A fair business

The lobby of the Al Khozama Hotel, in Riyadh, Saudi Arabia, is claimed to be of medium size but it would be closer to the truth to describe it as small. As a result, it's easy to be overheard if you are speaking above a murmur.

Sitting there on one evening in 2003, thinking about foreigners who had been recently killed in the city by Al Qaeda, my anxious reverie was interrupted by the unmistakable accent of a Dutchman speaking in English. On looking around, I saw a thin, earnest man, explaining the complexities of the Dutch flower trade to a Saudi who seemed to be more interested in his prayer beads. The Dutchman was not the most memorable speaker I have overheard, but a phrase has stayed with me: 'It's a fair business', he kept on repeating to his disinterested Saudi interlocutor.

In 2003, many people in the tulip trade in Holland would have agreed with him. In fact, they would have told you that it was also a very lucrative business.

By 2004, however, at least 75 million Euros of investors' money had disappeared and the biggest bubble in tulip trading in living memory had burst. And two men, Mark van der Poll and Marco Vrijburg, sons of farmhands who had dared to dream big, were at the centre of it. This is the story of their road to riches.

The Porsche Owner's Club

The town of Leusden nestles amidst heathlands and forest in the affluent heart of Holland. It boasts of an impressive arc - shaped building, on the bank of a body of water which has been specially created to mirror its elegant structure. The building itself is transparent, and sparkles like crystal against the clear night sky. It is the showroom of Pon Automobile Trading, the Porsche dealers for The Netherlands. And it was where a Porsche owner invited Mark van der Poll to talk about the investment opportunities in new varieties of tulips.

That was in the late 1990s, and van der Poll, himself a Porsche owner, was already a successful commission agent with his own company, the Ornamental Flowers Trading Centre. The eighty Porsche owners who attended the meeting in Pon's crystal bubble were just the sort who could benefit from his expertise because they knew nothing about tulips. They left it to him to identify promising new varieties of tulips, buy them from their growers and sell them on at a handsome profit.

And they felt that their money was in safe hands. Mark was a good educator. They recalled how he had traced the history of investment in new races of tulips on that evening at Pon's. He told them about a tulip called Double Price which had commanded 7,000 Guilders per kilo. And how some varieties of tulips had exchanged owners for as much as two million Euros per kilo. In fact, the Professor had pitched it so well that the enthralled members of the Porsche Owners Club could be forgiven for thinking that they were being asked to invest in something as profitable as a new life-saving drug.

A true money making machine

At the end of 2002, a man who promised to change the nature of the game itself stepped out of the shadows. His name was Marco Vrijburg. If Mark van der Poll was the man with the investors, Marco was the man with the idea. It was an investment fund called Novacap Floralis.

An investor was required to invest a sum of at least 100,000 Euros in the fund, but returns of 30 percent in 18 months were promised.

How would this happen? Vrijburg proposed that investors' money would be used to invest in new tulip varieties from the harvest of 2003, which would be identified by van der Poll himself.
Imagine a tulip grower had developed Venus Blush, a new variety of tulip. If identified by van der Poll as a bloom with a future, the entire harvest of Venus Blush bulbs in 2003 would be bought by Novacap.

Each Venus Blush bulb would then be planted. The flower of the plant would be severed from the bulb and sold at the flower auctions. The bulb, however, would get the signal to stop flowering and would expend its energy on its growth. In time, the bulb would multiply itself in the winter, bringing many more bulbs of Venus Blush into the world. Thus, the harvest of 2004 would consist of Venus Blush tulips, which would be sold in the 2004 auctions, as well as bulbs which would flower again, in 2005.

The novelty of the Novacap offering was that the buyers of the Venus Blush harvest of 2003 were protected against the risk of the harvest of 2004 failing to find buyers in the market. Being a new variety, this was a possible danger, and if it were to occur, the buyers of the harvest of 2003 would be left holding a field of germinated Venus Blush blooms and bulbs and little else.

