Norwegian businessman charged after fraud of Norfund money in 2018 –...

This spring, Norfund reported that someone had stolen NOK 100 million. By then, the fund had already seen a million disappear in a similar fraud less than two years earlier. A Norwegian businessman has now been charged with aggravated theft after the first fraud.

Published:Updated: October 27, 2020 10:15 AM, Published: October 27, 2020 10:03 AM

Oslo, 13 May 2020: A serious Norfund director meets the press to tell that someone has cheated Norfund for NOK 100 million. The Norwegian fund manages billions of taxpayers’ money and will invest in developing countries.

With him, Norfund’s director has got Terje Alexander Fjeldvær, head of DNB’s fraud prevention unit. Fjeldvær draws lines back to the biggest robbery in Norwegian history to describe what has happened:

– We must remember that this is twice as big as the Nokas robbery.

Among the statements director Tellef Thorleifsson gives the press this day is this:

– We have not previously in Norfund been exposed to this, but we have seen similar fraud against one of our partners, but to a much lesser extent.

E24 can today tell how this fraud also included Norfund, and not just the fund’s partner. In 2018, fake emails that apparently came from the fund were sent to the financing company Alios in Africa.

As a result, several million who were going to Norfund were stolen. A Norwegian businessman has now been charged with aggravated theft in connection with the fraud.

Less than two years later, NOK 100 million disappeared from the fund in a similar way, without the security at Norfund having been updated enough to prevent this.

– The fact that this has happened shows that Norfund’s systems and routines were not good enough, writes director of finance and HR in Norfund, Cathrine Conradi, in an e-mail to E24.

Followed the money to Norway

In the autumn of 2018, a police investigator in Trondheim will follow $ 795,228, or close to seven million kroner, from accounts in Tanzania and Zambia to a real estate company in the capital of Trøndelag. Money that was going to Norfund.

The state-owned Norwegian fund has sent invoices to the company Alios’ branches in the African countries to get them to pay installments on loans. When the invoice is sent from Norway, Norfund’s account is stated. The account number is changed before the invoice is paid the next day in Africa.

Some have pretended to be Norfund and sent e-mails with new information.

– How the e-mails from Norfund were forged, we have not succeeded in uncovering, says police attorney Aage Midling who has led the investigation at Trøndelag police district to E24.

Alios Finance Group offers financial services in eleven African countries. The subsidiaries in Tanzania and Zambia are among the companies in which Norfund has invested.

The employees of the two African companies do not respond to the payment information they send several million kroner to. When Norfund discovers that the forward amount is not paid as agreed, the fund urges. It’s too late. The money does not end up with Norfund.

They will still appear in Norway.

Norfund money ended up in Trøndelag

Norfund reports the incident as gross fraud with the police in Oslo, as the fund also does when 100 million disappear in 2020.

In the summer of 2018, the case of the African millions will be sent to Trondheim. There, investigators begin to investigate the real estate company in Central Norway that appears to have received Norfund’s money.

The company will be engaged in the purchase, sale and rental of real estate. Why a local real estate company should receive close to seven million kroner from Tanzania and Zambia, is difficult for the police to understand.

A Norwegian businessman who has been chairman of the board has now been charged with three cases of gross theft. That the company he was involved in received money that the police believe stems from the fraud of the money that was going to Norfund, constitutes the first part of the indictment.

To E24, his defender Hanne Pentzen says that it is too early to say how he will react to the accusations.

– We will review the indictment that my client has just received.

The businessman has for a number of years operated with several companies in Trøndelag. He is currently the contact person or general manager of several companies.

When the police discovered that the millions Norfund would receive from Africa instead ended up in Trøndelag, the account of the company that received the money was frozen. Some of the funds were already gone.

Was notified

How someone had access to manipulate the information in the invoice from Norfund in 2018 is not known. In the spring of 2020, 100 million were stolen from the fund as a result of fake emails.

– In the Alios case in 2018, it was one of Norfund’s partners who was exposed to fraud, not Norfund. In the Alios case, the fraudsters only communicated with them, over a shorter period of time and less sophistically, and a new and unrelated recipient of the money was introduced, writes director of finance and HR at Norfund, Cathrine Conradi, to E24.

– The fraud Norfund was exposed to this year was far more advanced. The perpetrators pretended to be both Norfund and the borrower, over time and in a way that was more realistic, and the borrower’s name was listed as the owner of the bank account.

Following the 100 million fraud, an external investigation was ordered from PwC. It revealed a large number of weaknesses in data security in the fund, despite the fact that several measures were to be taken after the fraud in 2018.

