The British marketing arm of the Brazilian social housing developer EcoHouse operation looks extremely likely to be liquidated next month with PricewaterhouseCoopers handling the action following a meeting in the United Kingdom last week of creditors who voted to appoint to global company to handle the liquidation.
EcoHouse was actively selling in Singapore and elsewhere in Southeast Asia during 2012 and 2013, and attracted investments of as much as S$60 million – making it one of the most popular overseas investments for several years.
There are thought to be more than 1,000 individual investors alone in the city-state, with many others around the region and in many parts of the world.
Many of the Singapore investors are not directly impacted by the British liquidation, and have sales and purchase contracts with the Brazil company operated by EcoHouse, but mystery also surrounds the future of that company, with which many of the Singapore investors have sales contracts.
It is believed that at least two separate actions has been instigated by groups of Singapore investors against the Brazil company, and in a statement released to creditors at the meeting Director Charles Fraser-Macnamara, a Director of EcoHouse Developments Limited who insisted he acted as a nominee director for Anthony Armstrong-Emery, the founder of the company.
He wrote that he had no knowledge about the Brazil entity, except for believing that several injunctions may already be in place including one started by the Brazil Federal Government. Computers and documents have been removed from the EcoHouse offices in Brazil by Federal Police authorities for investigation for alleged tax irregularities and can only be accessed by a court order, he said. He added that this, in simple terms, means the assets of the company [in Brazil] are likely to have been frozen.
To the best of his knowledge, he said the Brazil company has been shut down.
He also said that intervening acts of investors from Singapore may have “frustrated” binding contracts that exist for future company developments beyond the existing Casa Nova and Bosque developments
Anthony Armstrong Emery, the founder of the company and a regular face to Singapore investors in 2012 and 2013, is understood to have relocated to Dubai where there is no extradition treaty with the United Kingdom. He is no longer involved with either of the football clubs in Brazil and Italy where he was President. It has been widely reported that players and staff have gone without wages at both clubs.
The same is true of the U.K. company, where a number of staff are believed to still be owed wages following the collapse of the company late last year.
The United Kingdom Fraud Squad and Action Fraud are now involved under Operation Falcon, a 300-strong department in London focusing on possible cases of fraud, with Detective Constable Hill being the officer in charge of the case. The main number is +44 (0) 207 230 8129, according to information released at the U.K. meeting last week.
Regulatory authorities in the U.K. are also investigating the role of the Escrow agents, a firm called Sanders & Co., which is based in the same town as the sole remaining director of EcoHouse, Charles Fraser-Macnamara also lives, and whose daughter was responsible for managing the Escrow account.
PropertyGuru has received numerous contacts from investors around the world, often as many as 10 per day.
Yesterday an investor who wished to be known as John told PropertyGuru: “I personally invested in four units across a period of 18 months, a total of more than S$180,000, of my inheritance from my mother.
“Like many others I a small investor who will be hit hard by such a loss. I was guaranteed a 20 percent return and told the scheme was underwritten by the Brazilian Government and major banks.”
John is not alone; many investors are believed to have invested more than they could reasonably afford, lured by the promises of 20 percent returns in 12 months and what apparently looked like strong backing from reputable financial companies.
Investigations have shown that, contrary to statements made by the company, no properties are owned by EcoHouse in Brazil, according to information released at the meeting.
Notes provided at the meeting said: “On the basis of the information I have at this time, recovery prospects for investors do not appear to be encouraging.”
A spokesperson for the company initially appointed to arrange the meeting wrote: “Developments [EcoHouse Developments Limited] has no assets and on the face of it, there would seem to be no prospect of further recoveries for investors, unless it can be established that funds have been misappropriated, although at this stage, I have no evidence to support the fact that this has occurred.
“In that event, it may be possible to take proceedings for recovery. These will however be extremely expensive, particularly as they may have to be taken in jurisdictions outside the U.K., which will involve both U.K. and foreign legal advisers. The costs of such actions are likely to be tens of thousands of pounds and I have to say at this time that unless additional outside funding is provided to a liquidator, such proceedings will not be possible to pursue.
“Alternatively, if the current funding negotiations are successful and it is possible to overcome the legal difficulties in Brazil, it may be possible for construction to be completed, which in turn may bring about the best result for investors. It is impossible for me to say at this time whether this outcome is likely or not. Since the negotiations are not being carried out by Developments, I or any liquidator appointed cannot make direct enquiries of the brokers or ultimate lenders. There are some big “ifs” attached to this option and at the moment, I cannot say whether it is anything more than an extremely speculative outcome.”
The negotiations mentioned refer to speculation that EcoHouse is trying to acquire alternative funding from the Middle East in order to fund its business and complete the projects.
Singapore investor Nigel Moy has started a Google Group for anyone not already taking part in a class action. He can be contacted at nigelmoy@gmail.com and the Google group is
http://groups.google.com/group/eco-house-victims.
Image: Works on site at the Casa Nova 1 development in October 2013.
Andrew Batt, International Group Editor of PropertyGuru Group, wrote this story. To contact him about this or other stories email andrew@propertyguru.com.sg
