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ASSETS OR LIABILITIES?

Microloans in the Caribbean When executed correctly, fostering an entrepreneur’s or new business’s growth is one of the greatest ways to advance a local community. Progress in business is not the only realm, of course, but when growth is achieved here, it delivers a ton of truly fantastic benefits. BY ED KENNEDY, STAR BUSINESSWEEK CORRESPONDENT Continued on page 4

The ship tycoon, the con men and a €100m scam Just after noon on a sunny day in June, a 51-year-old former car dealer called Paul Sultana stood in court number four at Southwark Crown Court in London to be sentenced for his part in one of the

Paul Sultana said that Allseas would be “brought into a wonderful, privileged position”. He was given an 8-year-term after being found guilty of fraud

strangest crimes ever tried there. He was first arrested seven years ago for conspiring to defraud the owner of the world’s biggest ship of €100m, and the marathon proceedings had taken their toll. Pages 3, 5, 7 & 8

“You always hear that about fraudsters, don’t you? They are charming people who know how to talk [others] into things. Later you say, ‘My God, how could I have?’” Edward Heerema on the deck of Pioneering Spirit in Rotterdam © Charlie Bibby

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COUNTING ON CHANGE

Caribbean accountants face a host of external pressures that are changing the way the region does business

BY CATHERINE MORRIS, STAR BUSINESSWEEK CORRESPONDENT

Misha Lobban Clarke, Chief Executive Officer, the Institute of Chartered Accountants of the Caribbean (ICAC)

ccounting is one of the world’s oldest professions, dating back to ancient Mesopotamia where early bookkeepers counted sheep and audited temples. These days, Caribbean accountants are grappling with Artifical Intelligence (AI), blockchain technology and other disruptive technologies, alongside ever-evolving reporting and disclosure requirements. In this increasingly globalised and technologically advanced world, the sector is changing the way it does business - focusing on skills development and identifying areas of opportunity.

retool to address any skills gaps as the field advances. “The digital transformation that is engulfing economies across the world has no doubt created new and interesting challenges for the accountancy profession,” says Misha Lobban Clarke, Chief Executive Officer, the Institute of Chartered Accountants of the Caribbean (ICAC). One of the key challenges arising from this transformation is the issue of data protection. As services move online they become vulnerable to cyber crime, which costs Latin America and the Caribbean around US$90bn a year, according to a study by the Center for Strategic Studies and McAfee. “The efforts by governments and regulatory bodies to address the impact on business practices due to digitalisation, AI and data analytics have resulted in new and more stringent regulations, disclosure rules and standards, which all have implications for the financial and accounting sectors,” says Lobban Clarke who believes that opportunities exist for accountants to thrive in this new environment. “I believe that these new developments create new and interesting opportunities for the professional and the Caribbean as a whole. They necessitate new strategic thinking and approaches by regional governments, changes to business models and the way we do business, [and] improvements in decision-making within the public and private sectors in order to leverage the value and opportunities that these new technologies offer. “Accountants can capitalise on smart technologies to enhance their traditional ways of working and it is believed that greater use of social media via smart technology will improve collaboration, disclosure and engagement with stakeholders and the wider community.”

BEST PRACTICES

ICAC celebrates its 30th anniversary this year. In its three decades of operation, membership has grown to around 4,200 accountancy professionals and eight national institutes, including one in the Eastern Caribbean which represents Saint

Lucia. The Institute’s role includes promoting best practices and ensuring adoption of international standards. All ICAC member territories have formally adopted International Financial Reporting Standards (IFRS) and International Standards on Auditing (ISA). The region is also in the process of getting up to speed with the International Public Sector Accounting Standards (IPSAS). As of 2017, nearly 60% of Caribbean countries surveyed by the ICAC had adopted IPSAS or national standards based on IPSAS and the remaining 40% were in the process of implementing them. Once fully adopted, IPSAS will help ensure greater fiscal transparency and financial credibility. “There will be more effective and efficient management of public resources as a result of better informed public policy making, based on enhanced financial reporting,” says Lobban Clarke who adds that the benefits will trickle down to deliver better quality public services, sustainable economic growth and increased employment. The ICAC is also championing a far-reaching Public Sector Financial Management Reform programme, which will begin rolling out initiatives within the next year. The programme is intended to promote greater public sector accountability and transparency within the Caribbean.

NEXT GENERATION

Looking ahead, ICAC wants to help the sector tackle any oncoming headwinds through solid leadership, continued professional development, increased engagement with stakeholders and new strategic linkages. In the long-term, the next generation of accountants is expected to make quite an impact on the industry, embracing technology and changing the culture. According to Big Four firm PwC, millennials will form 50% of the global workforce by 2020 and, by 2025, will comprise 75% of the accountancy profession. “Millennials already occupy a pivotal place in the accounting profession and they have already begun to redefine the world of work globally,” says Lobban Clarke. “They are the ones leading the online technology movement and their preferred tools are mobile communication, social media and other forms of digital technology. “Today’s millennials bring with them an array of new approaches, skills, perspectives and ideas to the work environment and to work itself. In order to attract more millennials and retain them, employers within the accounting sector will need to change the corporate culture to accommodate the new skills and mindset of millennials. This will involve rethinking strategies for training and engagement of millennials and considering new approaches to how work is done.”

