The big used clothing cup

 

The big used clothing cup

 

Berlingske Tidende, August 24th 2002

 

As the arrested Tvind founder Mogens Amdi Petersen is heading home top be tried for embezzlement, Tvinds international trade is running as ever. Sunday Berlingske can report today how Tvind, assumingly helping the poor of the third world, is defrauding people, acting in good faith by dropping their used clothes into Tvinds collection bins, all over Europe. A Network of secret companies, hidden in the Netherlands, Ireland and in the British tax haven Jersey, Tvind has been collecting millions out of the sale of used clothing for at least the last ten years.

 

By Michael Bjerre

AMSTERDAM

[Note: as this article has been translated from Danish to German, then to English, some of the quotes may not be literal.]

The small man with the graying hair points determinedly toward the main entrance:

"I have nothing to tell", he snares.

The mans name is Flemming Gustaffson and has been for many years one of Tvinds leading businessmen. The 59-year-old Dane stands behind the main entrance to the office in the grey and drab building, next to a lively main road in the provincial town of Maarsen, south-east of Amsterdam.

It is rather difficult to imagine that this building should be the location for one of Tvinds largest and shyest businesses in Europe.

From this location Tvind secretly betrayed for at least ten years all the good willing Europeans who thought the surplus of selling the clothes donated to Tvind would help the poor in the Third World, as Tvind promised. Instead Tvind channeled all the money through their secret companies into their own accounts.

Tvind even doesnt make a distinction in this practice with their offices. Only a handwritten note gives away that the company "Conmore" resides in this building in the sleepy Dutch province.

Flemming Gustaffson's limited hospitality might have something to do with him playing a central part in Tvinds big used clothing cup.

 

"Is there anything sensible to light going on in the companies youre involved with", Sunday Berlingske asks while on the way back outside.

"There is something wrong with the newspapers in Denmark", Flemming Gustaffson answers sharply and adds: "I want you to leave this office. NOW!"

Now there may be several reasons for Flemming Gustaffson to refuse to share details about his daily work with the public.

First, Tvind has never before been under such a high pressure, becoming clear lately, as the founder Mogens Amdi Petersen, after a half year in the rough American jails, yielded and accepted to return home to Denmark. Here he and seven other Tvind leaders are accused of embezzlement and tax fraud for 75 million Danish crowns.

Secondly, Flemming Gustaffson himself is accused of a white-collar-crime in Belgium. He and seven other Tvind leaders are facing a trial for money laundering from about 23 million Danish crowns, the details being undisclosed by the Belgian police.

Thirdly, there is questioning for Tvinds trading companies that Flemming Gustaffson would like to avoid. Noticing how the companies were the gear-wheels in an extremely clever system of deceiving the donators of the used clothes and the poor in the Third World who were to profit, Flemming Gustaffsons rejection makes sense. Thus Sunday Berlingske can reveal what up till recently used to be one of Tvinds largest frauds.

The fraud is based on the fact, that Tvinds humanitarian organizations in Western Europe UFF and Humana only receive a fraction of the profit from the sale of the clothes deposited in their collection bins.

Instead, they sell them officially to a Tvind company in Holland, which in turn sells them to Tvinds companies, for example in the British tax haven of Jersey, earning the profit by selling them at far higher prices in Eastern Europe.

 

This way the largest part of the profits can be collected in Tvinds own accounts and not into the accounts of UFF or Humana, which in turn have far less to give to the Third World as might be achieved originally.

In order to understand the structure and the background of Tvinds economic used-clothes-laundering we have to turn back the time to a historic date. It is November 9^th, 1989; the iron curtain separating Europe falls.

The party in Berlin seems to never end. Champagne corks pop everywhere, people saluting each other and a wave of happiness and relieve rolls over the European continent.

But for some the new time is something else than just a party. In some distance to the events, Tvinds supreme leaders, led by Mogens Amdi Petersen, begin to make new plans for their business. They consider Eastern Europe to be a whole new market to wash money into their tanks, and so Amdi, shortly after the iron curtain fell, accepted the plan for a large campaign, as sources close to the leaders for some years, explain.

