Global Forestry was a SIPP investment scheme that many pension holders in the UK invested in. They did so because of the promise of healthy returns and because the investment was labelled as being green, i.e. they were investing in something that would make them money and that was also good for the environment.
Things didn’t go well, though. In fact, it was disastrous for the pension holders involved as most of them got nothing back from Global Forestry investment – not even their original investment.
What was Global Forestry and what went wrong?
The Pitch to Investors to Transfer Their Pension to a Global Forestry SIPP Product
Investors who purchased the Global Forestry SIPP product were told they were investing in teak plantations. There were two teak plantations, in fact, both in Brazil – Belem Sky and Para Sky.
Those who invested were told they would be leasing a plot of land at one of these plantations. Timber management companies would then lease the plots from the investors to manage the land and grow teak trees.
To invest in Global Forestry, you had to commit a minimum of £5,000 into the scheme.
In total, £24 million was invested. Not all of this was by people purchasing a Global Forestry SIPP product, but a large proportion was.
The Promise to Investors
Investors were first of all told they were investing in a sustainable scheme, i.e. a scheme devoted to regenerating forests in Brazil while also producing a renewable resource.
The investors were also told to expect returns of up to 20 percent per year. In addition, they were told they would get a minimum annual return of 10 percent
The Failure of the Scheme
The company, Global Forestry Investments, went into compulsory liquidation in 2014. It was also investigated by the Insolvency Service and other agencies. Following these investigations, the directors of Global Forestry were disqualified from being company directors as a result of the way they ran the company and managed the scheme
Unfortunately for those who bought into the scheme, the investigators found little evidence of returns to investors.
Issues from the Start
It’s unclear exactly what caused the Global Forestry investment to fail. One thing we do know is that investigators highlighted the unusual use of investors’ money, including the fact that £13 million was paid into the personal bank accounts of the company’s directors.
Whatever the reasons for the failure, though, the total returns to investors amounted to just £710k from an original pool of over £24 million.
An Example of SIPP Product Miss-Selling
Many of those who transferred their pension into a Global Forestry SIPP may have been the victim of miss-selling. This is primarily because Global Forestry was an unregulated investment.
This means it was a high-risk investment, so should only have been offered by financial advisors to experienced and knowledgeable investors. In general, investors that fall into this category are also high net worth individuals.
As most people investing their pension into a SIPP are neither high net worth individuals nor experienced investors, miss-selling may have occurred when they bought into Global Forestry.
Might this apply to you? If you think so, you should get advice on the steps you may be able to take.