NETHERLANDS - Two former directors at PREIM - the property manager of the €14bn Dutch pension fund for Philips - have been found guilty of fraud.

The Haarlem court found former director Will F guilty of committing forgery, money laundering and bribery, as well as participating in a criminal organisation, and sentenced him to four years in prison. Rob L - Will F’s successor from 2006 - was found guilty of having taking bribes.

The Haarlem court ruled that both former directors had accepted bribes in exchange for agreeing to divest large blocks of real estate in the PREIM portfolio to developer Jan van V. Rob L, also sentenced to four years in prison, subsequently sold the real estate at a profit.

This process was repeated on several occasions within a short period of time, with all involved parties sharing in the profits, the court said.

The fraud occurred as the Philips scheme divested its direct property holdings in the Netherlands, having decided to shift its portfolio to non-listed, indirect property.

The court, however, did not find either of the former directors guilty of having undervalued the properties.

“It was widely known that these property parcels were sold for a price just above the assessed value,” it said.

“Commercial interests apparently didn’t have priority at the Philips Pensioenfonds and PREIM.”

The Philips pension fund, which allegedly lost about €150m, declined to comment on the particulars of the case.

However, it stressed that it would do its utmost to reclaim the lost assets, and indicated in 2009 that PREIM was no longer active for the scheme.

The ruling against the two former directors came after four years of legal wrangling in what has been a protracted, high-profile case. So far, a dozen suspects in total have been convicted.

Another victim of the fraud had been Rabobank subsidiary Bouwfonds, where Van V served as director. Bouwfonds has allegedly been defrauded of €85m.

Financial daily Het Financieele Dagblad suggested that €160m of the disappeared assets had been returned to the Philips scheme and Bouwfonds, but that tens of millions were still missing.

Hans Copier, chairman of the Association of Institutional Property Investors Netherlands (IVBN), said: “The conviction of all suspects, and the considerable prison sentences in particular, is the right sanction for the criminal behaviour of this group of insiders.

“The sector has been shocked by the scale and the criminal involvement of the insiders, who have damaged confidence in real estate as an asset class.”

Copier said property sales should be monitored years after the transaction had been completed.

He also said property organisations should work closely together with tax authorities, the police and the public prosecutor in order to root out unlawful practices in the sector.

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