 

Amdis plans are to erect an international business empire to secure Tvinds further expansion, at some time in the 80s he already came up with a plan for something he called "money-earning activity".

 

The pedagogic project, started out in the 70s as a revolutionary movement with educational trips in rumbling busses and almost-sinking ships, was now to use the methods of capitalism to reach their goal.

 

Eastern Europe fitted perfectly for that strategy. These countries are an extremely good market for a good with which Tvinds storage facilities are almost overflowing with used winter clothing.

 

In 1989 Tvind had been collecting used clothing in some European countries for a couple of years already. In Denmark, Sweden, Norway and Finland they collected under the name "Ulandshlp fra Folk til Folk" (UFF) [Development Aid from People to People]. In England, Holland, Belgium, Germany and Austria they resided as Humana People to People.

 

But a substantial part of the used clothing people dropped into the yellow and green collection bins were warm winter clothes, which for obvious reasons were unsuitable for use in Africa.

 

Unlike Africa, Eastern Europe is perfect for the sale of these clothes. As always, whenever Tvind is under way with great plans, the so-called distribution group hunts for possible keynote themes in the Teachers Group.

 

This distribution group is made up of Mogens Amdi Petersen and his girlfriend Kristen Larsen, and shortly after, as Tvind-informants report; they had selected a number of trustworthy employees, who had proven well in business before, for the job at hand.

 

One of those is Flemming Gustaffson.

On September 3^rd, 1992 Flemming Gustaffson founded the company E.C. Trading in Holland. Gustaffson is the only shareholder of the company. Later all shares are taken over by a Kirsten Kristiansen. And later yet, they are taken over by Poul Laurits Jrgensen.

The changing of the stockholders is only trying to conceal the relations to Tvind, as several Tvind-informants report for Sunday Berlingske.

Flemming Gustaffson is not the only one of the three who has been a long-time-member of the Teachers Group. Kirsten Kristiansen has been with Tvind for 30 years, at first as a teacher for the traveling folk high school, later as coordinator for the container transports of the used clothes.

Poul Laurits Jrgensen inside Tvind called Poul junior as not to be confused with the Tvind spokesman Poul Jrgensen has been with Tvind for 20 years, most of the time with UFF.

Even though E.C. Trading is a Tvind company, there is a reason for Tvind to keep this a secret. E.C. Tradings main task is to buy used clothing collected by UFF and Humana all over Western Europe.

 

By cooperating closely, there is the opportunity to channel away a great part of the funds collected by the humanitarian national sections of UFF and Humana supposed to be distributed to Tvinds projects in the Third World.

 

And this is exactly whats happening.

 

E.C. Trading is, as mentioned before, just a stopover in Tvinds great eastern European fraud. E.C. Trading sells the larger part about 85 percent to five other Tvind companies, four of them hidden in Jersey, the British tax haven.

Low Taxes are not the only advantage of the Jersey addresses. Here you can hide everything from key numbers to staff members, as there is no need to supply that information to the authorities.

Sunday Berlingske came into possession of documents about those four companies Holland House, Holland Trading, Holland Enterprise and World Wide Suppliers.

Member of the board of directors of all these companies is Birgitte Larsen. She is not just somebody. For years she played a central part in leading the Tvind economy. From the Tvind headquarters at Grindsted she looked after the private economy, the issuing of tax cards and the pocket money for all the members of the Teachers Group, who all had signed up for the "mutual economy".

But now it is her job to channel the profits from the Jersey companies to the secret accounts. This doesnt happen physically on the green British Island, but from an equally secret Tvind office located on Mill Lane 28 in the tax haven of Gibraltar.

As the day-by-day leader of Tvinds tax haven companies Birgitte Larsen soon gets many other tasks. Tvinds decision to venture into the eastern European market proofs to be a great success.

 

East European people are going crazy for the modern western-style clothes. Unlike when they had to spend a months paycheck to buy some used Levis at the black market, they can now buy used brand clothing for a reasonable price.

