, Mr Rack and the former trustees.” Added Kaye: “Ms Velutini’s decision to revoke the trust and cut her relationship with Lord Balfour, the former trustees and Mr Rack is not at all surprising.”

Balfour was furious that he and Rack were being cut out of managing her wealth. He sent an email to Campos: “After all [Mr Rack] and I have done to defend [Belen’s] wealth for 20 years this is rough treatment.”

That was followed by further emails, threatening a lawsuit on the ground that Velutini was not mentally capable of taking such decisions on her own and she must have suffered “elder abuse”.

Three medical reports were produced, confirming that while Velutini was elderly, she did not lack mental capacity and she could take the decisions she’d made.

Balfour then sent emails to the judge described as “threatening”. “These email exchanges seemed to me to be high-handed, hostile and entirely inappropriate for an experienced professional trustee. Lord Balfour appears to have lost all perspective and this appears to have become personal,” Master Kaye said.

The judge rejected the claim that Balfour should be characterised as a layperson. “I do not accept this. Lord Balfour and the former trustees were part of a professional trust organisation with considerable experience. Lord Balfour had been a professional trustee since at least 2005. He ought to have been acutely aware of the inappropriateness of an impact of the tone and content of his communications which were framed in a manner inconsistent with the role of a professional trustee even if he had genuine concerns.”

In finding for Velutini and sanctioning the transfer of her money to the new trust, the judge accused Balfour of losing perspective and having not behaved in a neutral manner.

Belen was represented by London law firm, Mishcon de Reya. Peter Steen, partner at Mishcon, said: “It is truly shocking that an elderly lady like Belen was put through such an ordeal.”

Despite the glamour and polish, underneath it all, private family management can be as messy, if not messier, than the businesses it chooses to look down upon.