Is Andorra becoming the ‘Playground’ for successful fraudsters?
‘CRYSTAL CLEAR’ Glass stopper scam. Start-up secures €16 million from duped investors for wine and drinks glass stopper system, then never made a single product! When assets and shares are frozen by aggrieved investor, Vall Banc SAU in Andorra, advances €4 million loan on those frozen assets, bringing the Andorran banking system into question!!
Jumping from country to country, the Glass Stopper scam, as it is beginning to be known, weaves a web of intrigue and deceit, making it a true international fraud, begging the question, is Andorra becoming the playground for successful and serial fraudsters?
In 2015 a consortium of investors from Andorra invested in Luxembourg registered ‘start up’ glass manufacturing company ‘International Quiding Sarl’ (IQ), founded by Dutch businessman, Pieter Henderikus Langelaan, also a resident of Andorra.
Mr Langelaan and IQ took investment from several high-profile Andorran individuals, to the value of €16 million, to start the business and make the revolutionary glass stoppers for the wine and liquor industry. Predicting that by 2017 the company would be the world’s largest producer, manufacturing over 300 million glass stoppers a year, investors were impressed with the proposition.
Operating in various jurisdictions, bouncing around the globe, Mr Langelaan operates companies registered in Luxembourg, Malta, Andorra and Holland, has links with Australia, with news of similar investment shortcomings in Holland, Germany and France. Ironically the company that setup his intricate web of shell companies in Malta, the Andorran entity SOLV, did so through their partners E&S Investments Limited, a company that has been intervened by the Maltese Financial Authority (MFA) for money laundering and financial crimes following the assassination of a Maltese journalist, the investigation into a number of high profile businessmen and the resignation of the Prime Minister; all made very public in the international media. This is a true international story!
Feeling uncomfortable that IQ, now fully funded, had not produced a single product, one investor became suspicious, asking probing questions on how IQ was progressing, resulting in Mr Langelaan offering to buy back the shares from that investor. Both parties signed a ‘share repurchase agreement’ with Mr Langelaan agreeing to make the payment no later than 30th November 2016. To date, no payment has been received! In November 2017, to recover the €5 million owed, that aggrieved investor filed a lawsuit against Rihold Sarl, Langelaan’s holding company, in the Courts of Diekirch in Luxembourg, where Rihold Sarl was registered. The courts sentenced in favour of the investor, seizing all assets, shares and freezing bank accounts of Rihold Sarl.
In an act of shocking due diligence, on the 29th March 2018, 7,000 of shares in IQ were transferred to the Andorran banking entity, Vall Banc SAU* who granted a €4 million personal loan to Mr Langelaan. These shares are clearly stated as being FROZEN and SEIZED in the Commercial Registry of Companies of Luxembourg and demonstrates appalling and wholly inappropriate banking behaviour.
When challenged by the investor, Vall Banc SAU refused to comment. When the Andorran Financial Authority (AFA) was challenged, they stated, ‘they were unable to communicate with the investor, as he was not a client of the bank’! However, it was perfectly acceptable banking protocol for Vall Banc SAU to advance funds, secured by assets and shares, frozen by the courts, in favour of that same investor!! Again, a clear act of shocking banking protocol and due diligence!
Apathy and idleness of criminal cases lingering for years in the Courts of the Principality of Andorra, without sentencing is sadly becoming the norm! Following the case of Vall Banc SAU advancing €millions against fraudulent frozen shares and assets, Valora, an asset management company, who filed for voluntary bankruptcy back in January 2007 is another case. Responsible for the loss of over €22 million, investing in unauthorized derivative and futures strategies, Valora left over 400 investors, mainly Catalan citizens, losing all their savings.
One victim, a retired lady known as client number 1,289, invested in Valora with savings she had amassed over her entire working life, was unwilling to accept that the culprit and accused Xavier Felipó, the former President and CEO of Valora, was wandering free. It has now been 12 years since she started her legal battle through the Andorran courts, and to date is yet to be sentenced. This is not an isolated case, seeming that this and other criminal court cases are left to rot in the local archives of the judicial system in Andorra, either incapable or unwilling to act. This begs the question, “what is a reasonable duration for the right to a trial” as contemplated in Article 10 of the Andorran Magna Carta?! It seems the Andorran Courts, unlike any other Court in the world, can literally take as long as they want, with no set and obligatory timings on when decisions need to be taken.
This small Principality will have to start taking immediate action to be more diligent and measured if it is to attract new foreign investment. Nevertheless, Andorra must understand this will only happen when they are able to offer legal security and transparency, otherwise investors, being unprotected, will not invest.
With Andorra filing an application in February 2020, to become a full member of the International Monetary Fund (IMF), the need for stricter due diligence in the Principality is paramount. Regulator, AFA, must clean up their act and put pressure on banks to be more diligent in their lending, otherwise, future investors will not come to Andorra, whilst now it seems that only the fraudsters seem comfortable to exist in the Principality!
*Vall Banc is owned by J.C. Flowers & Co, and American private equity investment firm, founded by billionaire J. Christopher Flowers.