DISRUPTIVE TECH

One of the top concerns for virtually every industry in recent years has been the rise of the Fourth Industrial Revolution, in which the real world becomes increasingly integrated with the digital environment. In a business landscape that is continually evolving to encompass the latest technology, accountants have to stay ahead of the curve. Artifical Intelligence, blockchain technology and robotics are set to radically shape the industry in the near-term. IBM Business Analytics predicts that, by 2020, accounting tasks, tax, payroll, audits and banking will be fully automated using AI. In this new age, accountants will not only need a firm grasp of traditional accounting principles but also familiarity with data and analytics skills as well as a willingness to refocus and

The digital transformation that is engulfing economies across the world has no doubt created new and interesting challenges for the accountancy profession

THE BIG READ: WHITE COLLAR CRIME

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© The Financial Times Limited [2018]. All Rights Reserved. Not to be redistributed, copied or modified in anyway. Star Publishing Company is solely responsible for providing this translated content and the Financial Times Limited does not accept any liability for the accuracy or quality of the translation

THE SHIP TYCOON, THE CON MEN AND A €100M SCAM When fraudsters embarked on an elaborate sting, they made one big miscalculation: their victim BY JOHN GAPPER, ASSOCIATE EDITOR AND CHIEF BUSINESS COMMENTATOR FOR THE FT

ust after noon on a sunny day in June, a 51-year-old former car dealer called Paul Sultana stood in court number four at Southwark Crown Court in London to be sentenced for his part in one of the strangest crimes ever tried there. He was first arrested seven years ago for conspiring to defraud the owner of the world’s biggest ship of €100m, and the marathon proceedings had taken their toll. Sultana’s trial was not only the largest private prosecution known in the UK, but his second: he was originally tried last year but that jury could not agree on a verdict. He gave evidence in the first trial, donning glasses to examine documents as he swept back his brown hair. This time, he did not enter the witness box and looked exhausted as he was jailed for eight years after a six-week hearing. His victim, Edward Heerema, a 71-year-old Dutch shipbuilding tycoon, had finally broken him. Sultana might have escaped jail, despite being described by the judge in a civil trial in 2014 as “a patently dishonest individual”, who was a “willing participant” in a fraud that spanned three continents. Frauds are notoriously hard and expensive to prosecute and the Crown Prosecution Service (CPS) did not bring criminal charges against him. He was only tried because Heerema was wealthy and relentless enough to pursue the looseknit ring of fraudsters himself. Today’s fraudsters are often distant associates who come across each other on the internet. Their crimes are not only complex but each criminal has a ready defence — he or she was deceived, just like the victim. They draw in advisers, such as accountants and bankers, who

Edward Heerema, a 71-year-old Dutch shipbuilding tycoon

do not realise that it is a fraud and may be bankrupted by innocently taking money, as some were in this case. Finding out the truth, and then getting any jury to understand it and to convict, is a huge task. An estimated £193bn was lost to fraud in the UK in 2016 but, according to the accountancy firm KPMG, only 220 cases worth £1.1bn in total got to court. Heerema’s pursuit is a spectacular example of a trend towards privately funded justice — more banks and other victims are prosecuting because it is their only hope. “Jail is the most potent form of sanction against a white-collar offender,” says Mark Button, a professor at Portsmouth University. “If you are upset, it is a way to get retribution.”

But the private prosecution was only one of the remarkable aspects of the crime. There was the ship itself — Pioneering Spirit, the largest in the world by volume, a €2.7bn twin-hulled vessel the size of two super tankers joined at the stern. It is as long as the Empire State Building is high. There was also the fact that Heerema caused outrage by originally naming it after his father Pieter Schelte Heerema, a brilliant shipbuilding engineer who became a Waffen-SS officer in the Nazi-occupied Netherlands. I first encountered the case more than three years ago, talking to a victim of Marek Rejniak, a 63-year-old PolishCanadian who was the alleged ringleader

