EcoHouse, the Brazilian social housing developer with more than 700 individual investors in Singapore alone, has suspended its global operations.
A statement dated November 3 signed by Chief Operations Officer Deen Bissessar, noted that: “It is with extreme regret that the EcoHouse Group has had to suspend operations worldwide due to the completely unexpected intervention of the federal police force in Natal, Brazil.
“This turn of events occurred within the last 72-hours and appears to have been the result of malicious, inaccurate and fanciful allegations made by both competitors of EcoHouse in Natal and disgruntled former land owners who have recently lost three court cases to EcoHouse Brazil (where they had sought to withhold transfer under binding legal contracts).”
Bissessar added that advanced negotiations were underway prior to the above events, which would have secured a substantial financial injection to enable EcoHouse to catch up on the construction process and to make good in due course investor returns.
“EcoHouse senior management is still working diligently on securing said finance and despite the negative press and media comments we remain optimistic.
Addressing his many investors, thought to number more than 2,000 around the world, he added:
“You will undoubtedly be aware that in any event EcoHouse had suffered severe delays due to many factors, which can be summarised as follows:
1) Substantial theft of construction materials by staff since dismissed;
2) Banking strikes and delays in competing transactions with end buyers;
3) Ongoing disputes with land owners under contract to transfer land to EcoHouse (EcoHouse has judgments against the same in course of being enforced);
4) The effect of the World Cup and Olympics affecting materials costs and construction salaries – broadly speaking there has been a substantial increase and financial incentives paid to construction workers to work on these construction sites gave birth to migration of staff – many of whom had received their training via EcoHouse;
5) Delay in the release and or failures to release Escrow funds;
6) Changes to plans and construction schedules due to town hall decisions.
Bissessar added: “As a result of the federal police action, EcoHouse’s Brazilian staff are now subject to judicial scrutiny and unable to function. The effect of this is that all construction activities have presently ceased.
“A revised timeline of the construction had been in the course of being agreed with building partners however, due to the above, we are not at this time able to give any revisions with certainty.
“EcoHouse will of course provide further updates as soon as possible after further review. EcoHouse and its CEO have engaged top criminal lawyers in Sao Paulo who after preliminary analysis, have taken the view that the allegations giving rise to the police action are unfounded and unsustainable.
“The nature of the judiciary system in Brazil is a ccusatorial and as such until the final trial settles matters there is little EcoHouse or its personnel can do.
“EcoHouse’s Brazilian lawyers are in the course of mounting challenges to the same, but due to the nature of the Brazilian judicial process it may take many months before they bear fruit.
“The CEO of EcoHouse worldwide, Anthony Armstrong Emery , added: “This is a personal attack on myself,m y family and the EcoHouse Group. Neither I, nor my lawyers believe there is any real substance to the allegations made, which are motivated by spite and by commercial competitors in Brazil.
“I will defend myself and the Group for the benefit of investors to the best of my ability.
“Top lawyers have been retained in Brazil for this purpose. I thank my staff and family together with many investors for their expressions of support at this difficult time.”
In order to protect the investors’ position insofar as possible it is being proposed to put EcoHouse
Developments Ltd. into administration (subject to no investor or creditor applying to wind it up in theinterim). The effect of administration would enable the administrator, assisted by EcoHouse’ management, to continue with the negotiations to refinance and complete the developments.
Realistically this is the only viable option to enable investors to receive their capital and return on
their investment.
The statement adds that it is understood, subject to evaluation, that the current asset base of the Brazilian operation exceeds some GBP33 million and the Brazilian companies are under binding contractual arrangements which enable the repatriation of those funds upon the realization of those assets to EcoHouse Developments Ltd. and to clients.
At present it is unclear as to whether the federal police action will block these arrangements and this is subject to legal investigation.
Finally, EcoHouse management wishes to let all of its global investors know that it is fighting hard to bring you better news and quickly. Being late with construction and subsequent payments has created a vicious circle of negative publicity and a lack of time to address concerns as well as we wish.
Bissessar concluded: “EcoHouse has always been a Brazilian construction firm with a global sales operation. There are some third-parties out there would have you believe that EcoHouse is not a legitimate business and is notgoing to fulfil its contractual obligations, that is simply not the case.
“Investors as always will remain a priority with the company and we very much look forward to delivering some very positive news to the world in the future.
Image: EcoHouse founder Anthony Armstrong-Emery addressing Singapore investors at the opening of its Singapore offices which have since closed.
Andrew Batt, International Group Editor of PropertyGuru Group, wrote this story. To contact him about this or other stories email andrew@propertyguru.com.
