In the hall of the Palace of Justice in The Hague, Marcel de V. is still carefully avoiding Arjan G’s gaze at the beginning of the morning. The two men stand awkwardly next to each other, flanked by their lawyers. The V. with his hands on his hips, G. with a black notepad clutched in his hands. Only a few hours into the long court session do the two have a somewhat awkward conversation during a recess. There is a small smile visible on De V’s face.
The two men know each other well. Between 2003 and 2010, they secretly distributed tens of millions that they obtained by selling risky financial products to housing association Vestia. When things went wrong, their covert trading brought Vestia and the Dutch corporate system to the brink of financial abyss. The largest fraud case in the Netherlands had a damage amount of approximately 2.7 billion euros. After more than five years of waiting, the appeal in their criminal case was filed on Thursday.
Exotic products
In 2003, Marcel de V. was cash manager at the Rotterdam housing association Vestia, which at that time was the largest association in the Netherlands with 90,000 housing units. He was responsible for the purchase of complex financial products, interest rate derivatives, a kind of insurance against interest rate fluctuations, which kept Vestia’s interest costs much lower than those of other corporations for many years.
De V. speculated with corporation money on these financial products and gambled that interest rates would rise. He earned a lot of money from this by secretly working with Arjan G., who maintained contacts with large investment banks in London through his consultancy firm Fifa Finance.
The fees that advisor Arjan G. received from the investment banks through the many transactions with Vestia, he shared with Marcel de V. The two had an interest in Vestia continuing to buy derivatives. As a good customer, Marcel de V. was feted by the banks: from luxurious dinners to tickets for football matches and pop concerts. The duo raised a total of around 20 million euros. Marcel de V. bought a large farmhouse near Hazerswoude, while Arjan G. leased a hunting ground and purchased a new Range Rover.
Read the reconstruction: how bribes at Vestia led to system failure
After a few years, Vestia’s derivatives portfolio is taking on irresponsible proportions. At a certain point the portfolio includes around 23 billion euros in interest rate insurance. When interest rates fall sharply at the end of 2008 during the euro crisis, Vestia will have to pay hundreds of millions more as collateral to the investment banks. Panic broke out at the end of 2011: Vestia could no longer bear the risks and was in acute danger due to its derivatives portfolio. Other corporations must step in to keep the largest corporation in the Netherlands afloat.
Intermediary Arjan G. collapsed under the pressure in 2012. He wants to end his life, but comes to his senses at the last moment. Instead, he confesses everything to the Public Prosecution Service and hands over his administration to the financial investigation service FIOD – whereupon the fraud becomes visible and the case gets underway. Arjan G. and Marcel de V. are arrested, the Public Prosecution Service seizes all their belongings.
In 2012, the crisis managers at Vestia and the supervisors reached an agreement with the banks to buy off the derivatives portfolio for 2.7 billion euros. In the years that follow, the investment banks buy off legal proceedings worth hundreds of millions – the question to what extent they knew that Vestia was not the suitable customer for these types of exotic products will not be brought to court.
The other people involved will. In 2017, there were civil cases against Vestia director Erik Staal, against Arjan G. and against Marcel de V. A settlement was reached with the Vestia commissioners and the accountants. In 2018, De V. was sentenced to three years in prison in a first criminal trial. Arjan G. is sentenced by the criminal court to 2.5 years in prison. Both suspects and the Public Prosecution Service will appeal.
Five years
Five years of waiting begin for the housing associations and the suspects. This puts a strain on the suspects in particular. Marcel de V. suffers from high blood pressure, which he says is due to persistent stress. Arjan G. also says he has suffered health problems from the period of uncertainty. Shortly after the first criminal case in 2018, he was admitted with a perforated colon. It recently became clear that he has high blood pressure and diabetes.
Marcel de V. still lives in his farmhouse in Hazerswoude. “I am not doing well, I am broken,” he told the court. De V. says he has difficulty making social contacts and struggles with depression. It is not possible to find work because potential employers drop out when they search for him on the internet. “My 16-year-old daughter has all kinds of friends, but no one knows what her father does. I want this to be done.”
Regrettor Arjan G. says he wants this too. After his confession, he fully cooperated with the investigation, which was called Klaproos. G. testified on behalf of Vestia in settlement cases against the investment banks. “I am proud of that,” he says now. G. moved to Germany with his partner, where he volunteered as a taxi driver. He now runs a small guest house near an old water mill and has somewhat rebuilt his life, although the uncertainty is taking a heavy toll. “I have been looking at the poppies in the garden for twelve years. Not a day goes by that I don’t think about this case. I would like to move on, I think I now have that right.”
Strafeis
During the hearing, Marcel de V. and Arjan G. express regret for what they have done. They both say they understand that it was bribery. They do state that they have always had the interests of Vestia first – which the Public Prosecution Service is keen to ask for: why did they not give up their many millions in additional earnings? There is no definitive answer. In the conclusion of the indictment, the Advocate General points to greed as the motivation for their actions. „Greed is goodas Gordon Gekko in Wall Street said.”
The Public Prosecution Service considers the two guilty of, among other things, bribery and money laundering. Marcel de V. is sentenced to 3 years and 4 months in prison, Arjan G. is sentenced to 3 years and 8 months, both after deduction of pre-trial detention. That could have been even longer; the Public Prosecution Service says it has taken into account the lengthy course of the case and the personal circumstances of the suspects in the sentence. The date of the verdict will be announced later this month.
You can talk about suicide on the national helpline 113 Suicide Prevention. Telephone 0800-0113 or www.113.nl