of the Heerema fraud, and has still not been arrested. Steadily, like those caught in the crime, I became drawn into the story by its sheer improbability. I could not write much about it because of the criminal trials but I came to know many of those involved — not only the victims and lawyers, but the fraudsters themselves. Sultana and I chatted casually during his first trial and he gave a friendly wave at the start of the second. Luis Nobre, a flamboyant Portuguese confidence trickster who was part of the ring, talked to me for two hours, and I wondered whether he was conning me too. “When I come to know you a little better, I will start to tell you some things and disclose details,” he promised. He did not get the chance: he was prosecuted in 2016 by the CPS and jailed for 14 years for money laundering. Then came Edward Heerema, a cool, controlled man with a shy manner who gets more animated when talking about his ships. As construction of Pioneering Spirit started in 2011, he was lured by Sultana, Rejniak and others to hand over €100m that he had raised for the ship in a get-rich-quick investment scheme. He thought he was being granted access to a secret trading opportunity offered to high net worth individuals by the US Federal Reserve central bank, supposedly supported by the Vatican bank and the UN. He ended up having €12m stolen. The story was ridiculous, differing only in its scale and exotic nature from countless others that offer “privileged” victims fabulous rewards. “It was bizarre, but it was brought to us in an extremely smart way. We were defrauded by very clever people,” Heerema told me at the main engineering office Continued on page 5

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ASSETS OR LIABILITIES?

Microloans in the Caribbean Continued from page 1

It provides ongoing income, grows an asset, and offers numerous flow-on benefits for the individual like building a broader social network and playing a deeper role in government. At the heart of it, it offers those who started the business, stability and greater financial security. It’s for these reasons, and more, that microloans have grown to hold great support in recent years. At their best they can be a great vehicle for growing lives and a nation’s economy. But what issues are in play here beneath the surface? How have microloans fared in the Caribbean? And what changes are arriving to redefine this field? Let’s look now.

MAKING A SUCCESS OF MICROLOANS

In 2018 there is around US$34 billion circulating around the world in microfinance initiatives. At the heart of this funding has always been a strong but simple concept: that if aspiring entrepreneurs in developing nations are given the funds they need to build a business, they would go ahead and do it! Conventional loans to would-be entrepreneurs who may have little existing income, employment or assets wouldn’t work. Beyond the red tape of the application process,

conventional loans seek repayment with interest. Oftentimes these interest rates are very high in developing nations, making the idea of borrowing money even more daunting. This additional financial pressure - not to mention mental and emotional toll on a person already struggling to achieve and hold financial stability - means that even if an entrepreneur with little income could seek to gain approval for a loan, the prospects for a successful outcome would be unencouraging. Microloans also enable the supply of ancillary employment services that could be taken for granted by many businesses fortunate to enjoy greater profitability. From sick leave to workplace insurance, to the payment of an accountant for an annual tax return, as a whole, microloans make up a big ecosystem.

NO SMALL DRAWBACKS

While on paper microloans clearly look to be a promising pursuit, in reality debate continues as to their overall effectiveness relative to other options. While providing the financial support for someone to start their own business is clearly appealing, business is, of course so often a mix of expertise, good strategy, and timing. In the absence of an entrepreneur having these qualities on their side, providing a path

In Latin America and the Caribbean alone, some 600 microfinance institutions have lent around $12 billion to more than 10 million low-income clients

for their greater education - so as to find employment with another business before then perhaps starting their own venture - could provide a more stable and secure route. This is especially so because of the variables that exist from one community to another. The success of an initiative like microloans in one nation (such as the Grameen Bank in Bangladesh) is rightfully inspiring, particularly for the results it has yielded in delivering greater equality of opportunity to women in the nation. But such an initiative cannot simply be replicated elsewhere without consideration of unique local factors.

THE CARIBBEAN EXPERIENCE

The Multilateral Investment Fund (MIF) has been a pioneer of microloans in this region. operating since 1993. While it does not directly fund entrepreneurs, it has over US$100 million at its disposal for use in Latin America. It is active within 26 countries throughout the region and, most impressively, has scope to provide up to $2 million to a project. What the MIF has done well is engagement with stakeholders at the grassroots level, using local partners instead of an exclusively ‘top down’ structure, to see funds channeled via local groups who know their communities and countries best. The Caribbean MicroFinance Alliance (CMFA) has also been a leader in this field. Recent years have seen it perform strongly, with 2015 seeing over 22,000 clients served, and US$23 million deployed as loans in the region. These results are impressive but so, too, is the CMA’s wider work in promoting responsible lending within the region, as ultimately its membership still accounts for less than 50% of the total sector in the Caribbean. That means its words are just as important as its deeds, especially because much of the success of microloans is dependent upon subjective attitudes. Growing financial literacy is not a goal confined to the Caribbean. Yet it’s also true that often the ability of microfinance and microcredit institutions to succeed is hampered by (what is usually considered) good financial practice. In a cultural quirk, statistics show English-speaking Caribbean nations typically record a higher rate of savings compared to non-English speaking nations.

This is fantastic for their savings account, but it can mean the recognition of the options available via microfinance and microcredit initiatives is not always immediate. Many entrepreneurs and businesses will delay the prospective growth of their business that would otherwise be available via microfinance.