However, Novacap's proposition was that when the investors bought the harvest of 2003, the industrious Mark van der Poll would have already identified the buyers of the Venus Blush harvest of 2004. Further, he guaranteed that the harvest of 2004 would fetch a higher price than the harvest of 2003 because the number of bulbs for sale in 2004 would be several times more than those harvested in 2003. This difference would be the source of the promised return of 30 percent.

Relying thus on the bounty of nature and the proven persuasive powers of van der Poll, it was difficult to see how Novacap Floralis could go wrong. At a time when the stock and the property markets were performing poorly, it seemed as if the dismal unpredictability of the real world had been tamed and a true money making machine had been created. When the Dutch Financial Markets Authority gave its stamp of approval to Novacap Floralis in April 2003, that machine was ready to roll. In one of his first meetings with investors in May, in the understated elegance of a boutique hotel not far from Pon's, Vrijburg was able to attract 11 million Euros in one evening alone.

The great and the greedy

'It is hard for us, without being flippant, to even see a scenario within any kind of realm of reason that would see us losing one dollar in one of those transactions.' These were the words of Joseph J. Cassano, head of the London unit of AIG in August 2007. By the second quarter of 2008, his unit had posted losses of $25 billion and had brought one of the world's most respected insurance companies to its knees.

It was probably a similar spirit of unbridled optimism which enthused the great and the greedy of Dutch society to invest in Novacap. Cor Boonstra, a former CEO of Philips, invested 200,000 Euros while the dapper Willem Sijthoff, media entrepreneur and descendant of a distinguished publishing family, invested 800, 000.

 These were still modest sums. The de Rijcke family, which had sold off its Kruidvat chain of drugstores for more than a 1000 million Euros, stepped in with 12 million. The decision was spurred by Sushilkumar Ong-A-Swie, a director of Hoge Dennon Holding, an investment company set up by the de Rijckes. Sushilkumar also invested 200, 000 of his own money in Novacap. As a former government employee (he had been a researcher in fiscal fraud at the Ministry of Finance), he may have been impressed by Vrijburg's credentials - Marco had once been known as the youngest Inspector of Taxes in The Netherlands.

 Within six weeks of its opening, Novacap Floralis had attracted 121 participants and 85,2 million Euros of capital. The credibility accorded to it did not come from the approval of the Financial Markets Authority and Vrijburg's sales pitches alone. The ABN AMRO bank, which had been unable to penetrate the agricultural sector due to the strength of its rival, Rabobank, finally saw an opportunity. It's subsidiary, the Hollandsche Bank Unie (HBU) extended credit to potential participants to invest in Novacap. Of the 85,2 million which was invested by external participants, 50 million came from HBU - 60% of the private capital injected into the fund.

Following Sushilkumar's example, a HBU director, Pascale van den Boogerd, invested 200, 000 of his own money in the fund. A HBU account manager, Bas Welling, set aside 100, 000 in his father's name and Jan Maarten de Jong, a former member of the ABN AMRO board, invested 300, 000.

 Yet there were voices within the tulip industry which raised doubts about the premises on which Novacap's business model was based. New varieties of tulips needed soil to grow in, and it was not clear where the land was to be found. The old hands in the business said that the 30 main varieties of tulips which formed the backbone of the industry already took up 95% of the 10, 000 hectares available for tulip cultivation in the country. Where was the land to be found to nurse new varieties of tulips into the light of day?

 They were not listened to. If the model was flawed, why would Novacap's principals invest their own money in it? After all, Vrijburg had invested 1,3 million Euros of his own money and van der Poll was not far behind with 1 million. And why would HBU make it so easy to borrow money, so much so that getting a ordinary mortgage seemed more difficult in comparison?

 Rumours at the fishmonger’s

Vrijburg and van der Poll did not have the luxury of fine tuning their business model over a period of time. Between May and September of 2003, Novacap had received 120 million Euros as investment - 85 million from external investors and 35 million from within the tulip trade. Having promised returns of 30% to the investors, van der Poll came under enormous pressure to buy bulbs from the growers and sell their future harvests to yet other buyers for a handsome profit.

