“FCA’s Investigation to Determine if Deals Such As African Land are a Collective Investment Scheme or Not, is Irrelevant. The Bigger Concern Is if it Might Be a Scam”

June 20, 2014
Source
REDD Monitor

African Land Ltd had a simple offer: Invest in “low-cost, high potential” farmland in Sierra Leone. “We Harvest – You Profit” was the headline of one of the company’s brochures.

 But large numbers of investors are unhappy, including several who handed over their life savings to African Land. In July 2013, the Financial Conduct Authority started a legal case against African Land and their promoters, Capital Alternatives, and other companies. (The full list is available here.) The companies were accused of running a collective investment scheme, without FCA authorisation, and of providing false information and making misleading statements to investors.

In February 2014 in the High Court, Judge Nicolas Strauss QC ruled that African Land and Capital Alternatives were indeed operating a collective investment scheme. Some of the defendants saw their assets frozen and they were barred from promoting their schemes.

A new report by the Oakland Institute investigates African Land’s farmland project in Sierra Leone and reveals that African Land is currently looking to secure investments from new investors, in breach of court orders. Oakland Institute’s report can be downloaded here. African Land also continued to promote its investment scheme via africanland.net and its Facebook page, after the High Court ruling.

In 2009, African Land took out a 50-year lease on Yoni Farms, an area of 1,214 hectares of land in south-west Sierra Leone. The investment scheme was promoted by a company called GreenWorld (BVI). The initials “BVI” stand for British Virgin Islands, the tax haven where the company wasregistered. GreenWorld (BVI)’s website has disappeared, but here’s an archived copy of the company pushing an investment in teak plantations. GreenWorld (BVI) looks a lot like a boiler room operation, as does Capital Alternatives, which promoted African Land’s “investment” until March 2013.

Capital Alternatives also promoted “investments” in another related company, Capital Carbon Credits, which offered carbon credits, including from two REDD projects, one in Brazil and one in Sierra Leone. From its “investment” schemes, Capital Alternatives managed to raise about £17 million, according to a summary of the FCA court case by Intelligent Partnership.

Oakland Institute’s report includes the stories of some of the people who invested in African Land’s farmland project in Sierra Leone. (Comments from several other investors follow this March 2014 post on REDD-Monitor.) One investor is a health care professional in England who has worked for 37 years for the National Health Service. She was promised 15% annual returns. Two-years later she has received one payment amounting to approximately 1% of her total investment. “Once you buy into its schemes, there is no available exit, contrary to what African Land states in its brochure and sales pitch,” she told the Oakland Institute.

On the FCA legal case, she said,

“I am glad that the FCA is looking into this, but whether this is a collective investment [CSI] or not, is a small part of the story. It is pertinent that the FCA and courts look at other issues, as well. African Land had a lease for 3,000 acres, but I believe that 50% of the land I bought did not exist and of the 50% that may exist, African Land was forbidden by the terms of its original lease to sublet any of that land. I, therefore, legally had no land at all, after investing the resources meant for my retirement.”

 

As well as failing to provide investors with returns, African Land is not benefiting the local community in Sierra Leone. The Oakland Institute interviewed Paramount Chief Joseph T Kposowa III. He told them that,

“The local community is not getting any benefits from African Land Ltd farm. Few people were employed and now even that number has been reduced. There is no manager. Local employees have not been paid and have difficulty in getting their wages. No free rice has been distributed to the local villagers. African Land dont do anything for the community.”

 

Kristan Gander, a senior investment broker at Capital Alternatives, persuaded another investor to buy carbon credits from Brazil. The investor was promised a 100% return within two years and “an opportunity to save the planet”. He also invested in African Land’s Sierra Leone farmland project.

In 2012, he visited the Yoni Farm project area and found that much of the land was still scrubland. African Land employees told him there would be a rice harvest in 2012. He has still not received any money from his “investment”.

He told the Oakland Institute that he had “many unanswered questions, although the FCA court case answered some. For instance, African Land sold more land than it leased.”

Regarding the FCA’s court case, he said,

“FCA’s investigation to determine if deals such as African Land are a collective investment scheme or not, is irrelevant. The bigger concern is if it might be a scam.”