MICROLOANS IN THE E-COMMERCE ERA

One of the changes we’ve also seen in recent years has come with the rise of the ‘Kickstarter economy’. It offers an alternative to the microloans formula. Once upon a time not-for-profit channels commonly existed in a centralised and remote structure. Today all that is required to generate income for a new business is a solid presentation online and a PayPal account. While websites like Kickstarter and GoFundMe won’t replace the microloans sector by default, they are illustrative of the new opportunities the digital economy is creating for businesses to grow and generate capital. When it comes to seeking to deliver the benefits of microloans while also navigating unique cultural quirks in certain nations and communities, it’s another avenue.

SMALL LOANS IN A BIG WORLD

Microloans may retain a mixed record but part of this is owed to coverage; just the same as it’s often overlooked that, save for 25 nations or so, every other country in our world of almost 200 is classified as developing. Even economic giants like the People’s Republic of China, Brazil and India are developing. Ultimately, while microloans are most prominent in developing nations, all professionals globally in business can encounter great challenges thanks to a poor legal structure or financing. It’s a confronting reality in a world where approximately 836 million people (around 12% of the world’s population) continue to experience extreme poverty while, for many decades, strong economic growth and the rise of the middle class in booming economies like India have made inroads. Certainly developing nations have different challenges compared to developed ones but those challenges are not necessarily always exclusive. Progress in one area could assist in the other.

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THE SHIP TYCOON, THE CON MEN AND A €100M SCAM Continued from page 3

Pioneering Spirit, the largest ship in the world by volume © Charlie Bibby

of his company Allseas in Delft, near Rotterdam, which is lined with photos and memorabilia of his late father and their ships. “You always hear that about fraudsters, don’t you? They are charming people who know how to talk [others] into things. Later you say, ‘My God, how could I have?’” He was not alone in being made to look stupid. The judge in the civil case he brought against Sultana called two Allseas executives who dealt with the fraudsters “unbelievably inept and naive”. Yet Heerema defied humiliation and set out to get his money back and to trap those who fooled him. He spent millions on an array of accountants and lawyers to uncover the scam: Allseas’ estimated costs for one of the two civil cases it brought were £5.1m, although it is likely to get the majority back. One defence lawyer describes the private prosecutions as an abuse of the law courts for “revenge” but Heerema insists he is not bitter and simply wanted to stop others being hurt in the same way. “You tell nobody and you feel ashamed and you keep it silent,” he says of others in his position. “We decided to fight from a strong sense of justice . . . Other people were defrauded of smaller amounts and have terrible stories. I thought, ‘If we don’t

expose this, it will go on and on and on.’” The fraudsters knew that he was a rich man who was not a sophisticated financier; they did not realise quite how tenacious he would be. “He wasn’t loud, he was a bit on the shy side, as they say of me,” Edward Heerema recalls of his father. “He was very determined. When he had a clear view of what he wanted, he put all his energy into it.” The son also went into battle without wavering; in all that time, he has only retreated once. Rotterdam is 80km south-west of Amsterdam along the North Sea coast and on a fine day the open sky is difficult to delineate from the great stretch of ocean. The old city centre was destroyed and 900 people died in a bombing raid on May 14, 1940, an act that led to the Netherlands’ surrender to the Nazis. Since the war, Rotterdam has expanded into Europe’s largest port, and has steadily thrust outwards from the Hook of Holland. Maasvlakte 2, a 2,000ha extension of the port on reclaimed land behind a 4km dike, opened in 2015. It is highly automated, with rows of robotic cranes. Beyond them sits Pioneering Spirit, in a berth specially dug to accommodate the vessel. As I rode out to the ship in a tender boat two years ago, its vast bulk was visible against the skyline. The words Pioneering Spirit were painted in white on each hull, below its still-visible, over-

painted original name: Pieter Schelte. It was built for a unique purpose: carrying oil and gas rigs in one piece. As Sultana’s first trial ended, it lifted Royal Dutch Shell’s 24,200 tonne Delta rig in the Brent oilfield 186km north-east of Shetland with eight huge pairs of hydraulic arms fitted on the bows. With North Sea fields shrinking as reserves expire, the four Brent rigs are among more than 100 due to be removed. The ship has since lifted one other rig and laid 1,100km of pipeline in the Black Sea. Heerema recalls the moment he realised that, despite having resisted the protests for several years, he could not name his greatest ship after his father. It was February 2015, after it had sailed to Rotterdam from its yard in South Korea, and stories appeared about the name in newspapers, including the Financial Times. He had talked to Shell executives about the outcry all week and by the Friday the clamour overwhelmed him. “They said to me, ‘Things are getting very difficult for us and we’re not putting you under pressure but we want you to realise how difficult this is.’ Those were their words, very polite. I called them back and I said, ‘I’ll change the name.’ It felt like a defeat because I’d been criticised [about it] through the years but I thought, ‘It’s my business, I do what I want; my father was a great man and that’s it.’” Pieter Schelte Heerema joined the WaffenSS in the Netherlands in September 1940 after working as an engineer in Venezuela. He was stationed on the Russian front in the SS Wiking division and SS commanders came to his wedding. He took charge of the civil engineering arm of the Dutch East Company, a Nazi venture established to colonise eastern Europe and Ukraine. Then he became disillusioned and defected from the SS, fleeing to Switzerland. He was imprisoned in 1945 for being a member of the SS. He was released in 1946 and Edward was born a year later. Given this, it seems unthinkable that Heerema could have not only called the vessel after him but persevered despite protests from Jewish civil rights groups. “When he started [in the SS], he did not know a lot of the appalling stories and

