EGA

From Timber Investments Wiki

1 History of Euro Greenmix A (EGA)
- 1.1 The Hugo Krop formula
- 1.2 Hugo Krop convicted
2 Contacting EGA

[edit] History of Euro Greenmix A (EGA)

EGA (short for Participantenvereniging Euro Greenmix A, Association of Participants in Euro Greenmix A) was founded on June 2, 1995 by mr. H.K. Krop, a developer of forestry projects. The investment product provider was called Euro Greenmix Fund BV at the time. EGA was one in a row of foundations (EGB, EGC, EGD, etc.) which was supposed to protect the interests of the investors in the projects of mr. Krop.

A lot has gone wrong at the projects of mr. Krop. After that participants complained about a failing management by mr. Krop, in 1999, EGA's Algemene Ledenvergadering (General Assembly) appointed a board from the members (participants) consisting of Remo Strijker, Sjang Fijen and Henk Arnold.

EGA's new board presented a salvation plan to the 2000 General Assembly. The viable parts of the investment were a plantation of mainly young teak in El Cóbano (Costa Rica and a young walnut plantation in Tehov (Czech Republic). Dubious assets were "plantations" (in reality unmanaged reforestation projects of 1985) with half-grown laurel trees in Costa Rica and a plantation of young walnut trees in Psare Czech Republic). To salvage the parts which offered perspective, contributions had to be raised from the members for lease and maintenance; this contribution was settled by circa 85% of the members. When, in May 2001, mister Krop demanded an extremely high lease for the El Cóbano plantation on basis of a lease contract, a critical situation emerged again: under these conditions, EGA would still have to give up its young teak trees. After eight months of fighting, the danger was averted May 2002 by buying the soil under the EGA trees against a price that approximated the market prices of then. In 2001 and 2002 it became apparent that the dubious parts of the EGA-investments had to be written off definitely. The young teak trees at El Cóbano have outgrown the critical phase since 2003; the maintenance backlog has been overcome and the management is structurally in hands of knowledgeable parties on the basis of healthy contracts. In 2005 the other asset that had been believed viable, a plantation of young walnut trees at Tehov (Czech Republic) had to be written off, as studies proved that this project had been set up under totally wrong conditions and was lacking any future. As a result, the young teak at El Cóbano is EGA's only remaining possession.

[edit] The Hugo Krop formula

The formula which mr. Krop offered his investors in 1995 can be thus summarized:

A one time investment of NLG 36,000 per participation
investment of the money in (a) young teak and young laurel on El Cóbano, (b) almost grown laurel trees elsewhere in Costa Rica and (c) young walnut trees in the Czech Republic.
maintenance and lease for the plantations the first 6 years on account of the project developer
after 6 years (in 2001), extraction of the grown laurel trees, with a yield estimated by professional advisors of mister Krop at circa NLG 19 million.
to found, from the profits of the laurel trees in 2001, a fund from which the lease and maintenance of the plantation for the remaining term of the projects would be payed
also from the yield of the laurel trees in 2001, make a payment to the participants of an amount greater than their initial investment
considerate yield from the thinning throughout the years
a big final yield after circa 16 years
an expected total return on the investment of over 24%

All this was based on partly correct and partly incorrect reports by forestry engineers and was brought into the Dutch national press by means of colorful ads which featured the warm recommendation of a broadly smiling Willem Duys.

Because the grown laurel could not be harvested profitably and The EGA board which was formed in the fall of 1999 and which had received the contracts and administration from the hands of mister Krop in May 2000, soon realized that the situation was more alarming than what was feared in 1999 and formulated the salvation plan mentioned above.

In 2003 it was already established by Sicirec that the healthy parts of the investment florish. Sicirec thought that, at the end of the term, the EGA investors could expect to win back not only their invested money (their initial investment of 1995/96 plus the contributions through the years), but also a (modest) profit. The present EGA board makes no predictions as to the financial outcome.

The current EGA board has four members:

Sjang Fijen, president
Henk Arnold, treasurer
Hans Slooter, secretary
Gé Bekker, member

Former president (1999-2001) Remo Strijker assists the board as an advisor.

To avoid any misunderstanding, please note that in 2000, EGA has detached itself completely from its founder and no ties remain with mr. Krop or his company Euro Greenmix Fund BV (EGF).

[edit] Hugo Krop convicted

On December 17, 2004, the Amsterdam Criminal Court sentenced Hugo Krop to a prison term of 18 months (of which 6 were under parole) and a fine of EUR 100,000. The judges found mr. Krop guilty of:

breaking the Wet toezicht beleggingsinstellingen (Wtb) (Financial Institutions Supervision Act)
advertisement fraud
using a dubious quotation for laurel yield
income tax fraud in the period of 1995-1999

Shortly after his conviction, Mr. Krop took the case to the Amsterdam Court of Appeal, which on June 18, 2007 confirmed the earlier sentence exactly. The day after, Mr. Krop started a cassation procedure at the Hoge Raad (Netherlands Supreme Court). The outcome is expected sometime in 2009.

The website of the foundation of participants in Euro Greenmix A features a summary report of the court case.