Questions raised over historic Vestas deals

DENMARK: Deminor, the Belgian consultancy representing disgruntled Vestas shareholders, has launched another attack on the manufacturer, claiming Vestas engaged in improper practices regarding a series of deals in the late 2000s.

Deminor has targeted former Vestas CEO Ditlev Engel in an earlier complaint (pic: Justin Lott)
Deminor has targeted former Vestas CEO Ditlev Engel in an earlier complaint (pic: Justin Lott)

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This is the second time that Deminor, which specialises in shareholder investment loss recovery, has challenged Vestas. In 2013, it forced a vote on the appointment of an independent scrutineer to vet the company.

At the 2016 Vestas AGM, on 30 March, Deminor asked questions of the Vestas board, highlighting a raid on Vestas offices by the German tax authorities in February. Linking the two issues appears to be the company operations during the late 2000s.

In response to the latest accusations, a spokesperson for Vestas said: "It is clear to Vestas that Deminor is asking these questions in connection with the AGM in pursuit of its own interests in the ongoing court case [from 2013]. Vestas has correctly accounted for the transactions in question. The questions Deminor raise are taken out of context and create a substantially inaccurate impression of the Deminor case's real content."


After the failed 2013 AGM vote, Deminor went to court to claim damages from false reporting from the then Vestas CEO Ditlev Engel, and the former chairman Bent Erik Carlsen and former chief financial officer Henrik Norremark.

This case has now passed through procedural, according to Deminor, and the company "would soon be in a position to start requesting documents".

Deminor’s ambition, and that of the disgruntled Vestas investors it represents, has been to prove the company manipulated its share price around 2010 when Engel and Carlsen were in charge of the company.

A key plank of its attack has been a 2010 change in Vestas’ accountancy procedures. Deminor claimed that 2010 sales would have been substantially below the €6 billion guidance released in August 2010 (under the old accounting rules) if the revenue recognition policy had not been modified.

Deminor’s second focus concerns activities of Vestas Central Europe from 2006-11, when the division was run by Hans Joern Rieks, who is now Siemens’ CEO onshore wind EMEA.

In 2013, Vestas commissioned PWC to look into earlier operations , and it was revealed that Vestas Central Europe had used shell companies to buy Vestas turbines for projects.

This is not illegal nor uncommon. However, it is believed that, while commission was paid to various Vestas employees that were then deducted from tax, no services were rendered in return for this commission, making the tax deduction void.

On discovery of this, Vestas notified the authorities, it said. It is now engaged in a separate legal battle with the former vice-president of central Europe Hans Joern Rieks.

It is believed the raid by the German tax office is related to Vestas’ notification. While Vestas says the two cases are unrelated, Deminor is claiming the German tax issue is indicative of how the company was working then.

Deminor partner Erik Bomans said: "We have litigation against former CEO Ditlev Engel and chairman Bent Carlsen. Vestas is a notified party, not a defendant, but could be brought in at a later stage."

So far, Vestas has responded only by stating that Deminor’s remarks will be answered in court. According to insiders, the company has not ruled out a deal with Rieks, although it looks like going to court.

However chairman Nordberg — formerly from the litigation-hungry tech sector — has ruled out any kind of settlement with Deminor.

There appears to be a waiting game. Under Danish law, a plaintiff has to put up money to cover the defendant’s legal costs if the former loses, and Deminor admitted the number of backers (currently 56) had fallen as a result of "procedural challenges raised by the defendants".

Deminor’s accusations have been well-reported in the Danish press, and highlight a difficult period in the company’s history from around 2010 to 2012.

Since that period, Vestas has undergone a painful restructuring process and has brought in a new management team, and is looking forward. Now, it is aware, part of that future could involve a legal battle that will make it look back to its past.


2006            Vestas Central Europe begins to set up project development companies.

2010            Vestas introduces new accounting standard IFRIC 15, and recognition of revenue from contracts is pushed back from completion of wind farm to when they have been handed over to the customer.

2012            Vestas reports a €5m pre-tax loss in the second quarter compared with a €76m profit for the same period of 2011. Share price continues to fall.

2012            Chief financial officer Henrik Norremark and vice-chairman offshore Hans Joern-Rieks among a number of high-level departures from Vestas.

2013            Deminor, representing disgruntled shareholders, purchases one Vestas share and forces vote on the appointment of an independent scrutineer, which it loses. In August, it then switches attack to former CEO Ditlev Engel, CFO Henrik Norremark and chairman Bent Carlsen.

2014            Vestas files a report with the German authorities regarding alleged criminal activities involving former Vestas Central Europe head Hans Joern Rieks.

2014            German police investigate former Vestas Germany employees over fraud.

2016            German tax authorities raid Vestas Central Europe offices.

2016            Deminor makes public challenge at Vestas AGM over Vestas Central Europe proceedings.

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