history,” Heerema says about his father, who was an ardent anti-communist. “My view is that he was quite wrong but it was 70 years ago. He was arrested, was convicted and was a free man . . . He [told me] the Germans were wrong. He said, ‘I made the choice in those days.’” It is not easy for most people to consign Nazi history to a box and close the lid, but Edward loved his father’s other side, that of the ambitious, creative engineer, who spent his career after the war as an entrepreneur, turning the family firm into a shipbuilding juggernaut. They shared a thirst for engineering innovation, such as the semisubmersible crane vessels with pontoons to keep decks steady that his father pioneered in the North Sea in the 1970s. “We were much the same, very technically minded, so it was easy to work with him.” After his father’s death in 1981, he and his four brothers oversaw the Heerema family company together for three years, but he fell out with the others and left to form Allseas. It mainly designed and operated ships to lay oil and gas pipelines but within a few years he dreamt of building a much bigger platform removal ship. He faced deep scepticism. “I would go to see clients and at the end of the meeting, they’d say, ‘Tell us how your toy’s getting on.’” €12m - Amount stolen by fraudsters from ship tycoon Edward Heerema 220 - Number of UK fraud cases that made it to trial in 2016 £193bn - Estimated amount lost to fraud in UK in 2016 Perhaps their levity sprung from Heerema’s almost childlike enthusiasm for engineering feats. As he discusses his father’s designs for semi-submersibles, his sober reserve vanishes and he springs to a whiteboard in his office to sketch out the idea. Early on, he had the “romantic” thought of welding two super tankers together to form the ship and Continued on page 7

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TECHNOLOGY

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INVESTT WELCOMES HACKER HOSTEL TO TRINIDAD AND TOBAGO!

oftware design and development took centre stage last week at the Hacker Hostel (Trinidad) Demo Day 2018, with live demonstrations of locally developed software solutions. The event, hosted in partnership with InvesTT, PitchIT Caribbean and the University of the West Indies, was the brainchild of Winston Wilkins and Akua Walters of Jamaica, founders of Caribbean software development firm Hacker Hostel Limited. The event served as the grand finale to the first Hacker Hostel Summer Solutions Programme which was hosted in Trinidad and Tobago earlier this summer. Subsequent to findings in its October 2017 ICT Skills Search survey, InvesTT channelled considerable effort into finding solutions to bridge the identified gaps between the software development skills required by international investors and what was readily available locally. At the Tech Beach Retreat in November 2017, held in Jamaica, InvesTT Manager Sekou Alleyne connected with the Hacker Hostel team to explore the company’s expansion goals for its Software Development Summer Programme for the Trinidad and Tobago market. This endeavour was deemed a success and was held throughout July in Trinidad. Mentors from leading American tech hubs like the San

Francisco Bay Area, Seattle and New York City were invited by Hacker Hostel to deliver their innovation and software development curriculum. Through the partnership with UWI’s Faculty of Engineering, 10 local software engineers began training to develop software-enabled start-ups like a fresh produce aggregator and delivery system, body language analysis software, and a subscription-based gym access pass. Specially invited guests to the Demo Day comprised mostly local corporate sector representatives. The event’s organisers hope that by inviting corporate representatives to witness the students ‘pitching’ their individual software start-ups, the corporates will be able to match these innovative students to employment opportunities within their organisations. So far, Hacker Hostel has completed a variety of similar programmes in several Caribbean islands including Saint Lucia. Last February, the group collaborated with TeleCarib Labs to host a week of innovation programming as part of a broader constituency development programme in the city of Castries.

Hacker Hostel mentor Louis Kinley (far right) teaches software development

If you would like to contact Hacker Hostel, please reach out to info@hackerhostel.com.jm

The Saint Lucia Government Gazette Company Registration Name: Braben Properties Ltd.

Name: H&A Tours Ltd.

Description: Property holding company

Description: Destination management services

Directors: Kim Waldron

Directors: Hernelle Ross; Alleyn Ross

Date Incorporated: 17-Apr-18

Date Incorporated: 9-Jul-18

Chamber: Du Boulay, Anthony & Co. Chambers, Saint Lucia

Chamber: SEDU, Saint Lucia

Name: B&V Plumbing Solutions Ltd.

Name: Caribbean Dream Vacation

Description: Plumbing, construction, and transportation

Property Ltd.

