Vestas Says Ex-CFO Involved in Unauthorized India Deals

Vestas Wind Systems Turbines
Eighty Vestas Wind Systems turbines off the coast of Horns Reef, a shallow area in the eastern North Sea, Denmark. Source: Vestas Wind Systems

Vestas Wind Systems A/S, the world’s largest wind-turbine company, said a former chief financial officer was involved in two unauthorized deals in India that may cost the company as much as 18 million euros ($23 million).

Vestas canceled its severance agreement with Henrik Noerremark, who “seems to have entered into these agreements in violations of the company’s internal provisions regulating his power to bind the company,” according to a statement today.

The revelations are a stark contrast for a man who once held the Aarhus, Denmark-based company’s top financial post and was promoted to chief operating officer less than a year ago. Vestas is now considering whether to pursue legal action against Noerremark, according to Chairman Bert Nordberg.

“We have not yet taken a position on whether there are grounds for legal claims,” and the decision will be made, in part, based on any additional information that’s uncovered during an investigation now under way, Nordberg said in the statement.

Noerremark was promoted to COO and deputy chief executive officer in January. Less than a month later he quit, hours before the company reported a 2011 loss of 166 million euros, four times greater than analyst forecasts.

While serving as CFO, he overstepped his authority during negotiations in India, according to the statement. One deal cost Vestas 4 million euros. The second may cost the company another 14 million euros, which was “transferred to two Indian companies.” The statement didn’t identify the companies.

Reversing Transfers

Vestas is seeking to reverse the transfers and has made provisions to cover the losses, according to the statement.

“The investigations we have carried out so far show that both the previous and the current board and the CEO have been kept unaware of these transactions,” Nordberg said.

The revelation may drive Vestas shares down tomorrow, according to Martin Prozesky, an analyst with Sanford C. Bernstein Ltd. in London.

“This will be taken badly by the market,” he said in an e-mail today. “There will be questions about other possible issues like this.”

The company declined to comment beyond the statement and couldn’t provide contact information for Noerremark today.

Vestas fell 1.6 percent today to 39.96 Danish krone at the close in Copenhagen. The company has lost 36 percent of its market value this year as increased competition from Chinese manufacturers and waning government support for wind energy cut into sales.

The announcement was released after the close of regular trading today. It was prompted by questions from a Danish newspaper that the company said is expected to publish an article tomorrow on the termination of Noerremark’s severance agreement.

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