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HomeFeaturedDiverting $21m+ Donor Funds Into Personal Use Fraudster Investor In Police Net

Diverting $21m+ Donor Funds Into Personal Use Fraudster Investor In Police Net

Diverting $21m+ Donor Funds Into Personal Use Fraudster Investor In Police Net

Robert McKendrick, a British national, is currently in custody over a 16.9 million pounds donor fraud relating to 3,000 acres of land in Bo. According to allegation, the convicted fraudster and his group fleeced thousands of land owners in Bo with the impression of investing in rice farming. After getting the poor Sierra Leoneans including women and aged in surrendering their plots of land amounting to thousands of acres, our investigations furthered, Evil Robert and his gang left Sierra Leone to seek funding for the purported project. While in Europe, he succeeded in raising 16.9 million pounds from various donor organizations for the said project.

While our poor farmers endlessly wait for their lives to be improved by the purported 50 years or more investment, Robert and his criminal gang went for a flamboyant lifestyle leaving our Sierra Leonean compatriots in abject poverty.

With the money been diverted into another but selfish and personal use, In February 2014, the FCA took eight people and eight entities related to the Capital network to court, charged with deliberately constructing Ponzi schemes around land leasing, rice farming, and carbon credits, all of which were designed to elude Britain’s collective investment regulations. The persons included Haddow, Hargous, and McKendrick; the companies included Capital Alternatives, Capital Secretarial, Capital Organization, and African Land, among others.

The FCA won the court case—the judge’s ruling that the schemes were collective investment schemes (CIS) and could not be lawfully operated by the companies and persons in questions. At stake was the known investment of more than 2,000 people, primarily pensioners, who had injected $26.5 million into Capital Organization, responsible for the overall organization of the Capital companies.

The court case, pertaining to the question of civil rather than criminal charges, did not look at the question of whether the schemes were fabricated. But some details alluded to just that. “The African Land scheme concerns a rice farm called Yoni Farm…Investors buy sub-leases of plots of land at the farm, on the basis that they will receive the profit from the sale of the rice cultivated on the plot sub-leased to them. This scheme has been promoted since about November 2009 and, at the time the proceedings were brought, had attracted investment totaling some $12.5 million from some 1,160 investors…The overall position is that the purchasers of some 4,300 acres have so far received no return, and most of them still have no land allocated to them. The contributions of all the investors had been spent on general expenses or on the payments to the minority of investors who have received a return in 2012 and/or 2013.”

The court also found that “30 acres was irrigated and planted…producing a high yield for the fortunate owners of plots.” These owners were among those who invested large sums of money and were given tours of the farm by Gander and others. This effectively meant that investors had received certificates that had no reference value or land allocated; that just 30 acres had been cultivated; and that investors who were paid did not receive project returns but, like any good Ponzi scheme, received funds of other, later investors.

But it gets worse. The land could not even be subleased to investors. The document submitted by McKendrick to the court alleging subleasing was permissible and lawful was withdrawn by McKendrick’s own attorney. When reporter Silas Gbandia visited the Yoni Farm in late 2014, he learned that the document was fraudulent. In an interview with Gbandia, Paramount Chief Joseph Kposowa confirmed that the document, which was neither stamped nor dated, and was not registered in the OARG, was neither ratified nor valid. Abdul Karimu, chairman of the Landowners, confirmed they had not entered into a subleasing agreement. Both names were listed on the document—along with thumb prints allegedly belonging to landowners. Documents registered at the OARG revealed the company was issued a certificate to operate in Sierra Leone on September 12, 2011, almost two years after signing the lease agreement to cultivate 3,036 acres.

Internal documents revealed that McKendrick and Haj Fawaz, a Sierra Leone-based businessman, created Agri Capital Sierra Leone (ACSL) to carry out farming operations. The U.K. entity, Agri Capital, would be responsible for investor-related activities. Initially, Agri Capital U.K.—described as a division of Haddow’s Capital Alternatives—was created from a dormant entity, Capital Advertising Ltd. In November 2011, the company was forced to change its name to African Land, following legal response from Agri Capital Corporation based in New York. One document, authored by a director, revealed that African Land U.K. was beneficially owned 50/50 by McKendrick and Haddow through unidentified “nominee companies”; 45 percent of the $13 million was “retained by McK and RH by way of investment arrangement fees,” via entities like McKendricks Rusalka. The FCA found that the brokerage fees remitted to Capital Alternatives in the range of 25 percent were “high” and “highly dubious.” When an FCA official tried to chart the flow of investor funds, he found they could not be properly traced.

In an interview, McKendrick claimed that both African Land and ACSL were loss-making companies; that Rusalka was nothing more than a family trust used for ‘tax reasons,’ and that the company was allowed to sublease. Fawaz was described by McKendrick as a “sleeping partner” who was never involved with the financing or the U.K. entity.

Fawaz—and other directors in statements in internal documents and correspondence—believed McKendrick used proceeds from African Land to finance his mining projects. Fawaz would later take African Land to court in Sierra Leone demanding repayment of over $70,000 in loans to the Yoni project, plus his share of the company’s profit as a 20 percent shareholder in ACSL.

Interviews with former staff at Yoni confirmed that Fawaz had financed the farm, providing equipment and other assistance. Yoni’s manager, Francis Kobba, interviewed in 2014, claimed that Fawaz’s true intentions were to take possession of the farm and its equipment. Fawaz, for his part, remained uninformed about the financial scamming of retirees.

