[Tvind in China]     [Yunnan Institute of Development]     [IEC]

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Berlingske Tidende, Denmark, 28th April 2000

By Christian Jensen and Michael Bjerre

Tvind-controlled business conglomerate in China withdraws application for government loan.  Fund under Ministry of development admits mistake and tightens procedures.

The Investment fund IFU controlled by the Ministry of Development admits that the investigations it carried out in connection with the approval of a million-DKK loan to a Tvind-owned furniture factory in Shanghai were unsatisfactory. This is why the fund decided yesterday that it is going to tighten up its approval (procedures) when it comes to selecting new Danish businesses as partners.

This has happens after Berlingske Tidende, through a series of articles has revealed that the IFU board had approved a loan amounting to millions of crowns to a business conglomerate, without knowing that the conglomerate was being controlled by Tvinds economic elite by way of a tax shelter on Britains Isle of Man.

Under pressure from Minister of Development Jan Trjborg (Social Democrat), the board decided to temporarily pause the loan process so that the case could be fully investigated. (As part of the investigation) the IFU posed a number of questions regarding The Trayton Groups bookkeeping and ownership to the president of the Trayton Group, 33 year-old Tomas Lichtenberg. Lichtenberg, however, chose not to answer the questions, instead he faxed a letter to the IFU in which he announced that the company was withdrawing its application for the government loan.

It was only yesterday that IFU chairman, Sven Riskr announced to the board that Trayton had withdrawn its loan application. He says: One could say that we havent done our jobs well enough. That is why we have decided that (similar applications) will be much more closely investigated in the future.

Tvind: Nothing is so bad it isnt good for something

Berlingske Tidende, Denmark, 28th  April 2000

REPORTAGE ABOUT WHAT HAPPENED FROM THE FIRST DAY WE
WROTE ABOUT TVIND IN CHINA AND HOW IT WENT IN THE END.

IFU, a Ministry of Development fund has had its reputation damaged by approving a government loan to a business without knowing that it was controlled by Tvind. But the fund was spared having to make a decision on this potentially explosive case because the president of the business withdrew his loan application.

Illustration:
This is the Chinese furniture factory, owned by the Trayton business conglomerate, that was supposed to receive government funds for an expansion. But Trayton (has turned out to be) a part of Tvind, and now the
loan has been stopped.

For Tvind, keeping ownership and bookkeeping information secret is more important than a loan amounting to millions of DKK. Even in the case of a
new investor that was ready to give out a government loan with some very attractive (terms and conditions).

This is the conclusion that can be drawn from the recent case involving the IFU fund approving a loan to the Trayton group in China - without knowing that Tvind was behind (the business).

It came as a great surprise to the third world development fund, when last month, Berlingske Tidende uncovered the financial background of (The Trayton Group) through a series of articles.

Among other things, Berlingske Tidende could describe how Tvind controls the business conglomerate through a holding company based on the Isle of Man.

At this point the fund was just finalising an agreement to give out the (above-mentioned) loan to its new China-based business partner. But after
pressure from the Minister of Development, the fund froze the loan process and initiated a thorough investigation into The Trayton Groups bookkeeping and
ownership.

At first, Tomas Lichtenberg, president of Trayton and a long-time member of the Tvind Teachers Group, agreed to answer any new questions (that the IFU had.)

But when it came some questions regarding ownership of Trayton and its bookkeeping, questions that the IFU regarded as necessary to maintain the agreed loan agreement, Simon Lichtenberg was silent.

In light of this, on February 21st a fax arrived at the IFU headquarters on Bremerholm in Copenhagen. Instead of answering the questions posed by the IFU, Lichtenberg just announced that Trayton hereby withdrew its application for an IFU loan.

So the announcement was received by IFU chairman, Sven Riskr only six days before the board was to deliver its decision on the loan. Yesterday, Sven Riskr presented the board with the unusual turn of events that had ended the case. There is no doubt that the IFU was relieved by Lichtenbergs sudden withdrawal of the application, as this meant that the fund did not have to make a decision in the potentially politically volatile case.

Because the IFU would have been wide open to criticism from (across the political spectrum.)

If the fund had approved the loan, it would certainly have faced some very angry politicians claiming that the government was subsidising Tvind once again just a few years after the government withdrew Tvinds education subsidies.

If on the other hand the fund had refused the loan applications other politicians could have claimed that the IFU was somehow out to get Tvind, as the loan had indeed been approved before Tvinds involvement became known.

Certainly, the IFU been under immense pressure from Christiansborg (parliament) during the case. A short time ago Development Minister Jan Trjborg made it clear that the government did not wish to support the
Tvind group in (any way). He added however, that it was of course only up to the IFU board to make the right (final) decision.

Other parties, particularly Venstre (Liberals) were even louder after Berligskes investigations and demanded that the loan (negotiations) be stopped immediately.

