5.3.3. Count 1.11: Floryl, Brazil

5.3.3.1. Application and grant

On 11 December 1992 LSV applied for support to an amount of USD 2,575,000 to a “ unique nature protection project" in Brazil. In the application, which is signed by Lars Jensen , it is mentioned that a very large plantation in Brazil (totally 104,000 ha) has been owned by Shell, but that LSV has now entered into an agreement on cooperation with "the new owner" (Exhibit 56-3-4-2 p. 17). It does not appear from this or the following documents who "the new owner" is.

It appears from later correspondence that Floresta Atlantica Ltda owns the plantation. For this company Tove Birkøe signs as "manager". Tove Birkøe was one of the two founders of the Foundation. From accounts , etc. it appears that the funds paid by the Foundation to LSV/LEE, which these associations pay to the owner, are spent by a number of subsidiaries (Exhibit 56-3-4-8 p. 21).

At a meeting on 14 December 1992 , the Foundation decided to grant the amount applied for ( chairperson Bodil Ross Sørensen ). This amount of USD 2.6 m was paid in the period 1992-1996, so that in 1992 the Foundation paid the first instalment of USD 750,000 to LSV. In 1993 LSV applied for a transfer to another French association, LEE. The following payments were made to that association.

In addition, the Foundation decided in 1994, on the background of an application from LEE dated 2 October 1994 , to grant USD 411,000 to the building of a power station at Fazenda Jatobà. This application and the subsequent reports from LEE are signed by Lars Jensen . In addition to these two primary grants the Foundation has also supported the project with USD 200,000 for completion and extension of the power station at the plantation and for payment of legal expenses, etc.

5.3.3.2. The police investigation of the project

The investigation has shown that Floryl Florestadora YPE S.A. is a commercial enterprise, controlled by the defendants, where the profits accrue to LG's treasury. The payments are therefore unlawful (not for a " public utility" purpose). The investigation has also shown that part of the funds allegedly paid to Floryl Florestadora YPE S.A. have been spent on other purposes.

The purpose of purchasing the plantation

The purpose of purchasing Fazenda Jatoba is described in a letter from Amdi Pedersen to Kim Bonde Andersen of 8 January 1993 (tab 8). It is not mentioned in this letter that the purpose of the purchase should be nature protection or research. It was clear to the Tvind management that there was no basis for producing electricity by means of biomass fuel for subsequent sale of this electricity, because the plantation is too far removed from urban areas to make this profitable. The purpose of the purchase seems to be that Amdi Pedersen wanted to establish a commercial plantation with a self-sustaining Tvind community on the estate. Therefore, Jatoba is intended to: Pay for its own operation, to contribute to LG's treasury, and to supply wood for sale through One World Enterprise, of more about this company in the following.

The purchase of Floryl Florestadora YPE

The project in Brazil is part of the total activities executed and managed by USS. On the list of LG activities (tab 42) Floryl appears as No. 232 and 233.

In June 1992, the company Tropical Farming Ltd. (Kim Bonde Andersen) initiated negotiations with Royal Dutch Shell about purchasing the 140,000 ha plantation Fazenda Jatoba, which is situated in the Bahia region in Brazil. Tropical Farming Ltd is registered on Grand Cayman and owned by DSI Estate in Denmark, The company does not appear on the Group diagram for 1995.

During the negotiations with Shell, Kim Bonde Andersen has currently received instructions from "KLAP" and from the rest of the management of LG's economy. For instance, Amdi Pedersen (KLAP) decided the size of Tvind's offer. The deal was concluded on 3 December 1992 , when the seller accepted an offer of USD 12 m (the actual sales contract is not included in the case). On 11 December 1992 a protocol of intent of the purchase was signed. On the same day the coming manager of the owner company, Lars Jensen , prepared an application to LSV for USD 2.5 million. On the same day LSV - also represented by Lars Jensen - applied to the Foundation for support to that amount, cf. the foregoing.

