Fri 21 Nov 2014 22:16

Will Kenneth Rosenmeyer's comments lead to lawsuits?


Former OW Bunker risk manager is quoted as saying that the $27 million he made in 2013 was from 'pure speculation'.



Over the last couple of days, former OW Bunker risk manager, Kenneth Rosenmeyer, has been lifting the lid on his role at the firm prior to his departure earlier this year. His comments have raised a lot of questions about OW Bunker's business strategy before the company's initial public offering (IPO), the role of speculative investments in its profit growth prior to the IPO, how the IPO prospectus was compiled and the role of the board of directors and private equity firm Altor Equity Partners.

In an interview published on Thursday by Jyllands-Posten, Rosenmeyer reveals: "I had a budget that said I should make a profit of 1.5 million dollars per month. It was speculation." The investments were said to be in fuel oil, crude oil and gas oil via futures, swaps and options.

According to the Danish newspaper, he made more than $20 million in 2013 for the group, which achieved a total profit before tax that year of $83.5 millon.

Today, rival news service Berlingske claims that Rosenmeyer sent a text to confirm: "It was actually $27 million and came from pure speculation," while stressing that there was no so-called hedging.

Rosenmeyer resigned from OW Bunker in March after 13 years of employment - just days before the IPO later that month. According to Jyllands-Posten, Rosenmeyer stated that the IPO would have made it harder for him to maintain the good results.

Rosenmeyer also told Berlingske that the significant gains from speculative investments were accounted for as operating income.

If the aforementioned $27 million figure is correct, this would mean that 32.3 percent of last year's $83.5 million profit before tax came from "pure speculation" gains.

Rosenmeyer's account of events at OW Bunker has led to questions about previous claims that what went wrong at OW Bunker took place after the listing.

Johnny Madsen, chief investment officer and partner at Dansk Formue- & Investeringspleje A/S, told Berlingske: "If what he [Rosenmeyer] says is true, that a significant portion of their revenues came from speculation, then it's a different type of business than they said in connection with the IPO. There is more and more to suggest that they have marketed it as a conservative company."

"The whole growth from 2012 to 2013 is due to speculation," Per Hansen, investment economist at Nordnet, is quoted as saying by Berlingske.

"The management knew it. The board knew it. Investment banks are required to verify it in the prospectus, and Altor have known it," Hansen added.

Madsen went on to say that Rosenmeyer's comments could lead to a number of lawsuits. "If it's true what the employee says, then Altor is in a really bad situation. I have no doubt that there will now be a series of lawsuits based on this," Madsen told Berlingske.

Rosenmeyer's comments over the last couple of days also raise questions about certain claims in the media earlier this month that he was about to rejoin OW Bunker before the firm finally filed for bankruptcy.

On November 6, the day after OW Bunker released a statement to inform the market about a $125 million "fraud" by senior employees at Dynamic Oil Trading in Singapore, a loss of "around $150 million" from its risk management activities and the dismissal of its Head of Risk Management, Jane Dahl Christensen, it was claimed that an agreement had been reached with Rosenmeyer earlier that week for him to rejoin his old firm and head a new risk management programme.

In addition to the 'agreement' with Rosenmeyer, it was claimed that OW Bunker was also in the process of sealing a new deal with a group of banks when the whole scenario turned on its head after senior employees arrived in Aalborg from Dynamic Oil Trading on November 5 and "came clean" about activities in Singapore. As a result, the banks were reported to have pulled out of the deal and Rosenmeyer's 'new job' did not materialize.

However, in light of Rosenmeyer's comments this week, if he was offered a new job earlier this month, what had been agreed with the senior management? What type of risk management role would it have been? And would it have involved "pure speculation"?


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