Don’t be fooled by an ethical label
In a memorable line from the 1980’s movie Wall Street, Michael Douglas, playing successful corporate raider Gordon Gekko, proclaims: “Greed is good”. Judging by the advertising industry today, it seems that the catchphrase has changed to “Green is good”.
So it’s no surprise to see that fundraising by Global Forestry Investments Limited leans heavily on just how green and ethical it would be for us all to put our savings into trees. According to managing director Andrew Skeene: “I wanted to do something where people could feel good about their money. Green businesses are the way forward.”
Skeene’s company says it grows teak, mahogany, balsa and acacia in countries such as Ecuador, Trinidad, Ethiopia and Brazil. It adds: “Our intention is not only to be sustainable but also to increase the volume of standing trees, thus making a positive impact on carbon offsetting.”
And, it seems, all this ethical investment will give you a far better profit than any bank account or building society, with “a 12% return per annum on your investment”.
However, investors tempted by the mouth-watering returns and the warm glow of a green scheme, would do well to ask one or two questions before signing on the dotted line.
For a start, Companies House has no record of Global Forestry Investment Limited. There is a business with this name, but it’s a plc not a limited company, it’s dormant, and it’s run by two directors who live in New Zealand, whereas Skeene is from south London.
Of course, Skeene’s company could be registered somewhere else in the world – Britain is not the only country to use the word ‘limited’ in company titles. But, in that case, investors should know which country’s laws apply to their investment.
Then there is the question of who controls the Global Forestry website that makes most of the claims about profit from timber. The website at globalforestryinvestments.com is owned by a completely different business called Positive Equity. This is a British company, run by Skeene.
In February 2009, Positive Equity came within a whisker of being struck off by officials at Companies House. It had failed to file accounts that were legally due as long ago as April 2008.
It had also failed to file details of who owned it. Documents were submitted just in time to save the company. But oddly for a business linked to such a profitable forestry firm, Skeene made use of an accounting exemption only granted to small companies.
Positive Equity is also behind another Skeene scheme called Middle East Investments. This offers a guaranteed yield of 30% on cash invested in property development in Dubai.
It’s not clear from the scheme’s sales brochure and paperwork exactly how this works. At one point it says that “the investment will be enacted through a Cayman Island company”, but elsewhere it announces that “the invCestment will be a syndicate”.
Either way, whether investors get shares in a Cayman company or a percentage stake in a syndicate, Middle East Investments should be authorised by the Financial Services Authority, covered by the Financial Services Compensation Scheme, and have access to the Financial Ombudsman to settle disputes.
Yet it ticks none of these boxes. The investment is unlicensed and unregulated. And that means it is also unsafe.
The general term for the rate of income from an investment expressed as an annual percentage and based on its current market value. For example, if a corporate bond or gilt originally sold at £100 par value with a coupon of 10% is bought for £100 then the coupon and the yield are the same at 10%, or £10. But if an investor buys the bond for £125, its coupon is still 10% (or £10) and the investor receives £10 but as the investor bought the bond for £125 (not £100) the yield on the investment is 8%.
If you’ve have a complaint about a financial service product you have bought but the company you bought it from refuses to resolve your problem after eight weeks, the Ombudsman can help. The Ombudsman will investigate and resolve the matter. The Ombudsman is independent and its service is free to consumers. The Ombudsman may find in the company’s favour but consumers don’t have accept its decision and are always free to go to court instead. But if they do accept an Ombudsman’s decision, it is binding both on them and on the business.
This is a mutual organisation owned by its members and not by shareholders. These societies offer a range of financial services but have historically concentrated on taking deposits from savers and lending the money to borrowers as mortgages, hence the name. In the mid-1990s many societies “demutualised” and became banks. One academic study (Heffernan, 2003) found demutualised societies’ pricing on deposits and mortgages was more favourable to shareholders than to customers, with the remaining mutual building societies offering consistently better rates. In 1900, there were 2,286 building societies in the UK; in 2011, there are just 51.