In the end, Simon Lichtenberg himself made sure that the IFU came out of the case relatively undamaged. Its reputation, however did receive a few dents because the funds employees had not been able to make the connection (between Trayton and Tvind) during their investigations, (resulting in the fund being days away) from putting millions of DKK (into Tvind).

It is in light of this that Sven Riskr yesterday announced his plans for tightening up IFU partner selection procedures to the board.

Chairman Riskr admits that the investigations preceding the Trayton loan approval were not sufficient.

One could say that we havent done our jobs well enough, he says.

Riskr claims that the Trayton case was unusual. Normally the fund has been involved in the projects from their beginning. This wasnt the case with
Traytons furniture factory that had opened last year and that was now simply expanding its production facilities.

In the case of projects that have not already started, we have clear guidelines for our investigations. A thorough analysis of the financial structure and leadership of the partner (is carried out).

It is about having faith in your partner,  but in cases where projects have already been established our main has been ensuring that everything was working properly, therefore our investigations were less detailed

Sven Riskr does not wish to comment on whether the IFU feels that it has been duped by Trayton and Simon Lichtenberg who has denied all economic connections (between Trayton and Tvind) to the IFU.

Actually, we dont have any further comments on the case in question. Now we just need to tighten up our procedures so that they will improve in the areas where they havent been satisfactory

[Back to main Berlinsgke Tidende article]

It came as a great surprise to the third world development fund, when last month, Berlingske Tidende uncovered the financial background of (The Trayton Group) through a series of articles.

Among other things, Berlingske Tidende could describe how Tvind controls the business conglomerate through a holding company based on the Isle of Man.

At this point the fund was just finalising an agreement to give out the (above-mentioned) loan to its new China-based business partner. But after
pressure from the Minister of Development, the fund froze the loan process and initiated a thorough investigation into The Trayton Groups bookkeeping and
ownership.

At first, Tomas Lichtenberg, president of Trayton and a long-time member of the Tvind Teachers Group, agreed to answer any new questions (that the IFU had.)

But when it came some questions regarding ownership of Trayton and its bookkeeping, questions that the IFU regarded as necessary to maintain the agreed loan agreement, Simon Lichtenberg was silent.

In light of this, on February 21st a fax arrived at the IFU headquarters on Bremerholm in Copenhagen. Instead of answering the questions posed by the IFU, Lichtenberg just announced that Trayton hereby withdrew its application for an IFU loan.

So the announcement was received by IFU chairman, Sven Riskr only six days before the board was to deliver its decision on the loan. Yesterday, Sven Riskr presented the board with the unusual turn of events that had ended the case. There is no doubt that the IFU was relieved by Lichtenbergs sudden withdrawal of the application, as this meant that the fund did not have to make a decision in the potentially politically volatile case.

Because the IFU would have been wide open to criticism from (across the political spectrum.)

If the fund had approved the loan, it would certainly have faced some very angry politicians claiming that the government was subsidising Tvind once again just a few years after the government withdrew Tvinds education subsidies.

If on the other hand the fund had refused the loan applications other politicians could have claimed that the IFU was somehow out to get Tvind, as the loan had indeed been approved before Tvinds involvement became known.

Certainly, the IFU been under immense pressure from Christiansborg (parliament) during the case. A short time ago Development Minister Jan Trjborg made it clear that the government did not wish to support the
Tvind group in (any way). He added however, that it was of course only up to the IFU board to make the right (final) decision.

Other parties, particularly Venstre (Liberals) were even louder after Berligskes investigations and demanded that the loan (negotiations) be stopped immediately.

In the end, Simon Lichtenberg himself made sure that the IFU came out of the case relatively undamaged. Its reputation, however did receive a few dents because the funds employees had not been able to make the connection (between Trayton and Tvind) during their investigations, (resulting in the fund being days away) from putting millions of DKK (into Tvind).

It is in light of this that Sven Riskr yesterday announced his plans for tightening up IFU partner selection procedures to the board.

Chairman Riskr admits that the investigations preceding the Trayton loan approval were not sufficient.

One could say that we havent done our jobs well enough, he says.

Riskr claims that the Trayton case was unusual. Normally the fund has been involved in the projects from their beginning. This wasnt the case with
Traytons furniture factory that had opened last year and that was now simply expanding its production facilities.

In the case of projects that have not already started, we have clear guidelines for our investigations. A thorough analysis of the financial structure and leadership of the partner (is carried out).

It is about having faith in your partner,  but in cases where projects have already been established our main has been ensuring that everything was working properly, therefore our investigations were less detailed

Sven Riskr does not wish to comment on whether the IFU feels that it has been duped by Trayton and Simon Lichtenberg who has denied all economic connections (between Trayton and Tvind) to the IFU.

Actually, we dont have any further comments on the case in question. Now we just need to tighten up our procedures so that they will improve in the areas where they havent been satisfactory

[Back to main Berlinsgke Tidende article]