EcoPlanet Bamboo’s investors were “significantly let down”

By Chris Lang

EcoPlanet Bamboo is a US-based company that has established bamboo plantations in Nicaragua, South Africa and Ghana. Here’s how the company describes itself on its website:

EcoPlanet Bamboo is an innovative forestry company focused on integrated bamboo plantations and associated processing. We focus on the provision of a secure and certified source of fiber for timber manufacturing industries and markets globally. We currently operate in Central America, Southern and West Africa.

Sustainability award

In 2013, EcoPlanet Bamboo won the IAIR Sustainability Award. IAIR stands for International Alternative Investment Review. IAIR describes itself as “One of the world’s leading ranking and prize for excellences in global economy and sustainability”. IAIR tells us that EcoPlanet Bamboo won the award,

“For its leadership as a global developer of commercial bamboo plantations, always following sustainable environmental and social development. Reducing emissions from deforestation and creating job for third-world communities, it has been able to reach important financial rewards, becoming a true example of conscious capitalism.”

The photograph above is Troy Wiseman, CEO and co-founder of EcoPlanet Bamboo, looking very pleased with himself and holding the IAIR Sustainability Award.

Plantations sold off

Also in 2013, a company called Eco Resources Fund bought EcoPlanet Bamboo’s Rio Kama plantation in Nicaragua. Here’s how EcoPlanet Bamboo describes that transaction on its website:

In late 2013 the Isle of Man based Eco Resources Fund, managed by the Premier Group, purchased the Rio Kama plantation, and as part of this transaction the 285 holders of Bamboo Bonds – a 2012 investment offering by Property Frontiers – received Fund shares and the Bamboo Bond was dissolved.

(As an aside, that post on EcoPlanet Bamboo’s website is dated 6 January 2016. Yet it includes a link to a website – bamboobond.co.uk – that was only registered on 5 November 2016.)

Eco Resources Fund is mentioned only twice on EcoPlanet Bamboo’s website. Here’s the other mention, from EcoPlanet Bamboo’s January 2013 newsletter:

2012 has seen EcoPlanet Bamboo become the largest commercial bamboo plantation entity outside of China, and our expansion has moved into a new phase. Planting of a 2013 500 acres of a 3,500 acre expansion in Central America (Nicaragua) has been completed. This latest expansion is in partnership with Premier Group, the Isle of Man based Fund manager of publicly traded Eco Resources Fund (ERF). EcoPlanet Bamboo has agreed to an initial $20 million long term debt package from ERF and has been extremely pleased with this partnership.

So, Eco Resouces Fund bought one of EcoPlanet Bamboo’s plantations, resulting in the end of EcoPlanet’s Bamboo Bond. The same Eco Resources Fund apparently lent EcoPlanet Bamboo US$20 million.

Earlier this month, CW Consulting published an interim report about the Eco Resources Fund. CW Consulting is the provisional liquidator and deemed official receiver of Eco Resources Fund. The report includes extracts from CW Consulting’s previous reports as adviser and controller of Eco Resources Fund.

Financial difficulties

In August 2016, CW Consulting wrote a report as controller of Eco Resources Fund for the Isle of Man Financial Services Authority. Here are some extracts from the report:

It is apparent to us that the three principal companies involved, the Fund [Eco Resources Fund], ERF [ERF Limited] and EBIOM [Eco Planet Bamboo IOM Ltd] have been in financial difficulties for well over a year. They are all, in our considered view, insolvent and most likely have been insolvent for some time.

EBIOM’s inability to meet the plantation expenses led to the introduction of the money from SAL [Sustainable Asset Lending LLC] from July 2015. That effectively kept things going whilst longer term options were sought.

The financial difficulties can, in our view, be directly attributed to the decisions taken early in the life of this structure, in particular to give special redemption terms to the shareholder vehicles linked to Mr. Wiseman which saw them redeem over half their shares in cash.

CW Consulting states in its report that, “Overall we feel that the investors have been significantly let down.”

Financial failure

In November 2016, CW Consulting wrote another report as adviser to Eco Resources Fund. This report concluded that the Fund’s financial failure was mainly a result of the following:

• a collective failure to objectively manage the plantation assets due to a combination of over reliance on Eco Bamboo Group and Mr Wiseman, to Mr Wiseman’s degree of control over EBIOM and failures to avoid conflicts of interest,
• an overly complex structure with a catastrophic mismatch between liquidity terms offered to investors versus the liquidity associated with the underlying asset class,
• restrictions on information flows and their subsequent impact on objective decision making, financial mismanagement, in particular the consequences of the redemptions paid to Eco Bamboo Group.