– Implementation of the measures that were decided was delayed for various reasons, including as a result of the follow-up after the terrorist attack that hit Norfund’s office in Nairobi in January 2019, lack of dedicated resources in Norfund to follow up the IT project, but also conditions with suppliers , writes Conradi.

The report from PwC, which E24 has received from Norfund, provided information on what happened in the time after the Africa scam.

The investigators pointed out that Norfund was notified by Microsoft of suspicious activity in the e-mail system several times during 2019 and up to the 100-million coup this year. Throughout 2019 and until March 2020, strange e-mails were discovered at the fund. That accounts were compromised was confirmed by Microsoft in notifications to Norfund.

Three of the alerts can be linked directly to the email account that was the target when the 100 million disappeared, according to the report. The internal IT department received the alerts, but the first two were not forwarded to the external company responsible for the fund’s IT security.

Only in January 2020, after the third notification, was the relevant account blocked by Microsoft from sending e-mails from Norfund. A few days later, the account was reopened.

No one in Norfund knows who reopened the account. No one has investigated the reason why it was closed, according to PwC’s report. Shortly afterwards, the 100-million coup was a fact.

– The alerts were followed up, partly internally and partly by our IT supplier, but the handling of these did not prevent Norfund’s e-mail system from being compromised and thus could contribute to the fraud taking place. This shows that our systems and routines were not good enough, writes Conradi.

Must have ended up in Hong Kong

In the investigation of the Africa fraud from 2018, Norwegian police followed tracks out of the country in search of Norfund’s money. The police managed to seize around four million kroner, while about three million were sent from Trøndelag to China.

– We consider the money to be lost, says police attorney Aage Sliper Midling.

Norfund informs E24 that the fund does not expect to have to realize losses, as a result of the police’s work and an agreement with the Alios companies in Africa.

– We have subsequently agreed with Alios on repayment of the outstanding partly directly from Alios to Norfund and partly from an expected compensation settlement as a result of the indictment, says director of finance and HR in Norfund, Cathrine Conradi.

According to E24’s surveys, the millions sent out of Norway must have ended up with a company in Hong Kong.

A Chinese national owns all the shares in the company. He is in his 40s and has an address in a village outside the city of Nangong in northeastern China. The person founded the company in December 2017 and is listed as chairman of the board. E24 has not succeeded in getting in touch with the person.

Both Norway and Hong Kong are members of the OECD’s system for automatic exchange of information. In addition, both are members of the Financial Action Task Force, which is an international collaboration established to combat money laundering from criminal acts.

Hong Kong has long been known as a tax haven where it can be difficult to obtain information. However, the region was removed from the EU’s list of non-cooperating actors in March last year.

The only telephone number registered with the company belongs to a business services provider. E24 has been in contact with an employee, who states that the address in Hong Kong belongs to their office, not the office of the company that is supposed to have transferred the money to Norfund.

– We have ten thousand companies registered with us, so we do not have specific knowledge of the company you mention. In any case, we could not pass on contact information due to privacy, the employee tells E24.

The accused Norwegian businessman has via his defender Hanne Pentzen not answered why money was sent on from the company in Trøndelag and to Hong Kong. The businessman has also been asked by E24 whether he has had any role in the major fraud Norfund was hit by this year. According to defense attorney Pentzen, she will go through what the businessman is accused of before answering questions from the media.

– At the moment we do not want to comment on the questions you have sent me by e-mail, Pentzen says.

900 pages of information

When Norfund had to pay NOK 100 million to partners in Cambodia in March, the money disappeared to an account number in Mexico. Neither the fund, DNB nor the police have succeeded in finding the perpetrators or obtaining taxpayers’ money.

It is not known if the 100 million fraud has anything to do with the African fraud, or if two different criminal groups have forged emails in the last two years.

In connection with the investigations of the Trøndelag company and the businessman, however, the police in Trondheim believe to see traces of others who may have contributed to the forged invoice from Norfund in 2018.

– The investigation has revealed a possible culprit, but so far we have no evidence to support this suspicion. We assume that this is the person who has committed the primary crime, the fraud itself, says police attorney Aage Sliper Midling.

The information collected by the police in Trøndelag amounts to more than 900 pages.

According to Midling, no other authorities have approached the police district to get that information in the search for who was behind one of the biggest frauds in Norwegian history in 2020.

– Based on what we have received from information from the police, there is no reason to assume that there is any connection between these two fraud cases, says director of finance and HR in Norfund, Cathrine Conradi.