This is a story involving a company called Sustainable AgroEnergy, a jatropha plantation in Cambodia, boiler room companies, retail investors asking where their money went, banks in Switzerland, Tanzania and the British Virgin Islands, a member of the House of Lords, and the Serious Fraud Office.
First a quick recap of last week’s post about Global Forestry Investments, because it was a footnote to that post that led me to Sustainable AgroEnergy. Andrew Skeene and Omari Bowers of GFI bought teak plantations in Brazil. Emerald Knight sold plots of land in the plantations to retail investors. The plots of land were held in trust by Title Trustees International, a subsidiary of Hutchinson & Co. Trust Company Limited. Many of the investors are now wondering where their money went.
Here’s the footnote to that post: The front page of GFI’s website features the logo of Thomson Reuters Point Carbon, with a note inviting readers to “Find out how we are working with Thomson Reuters Point Carbon Advisory Services.” Click on the link, and GFI explains that, “GFI Consultants Ltd is working with Thomson Reuters Point Carbon Advisory Services.”
Thomson Reuters has now closed down Point Carbon Advisory Services, but here’s a description from a 2010 job advert:
Point Carbon Advisory Services provides clients with customized and in-depth analysis on a wide range of carbon and energy issues. The Advisory team consists of around 25 consultants, including several of the leading experts in the global carbon market, and capitalizes on access to Point Carbon’s world class databases, models and networks.
Nelson Sam and James Whale worked together at Point Carbon Advisory Services. In November 2013, they set up a company together called City Advisory Ltd. Their timing was perhaps odd. A few months earlier, James Whale was one of four people in court, charged with fraud by the Serious Fraud Office.
All four were involved in a company called Sustainable AgroEnergy that had run an unregulated investment vehicle in a jatropha biofuel plantation in Cambodia. James Whale was former Chief Executive Officer in the company.
About 2,000 people invested their money. According to the Serious Fraud Office,
The value of the alleged fraud is approximately £23m and the offences are said to have taken place between April 2011 and February 2012.
Three others were charged: Gary West, Director and Chief Commercial Officer of Sustainable AgroEnergy; Stuart Stone, an Independent Financial Adviser associated with Sustainable AgroEnergy; and Fung Fong Wong the former Financial Controller of Sustainable AgroEnergy. They were charged with “offences of conspiracy to commit fraud by false representation and conspiracy to furnish false information, contrary to section 1 of the Criminal Law Act 1977″. West, Stone and Wong were also charged with “offences of making and accepting a financial advantage contrary to section 1 (1) and 2 (1) of the Bribery Act 2010″.
A first hearing took place in Southwark Crown Court on 7 October 2013, and the next hearing will be a case management hearing on 28 April 2014. The case is listed for trial on 22 September 2014. All four defendants were released on bail.
Sustainable AgroEnergy was formed in March 2009 and until February 2011 was called Carbon Credited Farming. In February 2010, the Ecologist magazine raised the alarm about the company’s jatropha plantations. The article focusses on the impacts that a large-scale expansion of jatropha plantations would have on land conflicts, food security and hunger in the Global South. Friends of the Earth International had published a report in 2011, titled “Jatropha: Money doesn’t grow on trees. Ten reasons why jatropha is neither a profitable nor sustainable investment”, and Action Aid continues to campaign on the impacts of biofuels on farmers and food security.
The Ecologist article mentions two companies that were acting as agents for Carbon Credited Farming and marketing investments in jatropha: Onyx World and Viceroy Invest. Both companies are registered in the UK. Onyx World is in liquidation, and Viceroy Invest is a live company.
The websites of both companies have disappeared. A copy of Onyx World’s website on archive.org dated 7 January 2012 reveals the company’s claims. “Tax free investment within a SIPP,” is the headline. Jatropha “could eradicate poverty, stop crude oil dependency and save the planet from the effects of global warming thus bringing you an amazing return on your investment”. Onyx World promised “massive 345% cash returns over the first five years – up to 93% a year”.
A 2009 Viceroy Invest brochure also makes claims of “Returns up to 93% a year”, “Guaranteed purchase contract”, and a “Highly ethical ‘green’ investment”. By 2011, in another brochure, Viceroy Invest had toned down its claims to “20% returns or more each year”.
In its 2011 brochure Viceroy Invest tells us that,
When you purchase a Green Oil or Agro-forestry Lease, you have legal entitlement to the land and trees for 45 years. You receive confirmation of ownership through the independent, UK-based Citadel Trustees Ltd (‘Citadel’) for the duration of the investment. They hold the land in trust throughout the 45-year lease.