Ownership of the receiving company

The plantation in Brazil is owned by the company Floryl Florestadora YPE S.A. Until 1991 Royal Dutch Shell owned all the shares in this company. In 1992 LG's treasury purchased the company on direct instruction from the defendants Amdi Pedersen and Kirsten Larsen . This appears for one thing from Sten Byrner's letter of 3 December 1992, tab 6. The deal was completed by Sten Byrner and Kim Bonde Andersen, who in connection with the acquisition used a number of companies controlled by the defendants (cf. group diagram below).

The fact that via a number of front men and companies the defendants Amdi Pedersen , Kirsten Larsen , Ruth Sejerøe-Olsen and Marlene Gunst were in reality behind the purchase is confirmed by Amdi Pedersen's letter about replacement of the management (tab 28).

After the purchase, the ownerships were as follows, cf. also the group diagram on page 6:

Hobbhouse Investment Co. Ltd Jersey

Fairbank Cooper Lyle Ltd.
3 Jersey Companies

Bahia Farming Ltd., Guernsey

Floresta Atlantica Ltda, Brazil
New name Floresta Jatoba (Brasil) Ltda.

Floryl Florestadora YPE - owns the plantation Fazenda Jatoba

At all times the defendants have attempted to conceal the ownerships of the plantation from the Danish authorities. It is demonstrated for example by the Department of Private Law's decision of 26 June 2001 that Poul Jørgensen had surrendered a document from which it appeared that "we", i.e. LG, bought Jatoba in 1992. It seems that this document was surrendered to the Directorate by a mistake. In any case the defendant Jørgensen attempted to remove it from the file of the authorities during a meeting.

The defendants have also attempted to conceal that in a number of cases the text in the applications has been prepared in cooperation between the "applicant" and the chairman of the Foundation and the persons responsible for LG's economy. It also appears from a "list of assignments" prepared by Ruth Sejerøe-Olsen and Marlene Gunst that in connection with later applications - an application of 15 November 1998 - it lies with Poul Jørgensen to write the cover letters to be forwarded with the application to the Foundation. It appears from the examples in tab 19, tab 20, tab 22 and tab 23 that Poul Jørgensen also de facto has formulated both applications and letters to the Foundation, that is to Poul Jørgensen himself, concerning the project.

The actual application of the funds of the Foundation:

The funds for the purchase of Floryl Florestadora came from two sources: (1) From Bahia Farming Ltd ., which was a company newly established for the purpose under Fairbank, Cooper and Lyle. In connection with the purchase Bahia Farming received a number of transfers from a number of Tvind's companies and associations, including UFF/Humana, and from LG's treasury. (2) From La Societé Verte , which in turn was financed by Tvind's Humanitarian Foundation.

Regarding the application of the funds from the Foundation, it appears from the application of 11 December 1992 , that the funds from the Foundation shall primarily appear (be entered) as a loan, whereafter the amount is to be converted into a donation to the company. Therefore it appears from the application (Exhibit 56-3-4-2 p, 18) that the first part of the grant - USD 750,000 - is to be spent on the purchase of the plantation, while the money for the following years is to be spent on support of the project, i.e. the protection of nature. The Foundation has also informed the authorities that the grant had the nature of a loan. This was observed by the chartered accountant of the Foundation, Erik Rømer Jensen, in 1998. In a letter of 6 April 1998 the accountant informed Poul Jørgensen that a loan could not result in tax deductions. At the same time the accountant suggested "renaming" of the payments to Floryl to a "subvention with obligation of repayment in the form of royalty ", cf. tab 18.

Preliminary investigation of the cash flows shows that a large part of the funds from the Foundation has been spent on down payment and current payments of options to the seller, and that the bulk of the amount paid - USD 1.4 m- has been spent on covering costs without any connection with a possible protection of nature at the estate. All transfers from LSV/LEE have been entered at the recipient - Floryl Florestadora - as "loans" or as "funds for future, additional capital". The reason behind these entries was that Tvind did not wish to pay tax of the money in Brazil, cf. tab 32.

The investigation has also shown that part of the funds paid to the Floryl project has been spent on quite different purposes.