The community appeared to receive an even worse deal. The promised clinic, scholarships, and other developments listed in the lease agreement were never provided. Lease payments were listed as one bushel of unmilled rice per acre annually, as well as job creation. None materialized, save for a water pump used by staff. According to the paramount chief, “Two years ago, they put over 600 acres under cultivation. They put fire to it, and the people came to me angry. The people saw the rice on fire. Even the land they had leased, they were not making proper use of it.” Kposowa also noted that the jobs provided were badly compensated, if at all.

“Don’t forget the community has been getting a lot of rice and wages,” McKendrick responded. “We are not into hand-outs. We expect successful communities to help themselves. The community has been paid thousands of pounds in wages and rice, yet they have not even dug themselves community latrines. The community got one bushel of rice per acre harvested. This had been paid in full, making the locals very happy.”

Charles Dimoh, a father of three who was never paid his wages, said, “my children are suffering and my wife is suffering as I have no money to send to them.” Another former employee, Solomon Sellu, told his story. “I left the company in June 2012 because I was not fairly treated. The company still owes me 2,450,000 Leones [the equivalent of $560]. They promised to rebuild the school, but they didn’t do it. They promised to build a health center but didn’t do it. They promised to construct the road from the main road to the farm but didn’t do it. When I brought that to their notice, they asked me to resign, and I did. This is my home, and the people of Yoni are my people.”

Other sources said that all the remaining workers were being laid off in mid-2014. Yet most investors believed African Land was worthy of investment primarily because it stood for local sustainable development in a country wrecked by over a decade of civil war. A new lease offered to investors in November 2013, during the FCA investigation, negotiated not long after the prior suspect sublease document was withdrawn, revealed that a permission-to-sublet document was finally authorized—on November 4, 2013. New clauses stated that all disputes were to be settled in Sierra Leone; that the company has the right to refuse visitors; that the bushel of rice as payment for use of land was now to be compensated by the investor, as well as prior compensation for subleasing.

An internal audit of African Land disclosed that McKendrick and Haddow had established another company of the same name, African Land, in the British Virgin Islands. Corroborated by court and other documents, this company was connected to the carbon credits scam, involving over 900 investors and more than $12.75 million in investor funds. This BVI entity signed a land lease for the carbon credit scheme. The scheme, however, was promoted under a seemingly independent entity called Capital Carbon Credits (CCC). When one investor—acquiring some 250 acres at $750 per acre, for a total of $188,000—inquired as to the land lease, discovering in the process that African Land, not CCC, was the legal party involved, McKendrick responded with a letter confirming that African Land, not CCS was the correct party. A new certificate was then issued under the name of African Land.

Once again, no sublease was legal. More ironically, the entirety of the land lease, dated September 15, 2012, was described as fraud by Paramount Chief, John Ngeveo, Section Chief Brima Kallon, and others in affidavits. Though the contract allegedly held their thumb prints as proof of ratification, the relevant parties claimed they had never heard of, or had any dealings with, let alone signed land away, to African Land, CCC, or any other entity. The brainchild behind CCC, on further digging, did not appear to be McKendrick. Deborah King, whose company provided incorporation services and who was initially a director at CCC, was asked to list the name of Mark Eyres (in fact, Heavers) as sole director, even though no ‘Mark Eyres’ actually existed. According to a source close to the corporations, the name was provided to her by Haddow and Hargous.

Like Agri Firma and PAM, CCC never had a bank account. In its early formation, all CCC shares were owned by SME Capital, a company belonging to Haddow. Heavers, a disqualified director, claimed that it was all managed by African Land, and he was simply paid $1,500 per month to act as a front man. In an e-mail to the author, Heavers claimed that he was not central, played no part in the organization or set up of the companies, and had no control of bank accounts or funds. Like Agri Firma, PAM and myriad others, CCC’s physical address was listed as 124 New Bond Street.

Catch and release

For the Capital Organization, the rice farm played a critical role in the run up to palm oil.

According to one director, Haddow realized that many potential investors were reluctant to bankroll the rice farm because they were worried about how they could exit the deal—in other words, how could they be certain that somebody would buy their rice plots. Not that the organization ever had any interest in any such exit strategy. So to paper over this problem, the palm oil brochure gave confidence to investors by affirming that an investment fund domiciled in Anguilla had agreed to buy all of the palm oil plots that investors had traded in their rice paddies to purchase for the price that investors had paid plus a 50 percent profit. Sounds too good to be true? It was.

The scheme worked well, creating a market for the 1,000 or more African Land investors who would be offered the swap into PAM and other commodities. Possibly the only time Capital brokers like Kennedy spoke honestly to clients was when he told them, “You don’t have a choice.” It was swap or drop.

Sanctions on tax havens where fraudulent economic activity does takes place would be possible through automatic exchange of information, disclosure of beneficial owners, and corporate country-by-country reporting, revealing details of a company’s names, jurisdictions, employees, assets, intra-company trades, and key issues such as where it operates, where it pays tax, and where it generates profits. For regulators to catch the crooks, rather than periodically catch up with and then lose them, accountability must meet transparency, and both must be armed with political will. Unfortunately, the role of the United Kingdom in maintaining rather than combatting financial opacity speaks volumes in political will—to those of Haddow’s ilk.

By Ibrahim Alusine Kamara

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