Renewable Energy

Denied Profit From Green Power, Duped Prokon Investors Battle Historic Insolvency

Carsten Rodbertus Prokon chief executive 2 dpa
Carsten Rodbertus at a press conference after the announcement that the company is insolvent.
  • Why it matters

    Why it matters

    Germany is one of the world leaders in shifting toward renewable energy sources, but the country’s investment culture lags behind many other Western nations.

  • Facts

    Facts

    • Prokon has accrued debts of over €1.5 billion.
    • Some 75,000 investors trusted the firm with €1.4 billion.
    • Creditor meeting rejected founder Carsten Rodbertus’ power bid.
  • Audio

    Audio

  • Pdf

Wolfgang Siegel believed he was doing something good for both himself and the environment when he invested in Prokon, a wind energy company offering robust annual returns. But on Tuesday, he was leading the fight to claw back part of €1.4 billion ($1.9 billion) investors handed over to the now bust firm.

At the largest creditor assembly Germany has ever seen, Mr. Siegel’s group the “Friends of Prokon” were able to fend off a last-ditch attempt to derail insolvency proceedings by the wind park operator’s charismatic founder, Carsten Rodbertus.

“I’m very glad and relieved,” said Siegel, after gathering the support of investors holding the largest amount of debt, €426 million, at the creditor meeting in Hamburg.

The vote means Prokon’s insolvency – one of the largest in German history – will remain in the hands of administrator Dietmar Penzlin. He has suggested selling off some of the company’s assets to return €391 million to investors.

Prokon operates 50 wind parks in Germany, Poland and Finland, along with a wood pallet-making facility and other minor units. It has accrued debts of more than €1.5 billion.

On Tuesday, Mr. Rodbertus, a large man with a thinning, gray ponytail, had hoped to oust Mr. Penzlin, whom he accused of trying to cheat investors and destroy his company.

 

Rodbertus, Penzlin
Rodbertus together with administrator Dietmar Penzlin who is investigating Prokon’s business practices. Source: DPA

 

The irony of Mr. Rodbertus’ charges was apparently lost on the 15,000 investors who still backed him on Tuesday despite ample evidence that Prokon would never have been able to deliver the profits it once promised.

Founded in 1995, the company relied heavily on huge advertising campaigns to win over investors keen to support Germany’s shift to renewable energy while pocketing 8 percent annual returns by buying so-called “Genussscheine,” which are a type of corporate security in Germany without voting rights.

A court opened insolvency proceedings on May 1 after it became clear that Prokon was heavily in debt and no longer able to pay its liabilities. According to Germany’s federal statistics office, overall insolvencies dropped 8.1 percent in 2013, as Europe’s largest economy performed robustly.

German state prosecutors are currently investigating Mr. Rodbertus for attempting to hide Prokon’s bankruptcy, among other crimes.

His backers at the creditor meeting in Hamburg were effectively stripped of their voting rights, since a debtor – in this case Mr. Rodbertus – cannot have influence on the outcome an insolvency case.

 

“That would have been a sort of retirement fund for me, but that’s all gone up in smoke now.”

Joseph Stahl, Retiree and investor in Prokon

But many Prokon investors attending the meeting appeared resigned to never fully recouping their money. One of them, Josef Stahl, who travelled 14 hours from southern Germany, showed little anger despite the financial losses incurred.

“That would have been a sort of retirement fund for me, but that’s all gone up in smoke now,” the 67-year-old told the DPA news agency.

Erik Hölzl, a professor for business psychology, said many German investors tend to expect high returns in sectors they believe in philosophically, such as renewable energy.

“Unfortunately, that’s not a particularly good indicator of economic success,” he said. “But one thing is certain: Likability isn’t a good investment advisor.”

 

With reporting by Michael Brächer. 

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