Directors: Daniel Moncherry

Description: Property rentals

Date Incorporated: 20-Jun-18

Directors: Hanna McDonald

Chamber: Self-incorporation

Date Incorporated: 9-Jul-18 Chamber: SEDU, Saint Lucia

Name: Planet Number 9 Ltd. Description: Technology and agricultural

Name: Island Aero Ltd.

contracting and procurement

Description: Aircraft maintenance services

Directors: Craig Ferdinand; Sarianna Mosodeen

Directors: Charles Pinnock

Date Incorporated: 21-Jun-18

Date Incorporated: 13-Jul-18

Chamber: Self-incorporation

Chamber: RDM Chambers, Saint Lucia

Name: KJ Property Management Inc.

Name: KCCardiomed Inc.

Description: Property development and construction

Description: Medical private practive;

Directors: Karen Peter

internal medicine and cardiology

Date Incorporated: 3-Jul-18

Directors: Kurlene Cenac

Chamber: Andrea Gaillard-St. Rose Chambers,

Date Incorporated: 13-Jul-18

Saint Lucia

Chamber: Self-incorporation

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THE SHIP TYCOON, THE CON MEN AND A €100M SCAM Continued from page 5

he sounds sorry that it proved impractical: “It appeals to the imagination. It’s a very playful thought.” By 2011, he had secured bank finance to pay for building his ship, along with Allseas’ cash reserves. It was decades since he had first had the idea and the market had changed: instead of the ship installing new platforms in the North Sea, it would mostly dismantle them. But that did not matter to Heerema. There was still an opportunity and finally, after years of planning and overcoming obstacles, he was ready. The oil market was not the only one in flux. Interest rates have been very low since the 2008 financial crisis. “We have clients who 10 years ago were earning six-figure sums on capital and they are bleeding money now,” says Mark Levy of Berley, an accounting firm that worked on the investigation. “People are hungry for easy returns and they are susceptible.” This applies to pensioners with a few thousand in the bank; it also described Heerema. In April 2011, Fabian Redpath, a former City banker, went with a business partner to meet a mysterious investor who was staying in the Landmark Hotel in Marylebone under the name Mr Augustus. They were shown to the Tower Suite, where they encountered Luis Nobre. He was expensively dressed, with flowing hair in a ponytail that reached to his waist. Nobre had been living in the Landmark for five months since arriving from Geneva with his British partner, who had just given birth to their baby daughter. He was charming and loquacious, words flowing from him as he explained how he represented rich Chinese and Indian investors. He was looking for opportunities in London in many industries — asset management, property, green technology, even travel services for all the billionaires he knew. Nobre was a generous tipper, sometimes handing staff at the hotel hundreds of pounds. He employed a security consultant to guard him, and his hotel and travel bills, which later came to more than £400,000, were handled by a concierge company he had hired for his London stay. He also hired a legal firm, Notable Services in Marylebone, which advised him when he said he wanted to buy the hotel group that owned Claridge’s and a £37m mansion in Highgate. Redpath thought Nobre was eccentric but no less plausible than some of the wealthy who flock to London from countries such as Brazil and Russia. Nobre expressed interest in investing in the financial firm for which Redpath and his partner wanted to attract investors and he asked them to come up with other deals. “Nobre was quite credible in saying, ‘I am wealthy, and I know people with lots of money,’” Redpath says.

A month later, Edward Heerema walked into the Hilton hotel by Lake Geneva to meet Paul Sultana, another member of the fraud ring. Sultana was dressed “in an expensive shirt with nice cuffs”, Heerema later told a court. “Sultana said, ‘My uncle was the secretary to the Pope and so I know these things. I have access to the Fed in Washington.’ He was constantly impressing on me how important he was.” Heerema tried to show Sultana that he could keep a secret – “that I am not the guy in the country club who would brag about his dealings”. The pressure to prove himself, although he was the one with the €100m, is typical of investment frauds. As Justice Peter Smith, the judge in the civil case against Sultana, wrote in his ruling, victims are told that “they have the honour of being invited to invest in a secret scheme, which is operated in secret and produces fabulous returns. It is only available to special people and that is why it is unheard of . . . Secrecy is essential and any attempt to challenge the scheme or raise questions invokes instant rejection.” Allseas had been approached six months before by two former executives who knew that it needed money to build the ship. They introduced Cees Kooger, Allseas’ general counsel, and Johan Visser, its treasurer, to a consultant in London who in turn took them to Sultana. Sultana’s idea was for Allseas to put €100m in an account without losing control. It would be used as collateral for rapid trading, with US authorities offering bonds at a 20 per cent discount. They were, Sultana promised, being “brought into a wonderful, privileged position”. Sultana holds both UK and Maltese citizenship because his father is Maltese, and he has lived on the Mediterranean archipelago. He told Allseas that it would be best to invest the money through Malta, and Kooger and Visser flew out to make the arrangements with him. In July, they returned for nine days to be introduced to the “US officials” running the “investment scheme”. At the Hilton hotel near Valletta, they met Marek Rejniak, who was introduced as one of only six Federal Reserve agents able to authorise secret trading. He told Kooger over dinner he had been a member of the independent trade union Solidarity and had been close to Karol Jozef Wojtyla, the former Pope John Paul II. He was with two other men, said to be officials of the UN. For days, the group shared meals and outings, discussing “the House of Aragon”, which Rejniak described as a Vatican trading platform. “We are dealing with exceptional people,” Kooger emailed Heerema during the stay, adding two days later: “Johan and I now know the men well and we are confident that they are good guys who do this type of deal day in, day out.” After a delay in August, they came back to Malta in October to meet another man who was supposed to do the trading. Then came another delay and their impatience grew. Finally, on another trip to Malta in midOctober, Rejniak suggested an alternative, to