The buyers let the Jersey phones ring all day long. Actually though the calls were rerouted by answering machines to E.C. Trading in Holland, and in their Amsterdam office the order forms are filled out, too, as former Tvind workers point out to Sunday Berlingske. The demand is so high that E.C. Trading sometimes almost cant satisfy it. In a steady stream trucks filled with used clothing pull away from one of the 37 loading ramps in the 200 meter long building housing the sorting facility heading toward Eastern Europe.

The same thing happens in England, Belgium, Germany, and Sweden and wherever else in Europe Tvind is collecting clothes. E.C. Trading even picks up clothing from UFFs large sorting facility in Ballerup near Copenhagen and in rhus, as several hundred freight bills possessed by Sunday Berlingske prove.

 

In 1997 Tvind directed over 25,000 tons of used clothing through E.C. Trading and the Jersey Companies. With an average load of 17 tons this equals 1,500 trucks stuffed with used clothing heading from Western to Eastern Europe.

 

Other key figures reveal how gigantic the business with Eastern Europe for the Teachers Group becomes.

The E.C. Trading turnover rises strikingly in the mid-90s.Up from 17.2 million Dutch Guilders [about 60 million Danish Crowns] in 1995 to 35.5 million Guilders [about 130 million Danish Crowns] in 1998. Tvinds moneymaking machine ran smoothly. But the Hungarian police had a watchful eye on the transports with used clothing from the west.

 

The Hungarian customs officers noticed that the Tvind-trucks were showing false customs forms. There was far more clothing loaded on the trucks than accounted for in the customs forms.

 

Thus in the fall of 1999 the Hungarian customs police asked their Dutch colleagues to start an investigation on E.C. Trading.

 

In the Amsterdam offices of E.C Trading the employees were shocked as two police officers showed up to ask about the false customs forms, but the police left empty-handed. Now Tvind panics, as the police leaving empty-handed is no clue toward Tvind not being an active offender in the Hungarian matters, as a former employee states.

 

This former employee wishes not to reveal his identity as he has been involved in issuing the false customs forms for E.C. Trading.

 

"We sent out two different sets of customs forms. One of them showed the real amount, while the other showed a far smaller amount of the loaded clothes. In some cases, it only showed 10 percent of what was actually loaded on the truck", the former employee states.

As Tvind sources tell, action was taken by Tvind members after the police had showed up at the Amsterdam offices to destroy all proofs for irregularities.

 

The sources interpretation is as follows:

On the same evening as the police had visited the offices one of the Tvind leaders went hastily through all the files with the customs forms at the E.C Trading office to make sure, that nothing can be traced back to the company. Afterwards one piece of paper after another disappears in the shredder.

 

Tvind also had gotten very active in Hungary. Some time before, Flemming Gustaffson had travelled to Hungary to set up a Tvind office for one of the Jersey companies, as the sale of used clothing is booming.

 

Now everything is done to find a way our of the country as fast as he can. Immediately a container is ordered in order to clear away the office within 24 hours. Furniture and computers are packed removed, and as the police appear at the office the only thing left is Flemming Gustaffsons leased Mercedes.

The Dutch police are looking for Flemming Gustaffson, too. But he seems to have been swallowed by the ground.

According to the information available to Sunday Berlingske Flemming Gustaffson had fled to Kenyas capital Nairobi, where he still has an address even while working in Holland again. Sunday Berlingske would have liked to hear Flemming Gustaffsons own interpretation of the proceedings, but the request was being turned down as he didnt wish to talk to the newspaper.

The police in Holland have not found any proofs for the customs forms fraud, and some months later, on May 23^rd, 2000, E.C. Trading files bankruptcy.

 

So quietly the company tries to disappear from sight, explaining they were not able to get their feet back on the ground after the collapse of the trade with used clothes in Eastern Europe.

 

The appointed trustee, The Hague lawyer J.C. Rosenberg Polak, quickly realizes that this is not an ordinary bankruptcy. "Actually, I havent seen something like this before", J.C. Rosenberg Polak states, who is specialized in bankruptcies.

At first, the lawyer thinks it is just a regular liquidation. But after receiving the hint that a sect like Danish school movement of the 70 owns the bankrupt company and all of their trade partners UFF, Humana and the Jersey companies he begins to wonder.