Thus it appears from the documents under tab 27 that there is a discrepancy of USD 496,000 between the amount paid by the Foundation and the amount received in Brazil according to the books. The discrepancy is stated to be for example "management fee" and "travel expenses" in LEE totalling USD 325,000. Since LEE - as stated above -- is a "brass plate company" without any form of operations, this is proof that these funds have been spent on other purposes. It appears from the same exhibit also that answers to questions from authorities are in reality prepared/constructed by others than the foundation management, in casu Kirsten Fuglsbjerg (KF), and that the deficit in the books for 1995 is explained by expenditures allegedly effected subsequently.

It also appears from a draft for auditor's records for LEE of 1 July 1995 (tab 10) that in 1993 in connection with the project, loans have been granted to an amount of USD 176,000 to Eastover Properties Ltd . and Furtherland Farming Ltd . These two companies are registered on Cayman Islands. It appears from the Group Survey, tab 43 p. 8 that Furtherland Farming is owned by Kirsten Larsen personally with 40% and by Cay Properties Ltd. by 60% - As per 1 September 1995 Kirsten Larsen owns Cay Properties with 96%. Correspondingly, Kirsten Larsen personally owns 98% of the parent company of Agricorp Ltd., which in turn owns Eastover Properties Ltd. In a letter of 6 May 1995 from Kirsten Fuglsbjerg to Poul Jørgensen (tab 10) it is stated that "the section about Cayman [shall] be deleted" from the auditor's records.

Finally it can be mentioned that it appears from the documents under tab 23 that an application from December 1998 for payment of USD 100,000 to the power plant at Jatoba is a fabrication. In reality the money was to be used as "buffer in a mortgage payment to be made Wednesday ".

Operation of the enterprise

Until 2000 the plantation in Brazil was managed by Lars Jensen , who at the same time was chairman of LSV and LEE. This does not appear from the documents to which the authorities have had access. It appears from the dossier, tab 28, that on 19 September 2000 the defendants Pedersen and Larsen decided that due to unsatisfactory earnings on the estate, Lars Jensen was replaced as senior executive by Søren Sørensen (up to then head of LG's production enterprises in Belize).

In connection with a lawsuit concerning the construction of the power plant on the estate, Poul Jørgensen has acted as legal advisor for the owners of the plantations, cf. the dossier, tab 11. In this work Poul Jørgensen has also acted under instructions from LG's Economy (in casu Anne Hansen).

In 1999 the Danish tax authorities in cooperation with the local authorities carried out an investigation of the Floryl project. The Brazilian authorities concluded that the operation of the plantation was commercial, and that there had been no (or very little) planting of forest, citrus plantations, or other crops to replace the intense forest cutting at the plantation. Even though the enterprise might have developed and implemented a system for electricity production by exploiting felled wood (such as it is stated a.o. in the applications to the Foundation), everything indicates that the management on site has only maintained forest planting and felled trees that were ripe for this.

Instructions concerning the operation:

It appears from a number of exhibits discovered in secured computers at Tvind that grants to the plantation are managed by Ruth Sejerøe-Olsen and Marlene Gunst , but under instructions from Amdi Pedersen and Kirsten Larsen (KLAP). As mentioned, Amdi Pedersen has stated in a letter of 19 September 2000 that the purpose of LG's ownership is maintenance of the value of the estate and maintenance of the thinning out of the forest and controlling production profitability - and to cut and sell the trees when they are ready. Amdi Pedersen sets the goal that productivity must be increased by 200%, the wages must be cut by 62% of the present wages, the debt must be liquidated, and the accountancy must be revised so that "one can see that there is a profit ". The sale of wood from Fazenda Jatoba is partly effected under Amdi Pedersen's personal control through a company "One World Enterprise ” , which is responsible for wood export for furniture production in China.

Conclusion

On the background of the foregoing there is probable cause to suspect that payments to the Floryl project have not actually been used for public utility purposes, let alone to "protection of the natural environment". Thereby the payments are unlawful, and deductions for allocations and provisions in the accounts of the Foundation have been made unlawfully.