We decided to fight from a strong sense of justice . . . If we don’t expose this, it will go on and on and on Fraud victim Edward Heerema

employ a “tier one” trader in London with “the highest authorisation” whose name was Luis Nobre. Nobre had emailed Rejniak excitedly in September: “After all this long years . . . we meet at last!” There was, Rejniak told them, one hurdle remaining: he needed to have joint authority with Kooger to move the €100m. This was the sting, the culmination of months of gentle persuasion. Heerema and Kooger fell guilelessly into the trap. After failed attempts by Rejniak to wire the money to accounts held by Nobre’s company in Switzerland and Andorra, Heerema signed a notarised letter on November 2, 2011, authorising its transfer to a Barclays bank account in London. It was Nobre’s client account at Notable Services, the law firm that had advised him on property. Suddenly, the fantasist who had assured everyone he was wealthy had €100m in his hands. Allseas’ cash immediately started to pour out of Barclays. In three days, Nobre made 40 transfers totalling €16m. He paid £555,000 to his own account at Metro Bank, €246,000 to his girlfriend for covering his bills, £405,000 to his “chief of staff”, £150,000 to a travel and security consultant, and $500,000 to Marek Rejniak. But Nobre was careless. The rapid outflow of money triggered an alert to Barclays’ money laundering arm, which froze the account and notified the Metropolitan Police. At first, Heerema backed Nobre. “Neither Allseas nor I believe we have been victims of crime,” he wrote to the police. Finally, three days before Christmas, the police produced Nobre’s list of payments and the truth dawned. “My fears had come true . . . ” Kooger said later. “I now knew we had been tricked.” Mike Stubbs does not look like a City lawyer. He has tousled ginger hair, going grey, and is rarely seen in a tie. He carries two phones, constantly buzzing with voicemails and texts. His burly figure is often found outside Mishcon de Reya’s gleaming headquarters on Kingsway,

smoking a cigarette. If he resembles a bouncer more than a solicitor, it is not wholly misleading: he spent his early twenties after graduating from the nearby London School of Economics in 1978 as a rock promoter, putting on gigs by bands such as Mud and Manfred Mann. Only when lying on a beach in Koh Samui, Thailand, at the age of 24, did he decide it was time to knuckle down. Even then, he did not choose a straightforward route. After qualifying as a solicitor, he specialised in insolvency, then an obscure and unglamorous aspect of law, because he became intrigued by the aftermath of corporate failure. “I’m a problem solver. Most of what I do is a bit left or right of centre,” he says of his role at Mishcon. “My job is to find a way through the maze [and] if money has been nicked, or hidden, or buried, you have to get out the shovel.” Stubbs found Heerema by chance: he was originally hired by Nobre to get the €100m released from the frozen Barclays account, with Allseas as a joint client. But after he realised there had been a fraud, he fired Nobre as a client and devoted his energies to recovering Allseas’ money and pursuing the culprits. It turned out to be well judged: not only was he suited to the task, but Heerema was deep-pocketed. Mishcon is not the average City firm. Founded by Victor Mishcon in 1937, it has many clients who are entrepreneurs, financiers and even oligarchs. “It’s business. But it’s personal,” is a Mishcon motto and it specialises not in preparing legal documents but disputes — fighting for clients in anything from libel and divorce cases to employment battles and frauds. It represented Gina Miller in her Article 50 challenge to the UK government over Brexit. The firm quickly unleashed a barrage of retaliation against the fraudsters. Stubbs started off with one of his well-worn tactics: putting Nobre’s own company Larn into administration. Larn owed Allseas €12m — the money spent by Nobre and not recovered — giving Allseas a right to appoint Mark Levy of the accounting firm Berley as administrator, and later its liquidator. It sounds mundane but administrators have draconian powers under the Insolvency Continued on page 8

