A nasty proxy fight should draw closer to a conclusion Friday when the shareholders of the closed-end Portugal Fund vote on a series of proposals which could convert the fund to an open-end structure and give closed-end fund activist Ronald Olin a seat on the fund's board of directors.

The proxy fight, which began in April, took an ironic twist in the last two weeks when the Portugal Fund's four independent directors accused Olin of having a conflict of interest in his bid to win election to the fund's board. Closed-end fund activists have long complained that it is independent directors who have a serious conflict when the directors serve on several fund boards in the same fund complex, a fact which activists say raises doubts about the directors' independence.

Olin's conflict, should he win a board seat pits Olin's duty to Portugal Fund shareholders against the duty he owes to investors at Deep Discount Advisors of Asheville, N.C., the fund's directors alleged in an undated letter to shareholders the directors filed with the SEC Sept. 30. Olin is chairman and chief executive officer of Deep Discount Advisors. The firm specializes in investing in closed-end funds, according to SEC filings.

If the Portugal Fund opens, Olin's duties to his clients could compel him to sell their stake in the Portugal Fund, the directors said. Olin could be forced to sell his client's stake even if the sale is not in the best interest of the shareholders of the Portugal Fund, the directors said.

"Even assuming Mr. Olin's ... best intentions, these types of conflicts can be very difficult to reconcile," the directors said.

The Portugal Fund had approximately $82 million in assets under management as of June 30, according to Wiesenberger, a fund tracking firm in Rockville, Md. Credit Suisse Asset Management of New York serves as investment adviser to the Portugal Fund.

Olin said the conflict allegation was designed to confuse the debate in the proxy fight in the final days before the scheduled shareholder vote.

"I think it's a red herring, quite frankly," Olin said. "How can (Deep Discount Advisors' investors) benefit without benefiting the other shareholders? I don't understand the logic."

Federal securities laws bar all funds and fund executives from favoring one group of investors over another, Olin said. The lawyer for the independent directors and spokesperson for Credit Suisse declined to comment.

The closed-end fund industry, however, has contended that opening a fund poses potential problems for shareholders that remain in a fund after it opens. The Portugal Fund independent directors outlined such a risk in a proxy statement the fund filed with the SEC Sept. 2. If the Portugal Fund opens and suffers massive redemptions, the fund could be forced to sell off securities to pay shareholders that redeem, according to the proxy statement. That could force the fund to realize capital gains, which then would be distributed to those shareholders that remain in the fund. Significant redemptions also could make the Portugal Fund too small and too expensive to run, the directors said. Deep Discount Advisors owns approximately 32 percent of the shares in the Portugal Fund.

Philip Goldstein, president of Opportunity Partners of Pleasantville, N.Y., also invests in closed-end funds for the hedge fund he manages. Goldstein also serves with Olin on the board of directors of another closed-end fund, the Clemente Strategic Value Fund. The benefit to shareholders of having a director with a substantial stake in the fund far outweighs any conflict, Goldstein said.

"Everybody in the world has a conflict of interest," Goldstein said. "If you rate conflicts of interest on a scale of one to 10, (Olin's) is a one," Goldstein said.

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