 On paper, though, he seemed to have pulled it off: when Novacap closed the fund to new investments in September, it had bought bulbs worth 75 million Euros (with real money) and had sold them for 160 million Euros to yet other buyers. However, as the bulbs had to be planted in order to multiply, the 160 million Euros could only be realised in cash once the bulbs had been harvested. Until then, van der Poll was content with promissory notes. There were no reasons to doubt that the model would not work, and van der Poll looked forward to handsome commissions from the purchase and sale of tulip bulbs, as he had always done.

 At this point, a most singular thing happened. The potential buyers began to cancel their purchase orders in letters which were almost identically phrased. Amazingly enough, none of them had put their signatures to the promissory notes in the first place, and thus the notes were not valid in any legal sense. Nobody seems to have noticed this before, as in the tulip trade, ‘gentleman’s agreements’ were the norm and it was the honour of men which ensured conformity, not their signatures. When the purchasers defaulted, Novacap was left holding a clutch of promissory notes and many tons of unsold bulbs. The real money, which it had received from its investors, was gone.

 The news that something was seriously amiss at the Ornamental Flowers Trading Centre was not leaked by a newspaper. Nor did a tight-lipped bureaucrat lend credibility to the rumours by declining to comment on them. Rather, it was at the fishmonger’s across the street from the Trading Centre that stories began to circulate about the ‘ghost notes’. Investors began to enquire after their money. The Hell’s Angels, officially banned from investing in The Netherlands, appeared to have invested a tidy sum through a third party. They sent some of their members to threaten van der Poll with death.

 In a last bid to find the elusive buyer for his huge stocks of unsold bulbs, van der Poll named Cees van der Velden of Holland Bolroy Markt, a trader in new races of tulips, as a buyer. Unhappily, van der Velden refused to acknowledge the planned purchase of a single bulb. The Ornamental Flowers Trading Centre was soon declared as bankrupt.

 The carrousel and other conspiracies

On one morning shortly thereafter, as van der Poll was settling down to his morning coffee, his home was invaded by people who looked like the staff of the DIY store round the corner. In fact, the blue overalls belonged to the police, under the direction of Officer of Justice Joost Tonino. They had come to arrest him on charges of fraud and theft.

 At the outset, the case against van der Poll seemed plausible enough. Novacap's lawyers argued that when van der Poll and his tulip farmer friends realized that large sums of money would be invested in new varieties of tulips by outsiders, they set about artificially raising the prices by buying and selling the new varieties among themselves. Thus Venus Blush was sold by one tulip farmer to another for a handsome profit, who in turn sold it to another - in effect, a carrousel was set in motion. And it was held in place because buyers and sellers were assured that van der Poll would sell the entire harvest of Venus Blush to Novacap for an even greater profit.

 Thus, Novacap was eventually persuaded to buy the harvest of Venus Blush and other blooms of promise for exorbitant prices. Its lawyers argued that this money was siphoned away to tax havens in the British Virgin Islands and Lichtenstein by van der Poll and his friends. The price of the new blooms was so exorbitantly high, however, that it was virtually impossible for van der Poll to find a buyer for a higher price. Thus, the scheme where a current purchase of Venus Blush was guaranteed by its future purchase, could not hold.

 Though lawyers on both sides argued for and against this version of events for four long years, the press, and especially the NRC Handelsblad, came down heavily on the side of Marco Vrijburg and the Novacap management. In a fine display of objectivity, the NRC's first article on the subject was titled, 'The bulb growing crooks have made off with the money'. The bulb growers who appeared to testify in the court were described as having 'hands like coal shovels'.

 Yet, it is hard to believe that Vrijburg and his team were innocent of any intention to deceive. In 2007, for instance, the administrators appointed to manage Novacap’s assets made it known that they could not carry out their task because the hard disk with all records of Novacap’s transactions had been damaged. It had been replaced with a new disk. Unfortunately, the only back-up copy was on a laptop, whose hard disk had also been accidentally damaged at the same time. Therefore, there was no reliable way of knowing what Novacap’s assets were. The administrators concluded that the Novacap management had deliberately mishandled the records of the fund, and that this was cause for the authorities to investigate them.