These failures were then compounded by Mr Richardson and Mr Wiseman becoming personally invested in SAL and the resultant conflict of interest which that caused them both.

Wiseman’s conflicts of interest

In August 2016, Eco Resources Fund produced a document aimed at getting new investment into the EcoEarth Resources Sterling Sub-Fund.

A Supplementary Memorandum to this document includes a list of Troy Wiseman’s conflicts of interest:

(i) through a private trust holds 50% ownership of Wiseman Private Equity Fund, which owns the voting stock/units of EBG [EcoPlanet Bamboo Group], with which EBIOM [Eco Planet Bamboo IOM Ltd] has contractual arrangements and to which EBIOM has payment obligations;

(ii) has a controlling interest (through EBG) in EB PM [EcoPlanet Bamboo Plantation Management] and EBSAPM [EcoPlanet Bamboo South Africa Plantation Management], with each of which EBIOM has contractual arrangements and to which EBIOM has payment obligations;

(iii) is the owner and controller (through EBG) of EBCA [EcoPlanet Bamboo Central America LLC], which holds Shares in the Fund [Eco Resources Fund];

(iv) is the owner and controller (through EBG) of EcoPlanet Bamboo Southern Africa, LLC, which holds Shares in the Fund;

(v) is the owner and controller (through EBG) of EcoPlanet Bamboo UK, which owns EcoPlanet CA II, LLC, which holds Shares in the Fund;

(vi) is the owner and controller (through EBG) of ECM [EcoPlanet Capital Management LLC], which is the manager of EBCA IV [EcoPlanet Bamboo CA IV LLC] and EBSA II [EcoPlanet Bamboo SA II LLC];

(vii) through Dixieland Partners, LLC, has an indirect investment in SAL [Sustainable Asset Lending], which entered into secured bridge loan and security arrangements with EBCA IV and EBSA II, which was signed by Troy Wiseman for ECM on behalf of EBCA IV and EBSA II;

(viii) is a director of EBIOM; and

(ix) is entitled to receive remuneration of £12,500 per annum for acting as a director of EBIOM.

Sustainable Asset Lending

Sustainable Asset Lending LLC is a company registered in Delaware on 27 May 2015. According to the Supplementary Memorandum, Sustainable Asset Lending lent US$6.3 million to EBCA IV and EBSA II at a rate of 18% per annum. The loans were to be repaid in full by 31 December 2016.

The Supplementary Memorandum explains that Sustainable Asset Lending is managed by Sustainable Capital Management, LLC and is a Special Purpose Vehicle set up by Dixieland Partners, LLC and Paul Feldman.

Sustainable Capital Management is a Delaware based company. It was registered on the same day as Sustainable Asset Lending. Both companies are registered at 1209 North Orange Street in Wilmington, an address they share with more than 285,000 other companies, including Apple, American Airlines, Coca-Cola, and Walmart, all making use of Delaware’s tax loophole.

Paul Feldman is an investor in Eco Resources Fund. Michael Richardson and Meryl Thomas, director and secretary respectively of Eco Planet Bamboo IOM Ltd, are investors in Sustainable Assets Lending.

Eco Resources Fund’s August 2016 document includes the following statement:

The funds borrowed by EBCA IV and EBSA II from SAL have been used to settle obligations of EBIOM to make payments to EB PM, EBSAPM and EBG, which are companies ultimately owned by EBG and controlled indirectly by Troy Wiseman as manager.

In January 2017, Gordon Wilson of CW Consulting met with Troy Wiseman in London. Wiseman told Wilson that Sustainable Asset Lending had foreclosed on the loans to the plantation companies (EcoPlanet Bamboo CA IV LLC and EcoPlanet Bamboo SA II LLC). Wilson asked Wiseman “to provide evidence that the foreclosure had occurred, details as to who had done what, who knew what and when this had all happened”.

Since that meeting, according to CW Consulting’s April 2017 report, neither Wiseman nor Sustainable Asset Lending has provided any information to explain what happened.