This model is great for everyone who wants to drain a company to channel away the assets.

While trying to reveal the trade relations between the companies, J.C. Rosenberg Polak finds a very suspicious pattern.

The debtors of E.C. Trading are the four Jersey companies and a fifth, registered in Ireland, Brichwood Trading.

At the same time, the annual statement of accounts shows that the five companies shortly before E.C. Tradings bankruptcy had paid out a stock profit of 2 million dollars to their common holding company, Coriander Holding Ltd.

 

"The question is whether this is a coincident or the dividend had been paid consciously at the expense of the practically bankrupt company", the suspicious receiver writes in a report on this matter, dated September 11^th, 2000.

 

Therefore J.C. Rosenberg Polak asks for information about Coriander Holding, which Tvind also is behind at and is, according to Sunday Berlingske information, controlled by Mogens Amdi Peterson.

 

Even though J.C. Rosenberg Polak asks the Tvind director of the Jersey companies, Birgitte Larsen at Gibraltar, for information regarding the holding company again and again, he receives no answer. On other occasions, the receiver is being lied to.

 

"At first they denied that the bankrupt company was part of the Tvind companies. In a later phase among others the board of directors of some companies based on the Channel Islands [i.e. Jersey, ed.] confirmed the companies being part of the Tvind group. All seems to show that the bankrupt company [E.C. Trading, ed.] is part of the Tvind group", J.C. Rosenberg Polak writes in the receivers report of this year May 7^th.

 

The Matter is not finished yet. But after J.C. Rosenberg Polak threatened some of the Jersey companies with filing a lawsuit in Jersey, the Tvind people obviously got nervous and paid part of their debts to E.C. Trading.

 

"It seems they fear a lawsuit filed in Jersey. Because then it would become obvious in court, who is behind Coriander Holding", J.C. Rosenberg Polak says.

 

Today, the receiver does not hold much for Tvind.

 

J. C. Rosenberg Polak: "I find it hard to see what their way of doing business has to do with humanitarian work. If they wanted to do good for the people in the Third World, they shouldnt be selling their used clothes to their own companies, skimming off the biggest profit."

 

The lawyer also shakes his head on the idea that Tvind set up a different company after E.C. Tradings bankruptcy, Conmore, to keep up the fraud.

 

 

"This is always the problem with bankruptcies, the people can just continue with a different company", J.C. Rosenberg Polak closes his statement.

 

ISOBRO is a union of 39 humanitarian organizations in Denmark. Members are among others the Fokekirkens Ndhjlp [Peoples Church Emergency Aid], BRNEfonden [the Childrens Fund] and UNICEF. ISOBRO reacts strongly on the revelation of Tvinds economic laundering of used clothing.

 

ISOBROs main target is developing a high ethic standard for collections and donations. The union has therefore drawn up common ethic rules for this area.

 

"First of all, it is fantastic, Tvind holding some of the poorest humans on this world hostage in this kind of speculation" ISOBROs Chairman Stig Fog says.

 

"Secondly, the Danish authorities will have to become more conscious of their responsibility. It is insane that they free UFF/Humana from their duty to pay VAT, even though they seem not to stand on the proper side of the law."

 

This weeks Friday, Coop Danmark A/S the former FDB, operating among others SuperBrugsen, Kvickly and Fakta announced Tvind would no longer be allowed to have their collection bins in front of their shops.

 

This was decided on as Tvind is operating so closed, it doesnt fit Coop Danmarks ideals of openness and dialogue. Stig Fog thinks the local authorities should follow this example.

 

"It would be peculiar if the Danish local authorities would continue to supply space for UFFs collection bins after all the information becomes public", Stig Fog declares.

 

The question of legality of Tvinds economic arrangements has to be answered by others. For the time being, Tax and Customs authorities investigate, closely cooperating with the Bagmandspolitiet [backers police], if UFF/Humana has drained sales tax or turnover tax-free funds from Denmark illegally. Upon reading the information collected by Sunday Berlingske the public prosecutor Henning Thiesen declares:

 

"What in this context is happening in Holland and other countries will of course be included in our consideration."