 Paranormal Forensics

While all this was going on, I was privileged to come to know someone who would have solved the mystery if his tools had not failed him. He had the unusual gift of communicating with paranormal beings and was ready to put this skill at the service of science. With time, he would have enjoyed worldwide recognition as the founder of the discipline of Paranormal Forensics. His name was R.E.T. Bigelow, and he is best described as a medium seized with a scientist's passion to classify.

 Bigelow rose to fame with his article on the distinction between Spooks and Wraiths, which was published in the authoritative Dictionary of the Paranormal (2003; Mantra, Stockton-on-Thames). He argued that while Spooks and Wraiths were similar in form (both had bodies which seemed to taper off in a wisp of smoke), they were quite different from each other in function. The Spooks had faces which were scary to look at, while Wraiths did not have faces at all, but displayed the face or the event which the beholder was thinking about. Bigelow argued that this showed that the function of a Wraith was to inform while that of a Spook was to frighten.

 It was during the third year of van der Poll's trial that Bigelow called me in a state of high excitement. He said that he had been meditating on the tulip affair, and had begun to see Wraiths. He believed that he had the face of the person who had made off with the money in sight. Being an recognized artist who had drawn portraits of passers-by at the Scone and Muffin for years, he sent me a portrait of the Wraith which he had seen on recent nights.

 Unfortunately, it transpired that the face belonged to Joost Tonino, the Officer of Justice who had arrested van der Poll. Tonino had recently lost his laptop on the street, but a honest citizen had found it and had returned the machine to the police. But not before he had a look at the hard drive, where he discovered many files of classified information as well as a lot of child pornography. Tonino defended himself by arguing that the child pornography was downloaded accidentally while he was visiting an adult porn site, but this could not save his job.

 We were disappointed with this, because it showed that while Bigelow could summon Wraiths related to the tulip affair, he could not yet summon the Wraith with the desired information. He promised that he would continue to refine his technique, but his untimely unification with his subject matter in 2008 abruptly ended a promising new chapter in the advancement of learning.

 The careers of things

If Tonino's laptop had not been found on the street, he would have continued to enjoy the cushioned life of a civil servant. Similarly, if it had not come to light that van der Poll's (confidential) Income Tax records had been 'accidentally' left behind at the table where Marco Vrijburg was having lunch. It would have been easier for Vrijburg to protect his reputation as the aggrieved party. The person who gave him copies of van der Poll's papers was an old colleague from the Tax Office in Leiden, where Vrijburg had once been a star.

 The case against van der Poll and his associates at the Ornamental Flowers Trading Centre would also have progressed more smoothly if some documents had found their way to the shredder in time.

 Dutch law protects the confidentiality of the relationship between a lawyer and his client. A Public Prosecutor cannot, for example, tap into their phone calls and build a case based on suspicions aroused by listening in to their conversations. Even if the Prosecutor taps into such calls, he is obliged by law to destroy transcripts of such recordings in a short period of time.

 It came to light that the Public Prosecutor had not only tapped into the conversations between van der Poll and his lawyers, but that the transcripts were in circulation well after the date of recording. No attempts had been made to destroy them. On learning of this, the Court came to the conclusion that the principle of protection of confidentiality of the lawyer - client relationship had been so severely violated that the evidence presented against van der Poll and his associates could not be accepted by the Court. Thus, after five years of procedures and investigations against him, Mark van der Poll left the Court in March 2009 as a free man. And to this day, nobody knows what happened to the money.

 With the exception of references to R.E.T. Bigelow, the information in this essay was gleaned from Het Agrarisch Dagblad, Het Financiele Dagblad, HortiNews.com, NRC Handelsblad, Quote, Rechtspraak.nl and De Volkskrant