Prosecutors in Berlin have launched a criminal investigation into Lars Windhorst, the financier whose ties were at the heart of the crisis in H2O Asset Management.
“The Berlin prosecution office is being investigated [Windhorst] due to the suspected violation of the German banking act, ”prosecutors told the Financial Times, adding that they acted after financial guard BaFin filed a criminal complaint.
BaFin declined to comment. People familiar with the matter say regulators are concerned about the activities of an investment vehicle called Evergreen Funding, which is owned by Windhorst.
In FT palisade in 2019 that H2O, a 17 billion-euro investment company, had poured the customer’s money into illicit bonds linked to Windhorst. French regulators last year frozen a series of funds to H2O on “valuation uncertainties” about its substantial bond yields.
Evergreen was created part of a plan conceived by Windhorst to repurchase H2O’s hard-to-sell assets. In June 2020, Evergreen released a € 1.25 billion bond, comforting investors with a strong annual interest rate of 12.5 percent.
However, the annual accounts of the Luxembourg-based vehicle for 2020 show that it gave loans at high interest rates of 272 million euros to Windhorst and that it held only 263.5 million euros of bonds in its balance sheet.
People familiar with the matter told FT that BaFin suspected that Evergreen could be engaged in banking activities such as taking deposits and lending without the necessary licenses.
Subsequently, BaFin froze Evergreen’s bank account in Germany and alerted criminal prosecutors in Berlin, where Tennor Holding of Windhorst has offices. Unlicensed banking is a criminal offense under German law and can be punishable by five years in prison.
“We are absolutely certain that there is no basis for the allegations since neither Evergreen Funding nor any of the group companies have engaged in regulated banking activities,” a Windhorst spokesman said, adding that all Evergreen obligations have been met. repayment including full interest.
He added that the loan listed in the accounts, which was initially granted to Tennor Holding and later transferred to Windhorst, was used to repurchase bonds.
Born to middle-class parents in the small town of Rahden in 1976, Windhorst shot to fame As an early teenage entrepreneur and has been hailed as a whim since then German Chancellor Helmut Kohl. But at the age of 34, Windhorst had resisted the collapse of two companies, personal bankruptcy and a suspended prison sentence.
Following that conviction in 2010 for “breach of trust”, the German financier moved to London and began entering a series of complicated financial transactions which involves illicit debt securities. Many of these things have resulted litigation, including billionaire Len Blavatnik and an investment vehicle linked to the former Minister of Energy of Russia.
Despite his legal problems, Windhorst continued his frantic pace of dealing, more importantly. buy a pole at the German football club Hertha Berlin in 2019. He recently did so joined on Twitter in an attempt to reject criticism, noting that “there are always things that have been reported about my company and me that I can’t and won’t leave uncommented.”
H2O still owns more than 1 billion euros of hard-to-sell assets linked to Windhorst and companies in its Tennor group. After the French regulator forced H2O to temporarily freeze its funds last fall, the asset manager seized the annoying securities in “side pockets” to the main funds, from which investors cannot redeem.
The fury caused the French bank Natixis abandoning its majority stake in H2O, cutting ties with a once highly profitable wealth management unit.
H2O declined to comment.