THE STAR BUSINESSWEEK

JULY 28, 2018

WWW.STLUCIASTAR.COM

THE BIG READ: WHITE COLLAR CRIME

THE SHIP TYCOON, THE CON MEN AND A €100M SCAM Continued from page 7

Act: they can search files and summon witnesses to uncover assets. Levy and Stubbs, now representing Larn as well as Allseas, used these powers to the full. They took 350,000 documents from Nobre’s laptop, filling 87 lever arch files. Some of it was fantasy — projects Nobre had dreamt up, such as setting up his own airline staffed by women — but there was a trove of material about the fraud. “Even after 25 years in this business, that computer made my hair curl,” Stubbs says. With Nobre refusing to co-operate, they took him to court nine times to make him answer questions before a judge and he was sent to Wandsworth prison for contempt over one bank holiday weekend. “It is a very unusual case because most [victims] will evaluate and say, ‘How much is it going to cost me and what will I get back?’” Levy says. “But that wasn’t [Allseas’] raison d’être: it was to make sure these people never do it again.” Mishcon obtained freezing injunctions in court against those it was targeting over the fraud, which among other effects forced Sultana to sell his house. It pursued most of those who had been paid by Nobre to get the money back, pushing some into bankruptcy. One of those was Fabian Redpath, who had innocently

Jail is the most potent form of sanction against a white-collar offender University professor Mark Button

“My job is to find a way through the maze [and] if money has been nicked, or hidden, or buried, you have to get out the shovel” - Mike Stubbs, partner at Mishcon de Reya © Charlie Bibby

taken a £105,000 consulting fee from Nobre, and could not repay it. “Little people like me [caught up] in a big affair, up against institutions that can afford to spend their lives in litigation, can get badly hurt,” Redpath says. This was only the start. Allseas sued Rejniak, Sultana and Nobre in the civil courts. It also sued the other men who participated in the fraud in Malta, the law firm Notable Services, which went into administration last year, and others including Othman Louanjli, a private banker who allegedly vouched for Nobre to Notable. Last October, the judge declared Louanjli’s former bank Liechtenstein Landesbank (Switzerland) vicariously liable for the Allseas loss and Stubbs expects Heerema to recover all of his €12m. Then it brought charges against Sultana. Private prosecutions are still in the minority but businesses, including banks, resort to them when public prosecutors do not take cases to court. More law firms now have criminal departments and one London firm is largely devoted to private prosecution. Mishcon’s

“Government should work with the private sector to bring fraudsters to justice” - Alison Levitt of Mishcon de Reya © Charlie Bibby

white-collar crime group, which deals with “the grey area where civil fraud, regulatory obligations and criminal investigation overlap”, is headed by Alison Levitt QC, former principal legal adviser to the director of public prosecutions. “I am a criminal practitioner and my clients are people who believe they have suffered a grave injustice,” says Levitt. She says frauds are expensive to investigate and there is always the risk of the jury not being sure that the defendant was dishonest. The government should work with the private sector to bring fraudsters to justice, she says, arguing that, with safeguards, companies and insurers could share the burden. Sitting in his Delft office, sipping a glass of tap water, Heerema recounts what he did after realising he could not name his ship after his father, as he had always wanted. The first person he called was Poulien Wolfswinkel, his former wife and mother of two of his seven children. The couple are divorced but remain close.

“I said, ‘Poulien, it’s all going wrong and I have to change the name of the ship.’ She said, ‘I understand.’ It really was a very nice moment.” He chokes up briefly and continues. “She’s very creative, she’s thought of the names of all our ships, and our advertisements, and everything. I travelled to the Netherlands overnight and came home, and she said, ‘I have the new name.’” At the glittering ceremony to mark the launch of Pioneering Spirit, a photograph of Pieter Schelte Heerema was projected behind a giant model of a heart, welded from steel. “Your soul will sail with this ship,” Edward Heerema declared, turning to the image of his father and bowing his head briefly. The new name has the same initials and, for him, the same meaning. On the day I visited Pioneering Spirit, the steps to board the ship were out of action and we were swung high over the sea in a capsule hung from a crane and deposited directly on to the deck. From high in the sky, the ship’s vastness was breathtaking. “It is the most comfortable ship I have ever been on,” says Fred Regtop, the ship’s master. He led me along the main deck, six football pitches in size, and through the decks. We passed canteens capable of serving 2,000 meals daily, and walked into freezers big enough for 50 tonnes of meat. We gazed at huge drums wound with thick steel cable, and descended into the depths, where its engines pulsated. Then, on the lower deck where the pipelines are welded before being passed out of the stern and laid on the ocean bed, we saw a familiar object. It was the steel heart from the ceremony, taken apart and fixed back together again, deep inside the ship. It felt like a symbol not only of love, but of determination never to give up. “He made no concession on his efforts to achieve a goal,” Heerema recalls of his father. He has plans for an even larger ship than Pioneering Spirit, to be called Amazing Grace. Some of the fraudsters who took his money are still at large. Heerema is not finished yet.

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