Investors trapped

Investigations continue into the bankruptcy of Hanseatische Elektrizistätswerk und Umwelttechnik, a German operator and developer of renewable energy power plant based in Hamburg. The company filed for voluntary bankruptcy in May after the Federal Supervisory office for German bank Bundesaufsichtamt für Kreditwesen (BfK) demanded the return of all deposits made by investors. BfK further charged Hanseatische and its 44% parent company, Eurokapital, with failing to make provision in its contracts for the payment of dividends or for loss sharing.

Investors, who it seems were mainly from eastern Germany, believed they were buying dormant equity holdings. Instead they were merely making deposits, a business for which the two companies did not have a licence, according to BfK. It says deposits amounted to about DEM 190 million.

Since setting up business in 1990, Hanseatische and Eurokapital had signed contracts with investors -- lured by glossy promotion material -- for holdings in small combined heat and power and wind plant. Concerns were raised, however, by both the German consumer magazine, DM, and Gerlach Report, a financial service. DM described Hanseatische's investment method as "a snowball system" in which above average profits paid to early investors are not earned, but paid out of the money invested by later customers.

Hanseatische developed a prototype 500 kW turbine installed in Schleswig-Holstein in 1993. This was upgraded to 550 kW and over the next three years, 15 machines went in the ground, according to the Deutsches Wind Energie Institut. Nine are sited in Lower Saxony, one each in Mecklenburg-Vorpommern and Schleswig-Holstein, two in Saxony Anhalt and two in Italy.