Global Forestry Investments, teak plantations in Brazil and the unravelling of an unregulated investment scheme
Global Forestry Investments, teak plantations in Brazil and the unravelling of an unregulated investment scheme
Global Forestry Investments claims to be an ethical investment company. But hundreds of investors are now asking where their money went.
Andrew Skeene and Omari Bowers registered the company, GFI Consultants Ltd., on 13 April 2010. They worked quickly. Just over two weeks later, they put out an invitation to an “Open Evening for a night of Champagne and Canapés”. Apparently, GFI already had clients:
You will be given a better insight into our phenomenal Teak projects in Brazil that are yielding our existing clients 10-20% per annum.
UPDATE – 28 February 2015: The Serious Fraud Office has announced that it is conducting a criminal investigation into Global Forestry Investments and Global Forex Investments. More information here.
The SFO is asking anyone who has handed money over to either Global Forestry Investments or Global Forex Investments to complete a questionnaire on the SFO website (click on the image to go to the questionnaire):
GFI bought a teak plantation in Pará province in Brazil, called the Belem Sky Plantation. A glossy brochure explains the deal:
Investors simply lease a plot on the timber plantation. The value of the investment and the return it will derive is based on the Teak trees growing on it. Specialist timber management companies lease the plots from the investors and manage the land.
The minimum investment is £5,000 and there is no maximum (which, when you think about it is interesting in itself, given that the area of the plantation is not infinite).
The land “will be held in beneficial ownership for the investor” by a company called Title Trustees International, a subsidiary of Hutchinson & Co. Trust Company Limited. Another of Hutchinson’s subsidiaries is Citadel Trustees. That’s the company that holds carbon credits that Worldwide Commodity Partners and several other companies scammed people into buying.
In the small print at the end of its brochure, GFI points out that the company and the investment is completely unregulated:
GFI Consultants Ltd is not regulated by the FSA and is not authorised to offer advice to the general public concerning any regulated or unregulated investment. This is not an authorised investment for the purpose of the UK FSMA (2000) and as such buyers have no access to statutory or regulatory protections including the Financial Ombudsman Service and the Financial Services Compensation Scheme.
As journalist Tony Hetherington pointed out in 2011, “The investment is unlicensed and unregulated. And that means it is also unsafe.”
Here are Bowers and Skeene explaining the investment scheme on Sky News:
Skeene manages to get the name of the company wrong. Bowers gets the area of Pará wrong. Then he says that, “The actually part that we are interested in is probably roughly about the size of the UK.” If true, that would be impressive. According to the International Tropical Timber Organisation, the total area of teak plantations in the world is about 6 million hectares. The area of the UK is nearly 23 million hectares.
But more interesting is the man in a baseball cap who is translating for GFI: Michael Greene of the Brazil Property Group. Michael Greene featured in a 2011 Dutch TV consumer programme about carbon credits, when he was selling plots of land in the Brazilian Amazon (at a price of one cent per square metre) for reforestation or for carbon trading projects. (Here’s a transcript of the programme: part 1 and part 2. If you’ve not seen it, it’s well worth a watch.)
The relationship between GFI and Michael Greene soured over the next few years. In October 2013, Greene commented on a website set up by people who had invested in GFI:
“I simply do not agree with Skeene and Bowers. They owe my company money related to invoices for when we sold them the farm. All’s I hear is next week.”
A company called Emerald Knight sold the plots of the Belem Sky Plantation to retail investors. You can get an impression of the type of company Emerald Knight is from the “Careers” page on its website:
We have fantastic opportunities for telesales professionals who, in combination with our full and comprehensive training, have the drive and ambition to apply their knowledge and skills in growing their own investor portfolio through the promotion and selling of socially-responsible and sustainable investment opportunities over the telephone to a wide range of investors.
Surprise, surprise, carbon credits are among the other “Socially Responsible & Sustainable Investments” described on Emerald Knight’s website. And on its twitter account, Emerald Knight makes some pretty wild claims about the returns on carbon credits:
There’s a great deal more of this sort of thing (if you can face it) on Emerald Knight’s Facebook page.
Emerald Knight was the company that sold Industry RE’s carbon credits to retail investors. In June 2011, Industry RE had forward purchased the carbon credits from Celestial Green Ventures, who claimed to have the carbon rights to 20 million hectares of Amazon rainforest. In September 2013, Industry RE went into liquidation.
There are lots of frustrated investors out there. Here’s a typical comment:
I invested 5K in GFI in 2011. I was sold this by Emerald Knight and told it was an ethical investment, offering 8% return.
I received one years payment.
Since 2012 and 2013 no payments have been received.
In September 2013, GFI sent a newsletter to investors stating that,
The Belem Sky Plantation investment has been extremely successful and as a direct result of this success as of earlier this year Global Forestry Investments have sold out of all the available retail plots and have now ceased sales.
GFI explained the delays in payments:
The delays in paying the annual income were a cumulate of various factors. Firstly the management companies experienced an unusually long rainy season followed by logistical and banking issues caused by a regulation in Brazil.
And GFI reassured investors that payments were “imminent”. In January 2014, in another newsletter, GFI explained that the “administrational complications” that had “played a part in causing the delays” were now “rectified”.
Meanwhile, in April 2013, HM Revenue and Customs issued a petition to wind up GFI Consultants. The company is still live. But hundreds of investors are still waiting to be paid.