An international timber fund chaired by former Irish Prime Minister, Bertie Ahern, which is sold to institutional investors and vaunts its sustainability credentials, has hit problems after one of its joint venture partners was declared bankrupt in Switzerland.
Ahern, the three-times Irish leader, became Chairman of The International Forestry Fund (IFF) in November 2009, just months after its launch.
The fund, a British Virgin Island listed, open-ended fund, is a joint venture between Helvetia Wealth A.G., a Zurich-based asset manager, and IFS Asset Managers Limited, an Irish forestry management company with €110m under management.
Helvetia, which says it has offices in Berlin, Glasgow, Hamburg, Kilkenny, Liechtenstein and London, is the investment manager and distributor of the fund out of a Liechtenstein office, while IFS runs the timber assets.
RI can reveal that Helvetia, which says it runs CHF1.1bn (€890m) in assets, was declared bankrupt in Switzerland on December 17, 2013. Helvetia says a court appeal led to the decision being suspended on December 30. The company has written to shareholders saying it is trying to raise CHF1m to avoid the bankruptcy ruling. A Swiss law firm, Fischer & Partner, is putting together a legal case for investors that may have suffered losses from the Helvetia bankruptcy. It says it could bring civil and criminal actions against the respective companies and their directors.
The International Forestry Fund (IFF) sells direct forestry investment to institutional investors. It heavily markets its socially responsible strategy based on Forest Stewardship Council (FSC) standards.
The fund says it has more 18,000 private and corporate clients. Paul Brosnan, Director of the International Forestry Fund and Marketing Director of IFS Asset Managers, said that as an open-ended fund IFF is legally owned by its investors. Brosnan said: “To the best of our knowledge the bankruptcy ruling does not affect Helvetia’s Liechtenstein office. We would have to replace Helvetia in the event that they could no longer manage the assets. For the moment, it is business as usual until we are otherwise advised.”Helvetia was founded in 2005 by Ottmar Ruoff, a German national, and Kamil Stender, a New Zealander, after they left jobs at Deutsche Bank’s wealth management unit. Ruoff initially served as Helvetia’s Chairman and Stender its Chief Executive, before Ruoff stepped down. Helvetia also has a partnership with Dahl & Partner, a German family office originally set up to manage the assets of media magnate Axel Springer. In the January 9 letter to shareholders, seen by RI, Helvetia says its liquidity crisis is due to a combination of non-performing company acquisitions, costs incurred from private equity investments, redemptions of bonds before maturity, and expected cash inflows not materialising in 2013. Helvetia said it had not filed 2012 business accounts in Switzerland because its auditor did not have the proper licence. It says it is looking for a new auditor.
The letter said that at a planned emergency general meeting Helvetia would ask its majority shareholder board members to give their equity to the company. The board will also seek the return of Ruoff as Chairman. To raise the CHF1m, Helvetia said its board would invest CHF100,000 and that shareholders would be asked to purchase additional shares worth CHF10,000 each. Contacted by RI, Ruoff said via e-mail that Helvetia had managed to suspend the Swiss bankruptcy proceedings. He said the IFF was not affected by the bankruptcy proceedings at Helvetia. The IFF has made timber investments in Ireland, the UK and Central America. Its minimum investment is €100,000 and it aims to return between seven and ten percent annually to investors after a management fee of 1.5%. Speaking in early 2011, Bertie Ahern said he had always been an advocate of sustainable forest management: “Helvetia also is a first-class company with plenty of international experience,” he said.
With reporting by Jan Wagner.