In its 2011 brochure, on a page titled “The Small Print”, Viceroy Invest tells us that,
Viceroy Invest Limited is not regulated by the Financial Services Authority and is not regulated to offer advice to the general public concerning any regulated or unregulated investment.
Which should have been (but obviously wasn’t) enough to scare off retail investors.
Many of the “investments” in Sustainable AgroEnergy’s jatropha plantation were through Self Invested Personal Pensions (SIPPs). According to a May 2012 article on New Model Advisor website,
A number of Sipp providers, agents and advisers are understood to have relied on due diligence on Sustainable AgroEnergy conducted by Citadel Trustees.
Peter Hutchinson, chairman of Citadel Trustees, told New Model Advisor that,
Citadel has never held itself out as being an expert in the field of sustainable energy projects and neither has it confirmed at any time that any firm, company or individual is entitled to rely on the due diligence information provided.”
In May 2011, Lord Laird of Artigarvan, who runs a PR company called Biscuit Public Relations, hosted a promotion in the House of Lords for something called “Sustainable Evolution”. On his website, journalist Andrew Drummond has a photograph of Lord Laird at the launch, shaking hands with James Whale, and with Gregg Fryett, the director of Sustainable AgroEnergy:
(An investigation by BBC Panorama journalists recorded Lord Laird on film agreeing to accept cash for questions in parliament. A separate investigation by Sunday Times journalists posing as consultants for a South Korean solar energy firm caught him agreeing to accept cash for questions. In December 2013, the Privileges and Conduct Committee of the House of Lords recommended that he be suspended from the House of Lords for four months.)
The Serious Fraud Office froze the assets of Sustainable AgroEnergy in February 2012. A report written by Mark Thompson of the SFO noted that Sustainable AgroEnergy continued selling investments up to February 2012, despite the fact that in June 2011, auditors had raised questions about,
“financial difficulties caused by the failure to plant sufficient jatropha trees to have any prospect of generating returns for investors.”
The Cambodia Daily reports that in his SFO report, Thompson wrote that Sustainable AgroEnergy had made payments amounting to more than US$5.7 million to bank accounts in Switzerland, Tanzania and the British Virgin Islands.
Gregg Fryett, director of Sustainable AgroEnergy, was arrested in Cambodia in March 2013 by Cambodia’s Anti-Corruption Unit. A year earlier, the chief inspector for the Forestry Administration in the northern Tonle Sap region made a complaint against Sustainable AgroEnergy’s local affiliate, International Green Energy, and another company Aphivath Meanchey for illegally clearing forest, according to an article in the Cambodia Daily.
Aphivath Meanchey is owned by Mao Malay, the wife of Ke Kim Yan Cambodia’s Deputy Prime Minister and former commander-in-chief of the Royal Cambodian Armed Forces. Sam Ourm, director of International Green Energy, told the Cambodia Daily that his company has a “handshake” agreement with Mao Malay and has paid US$1.3 million through a company called Phalla Development, which is owned by Hanh Chamrong, a general in the Royal Cambodian Armed Forces.
The plot of land is in Banteay Meanchey province in the north-west of Cambodia. Only about 300 hectares of a total of more then 6,000 hectares had actually been planted with jatropha trees by February 2012. No oil has been produced from the plantation. Ourm told the Cambodia Daily that International Green Energy does not own any land concessions in Cambodia. Ourm was arrested in January 2013 along with Soeun Denny, another US-Cambodian who worked for International Green Energy.
Fryett denies the fraud allegations. The Cambodia Daily reports him claiming that the project ran into problems planting jatropha trees and with its land ownership deal.
In February 2012, the London firm Chantry Vellacott DFK was appointed as administrator of Sustainable Agroenergy PLC and two related companies, Sustainable Wealth Investments (UK) Ltd, and Sustainable Growth Group (UK) Ltd. Adrian Hyde, an insolvency practitioner at Chantry Vellacott DFK told the Cambodia Daily that Sustainable AgroEnergy had sold investors 8,000 hectares of jatropha plantation in Cambodia. Hyde said that his firm had identified between £35 million and £40 million worth of investment.
The Serious Fraud Office advises anyone who invested in Sustainable AgroEnergy’s jatropha project to contact Chantrey Vellacott DFK:
If you are a creditor of any of the companies involved or have invested in them and want more information, please email Chantrey Vellacott DFK LLP with details of your enquiry at the following address: SAEEnquiries@cvdfk.com