Vestas: Case concerning former CFO handed over to the Fraud Squad

In December last year, Vestas’ Board of Directors took steps to involve the State Prosecutor for Serious Economic and International Crime (the Fraud Squad) in the case regarding the former Chief Financial Officer’s (CFO), Henrik Nørremark’s financial transactions in relation to an Indian cooperation partner, ref. company announcement No. 36/2012 of 2 October 2012.

This took place at the recommendation of the company’s external lawyers as they together with Vestas’ auditors had had to complete a number of comprehensive joint investigations of the case, without being able to conclude what the money had been spent on.

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. At the same time, the Board of Directors has informed the former CFO that he will be held responsible for the losses which the company may suffer due to his transactions.

Overall, the case involves two matters:

Firstly, the dismissed former CFO has on his own entered into extensive agreements which have resulted in Vestas making provisions for EUR 18.9m in 2012 to cover possible losses in this connection.

The amount of EUR 18.9m concerns two actions:

1. two debt agreements of a total of EUR 4.4m, from which the 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
2. an investment of EUR 14.5m in a potential project in India.
   The management of the company in the Indian Group, to which the money was transferred (and which is group-related with the company that was released from the above-mentioned debt by the former CFO), has till now not been able, or willing to explain to Vestas which assets Vestas was supposed to have received in return for the transferred amount.

Secondly, by entering into these agreements the former CFO exceeded his powers as Group Executive significantly as he was not authorised to bind Vestas the way he did in these specific situations.

The investigations made by the external auditors and lawyers have proven that neither the Board of Directors nor the Group President & CEO have been involved in or have had any knowledge of the mentioned transactions.

Regarding the case, the chairman of the Board of Directors, Bert Nordberg, says:

“The Vestas Board wants to have all aspects of this case investigated and the missing money returned. We therefore first asked the company’s external lawyers and auditors to carry out a number of extensive investigations. These proved that neither the Board nor the Group President & CEO have been involved in or have had any knowledge of the mentioned transactions.

However, the investigations were completed without the lawyers or the auditors being able to find any further clarification of what the money was spent on. On this background, the Board requested the Fraud Squad to initiate an investigation and at the same time, we informed the former CFO that the Board intends to hold him responsible for the losses which the company may suffer due to his transactions.

The reason why we have not previously mentioned this development is merely out of consideration for the investigation,” says Bert Nordberg.