SmartWood’s certificate for plantation outfit Prime Forestry Panama was suspended in May 2006, but SmartWood noted at the time that:
“From February 2003 to September 2005, SmartWood carried out 5 on-site audits of Prime Forestry Panama (August 2003, April and September 2004, March and Sept 2005). Through these audits PFP provided evidence that nonconformances were being addressed and demonstrated ongoing compliance with SmartWood and FSC certification requirements.”
However, far from being a sustainable forestry operation worthy of an FSC certifcate, it later transpires (see article below from Noriegaville) that the company is a front for a financial scam which has been banned from trading in some of the world’s major financial centres.
Switzerland Puts Sale of Panamanian Teak Trees on Hold23 04, by Okke OrnsteinPANAMA CITY/ZÜRICH – The Swiss banking regulators have placed Prime Forestry, a global teak plantation investment scheme operating from Zürich with plantations in Panama, under judicial supervision and started an investigation into its activities. The company, which has raked in about $60 million from investors over the years, can not move funds, has had to stop all sales activities and can not move other assets. The CEO has been forced to resign after previous securities frauds and ties with the Mafia had been exposed.The Swiss financial authorities are the last ones to act in a long line of financial regulators – Italy, the United Kingdom, France, Norway, New Zealand and Australia, among others – which have warned the public against Prime Forestry or simply outlawed its activities.Last February, the fraud squad of the Bermuda police warned citizens against Prime Forestry, calling them a “scam”.The Prime Forestry holding is headquartered in Switzerland where two floors of the Zürich Wirz-Tower are dedicated to aggressive boiler room style telesales of Panamanian teak trees. Prospects are sent glossy brochures and directed to the company’s sleek website. The company has a Panamanian wholly owned subsidiary, Prime Forestry S.A.Investors Buy Hot AirInvestors who part with their money after having been approached by the salesmen of Prime Forestry buy little more than a vague promise.They do not buy land, but the right to grow trees on land in Panama.This is a vague construction that no serious reforestation investor should ever consider and is normally not recommended by investment advisors or banks. Even so, Prime Forestry charges its clients far more – up to almost twice as much – per hectare than companies giving actual land ownership to investors.The projections on returns offered by the teak sellers are in itself enough reason to call the company a scam. For the first returns after 7 years they count for example with a growth per hectare of 15m3.This is outrageously optimistic and will most certainly not be met.But they continue with selling these cubic meters against prices that are only paid for first grade teak of at least 10 years old. And what really does it is that to make the promised returns, they’d have to sell ALL teak trees on the plantation after 7 years. Which of course leaves no trees behind to guarantee similar fantastic returns in subsequent years. And this was only the pessimistic scenario!Who are the Prime Foresters? The Mafia ConnectionSo who are the people behind Prime Forestry? The board of directors of the parent company in Switzerland is no less interesting than the activities in Panama. President is one Kurt Emil Meier, who in the eighties operated a penny stock scam in Europe called “Chartwell Securities.” According to Swiss financial magazine CASH and This is Money in the UK, Cartwell was a boiler room telesales scam that pumped dubious penny stock.Writes financial journalist Tony Hetherington (This is Money), who investigated Chartwell Securities at length:”A highly organised network of ‘boiler rooms’ in England, France, Spain, Germany, Switzerland and elsewhere used glossy brochures and high pressure phone calls to market shares in companies that existed only on paper.At the head of the scam was Tommy Quinn, a disbarred Brooklyn lawyer and an associate of the Genovese Mafia family. And his right-hand man? You guessed – Kurt E. Meier.To this day, nobody knows how much they made, but over about five years, investors lost about £1.1bn. Part of Quinn’s network was a corrupt broking firm in Zurich called Chartwell Securities, which had links to the shady side of the City of London.With 150 silver-tongued salesmen hitting the phones, Chartwell raked in £16.5m from 8,000 victims. And Meier was Chartwell’s president.”Quinn was eventually arrested in France, while Meier managed to get the case buried in the Swiss canton of Zug after having spent some time in prison himself as well. He then dabbled in gold, videotext and internet dating before discovering the possibilities of growing teak in a banana republic. Other principals of the Chartwell scam were recycled into the teak scheme as well.Publications by CASH in Switzerland about Meier’s murky past eventually triggered the Swiss investigations and Meier’s resignation.Outlawed everywhere, but endorsed by Panama’s governmentWhile financial regulators all over the world have acted against Prime Forestry and denounced it as a “scam,” the Panamanian government is deeply involved with the multi-million dollar teak scheme.First of all, according to the Public Registry, on the board of directors of the Panamanian subsidiary sits none less than Panama’s Minister of Agriculture, Guillermo Salazar – a flagrant conflict of interest that would already be serious even if Prime Forestry would be totally above board. Salazar has not answered questions about his involvement with the outlawed teak hustlers put before him by us.Then, prominently featured on Prime Forestry’s website and promotional material are Panama’s President Martin Torrijos and his wife Vivian, who visited the operations of Prime Forestry together with aforementioned Guillermo Salazar and the Minister for Public Buildings, Mr. Carlos Vallarino. The visit took place on February 4th of this year, long after financial regulators worldwide had issued fraud warnings or outlawed Prime Forestry’s activities. But that does not seem to have bothered Torrijos nor his wife, as the Prime Forestry website reports: “In particular, the President’s wife praised the 40% share of women working for Prime Forestry and the creation of jobs in plantation development and maintenance for Panama’s indigenous population.” There is no mention of investors who may have lost over $60 million altogether.Ironically, the Panamanian government only recently warned foreign investors about dubious investment companies and real estate sales. New legislation about land ownership was promoted stating that earlier teak swindles like that of infamous San Cristobal should be prevented in the future.Foreign investors, particularly those who are developing Panama’s tourism industry, are increasingly worried about the government not acting against frauds and even legitimizing dodgy investment schemes. Earlier this year, President Torrijos practically endorsed the activities of Petaquilla Mining, a highly questionable mining outfit – if not simply a pump-and-dump stock scheme – which is headed by a former governor of Coclé who is being prosecuted for stealing public funds. “It is not very reassuring or comforting when you invest substantial amounts of money in Panama to see the President himself in bed with shadowy figures,” said one entrepreneur on condition of anonymity.We asked the American Chamber of Commerce for a comment on this very issue, but have not received a reply.