Vestas fraud probe centres around 'ghost' Chinese turbine purchase

The allegations of fraud against former Vestas chief financial officer (CFO) Henrik Norremark centre around a mysterious attempt to buy wind turbines in India from Chinese competitors, Recharge understands.

Norremark is alleged to have a set up a top-secret project called “Project Dragon”, by which Vestas’ R&D department in India was to have set up a 100MW wind farm involving an unspecified number of Chinese machines.

Recharge understands that Vestas’ Contract Review Committee, which approves all turbine contracts over 10MW, was not informed of the deal, and nor was Vestas CEO Ditlev Engel.

R&D officials in India were sworn to secrecy by Norremark. Vestas says it only became aware of “Project Dragon” after Norremark was fired from the company in early February 2012.

Apparently, Vestas did not take delivery of any turbines, nor was any wind farm constructed, Recharge understands.

Engel has handed over his computer and all his emails to a PWC forensics team, and company officials stress that he has nothing to hide.

Vestas is now trying to recover payments of €18.9m ($24.5m), related to two different issues: two debt agreements of a total of €4.4m, from which Vestas’ “Indian cooperation partner was released by the CFO without Vestas’ management, the state-authorised public accountants or the company’s external lawyers subsequently being able to find any business-related explanation to this,” and an investment of €14.5m in a “potential project” in India.

Vestas’ board of directors decided to involve Denmark’s State Prosecutor for Serious Economic and International Crime (the Fraud Squad) in the case in December on the recommendation of its external lawyers, who, together with company auditors had carried out“a number of comprehensive joint investigations of the case, without being able to conclude what the money had been spent on,” Vestas said on Friday in a statement.

Since then “the Fraud Squad has carried out its preliminary investigations and has, as part of these, interviewed members of the Board of Directors, the Group President & CEO, several executives as well as a number of Vestas employees", the company says, and informed the former CFO that he will be “held responsible for the losses which the company may suffer due to his transactions”.

Vestas chairman Bert Nordberg said in Friday’s statement that the inquiry by the company’s auditors and lawyers proved that neither the board nor the group president and CEO have been involved in or have had any knowledge of the mentioned transactions”.

Norremark has denied all allegations of fraud through his lawyers.