Superyachts, Spies, & Scandal: The H2O-Windhorst Billion Euro Saga

H2O Asset Management lost billions of euros of investors' money through risky investments with Lars Windhorst.

### The Rise and Fall of H2O Asset Management: A Tale of Risk, Scandal, and Financial Ruin
* 💼 My journey has revolved around entrepreneurship, hard work, and risk-taking, culminating in a saga filled with **superyachts, spies, and scandal** involving Bruno Crastes and Lars Windhorst, who together **lost hundreds of millions of investors' money**.
* 💰 Bruno Crastes, a prominent fund manager, and Lars Windhorst, a controversial financier, found themselves entangled in a web of financial impropriety, with my personal exposure estimated at **over 1.5 million euros**, affecting **real people's pensions and investments**.
* 🔍 Investigative reporters, including Cynthia O'Murchu, have been tracking Windhorst's questionable dealings for over a decade, revealing a history of **financial misconduct and lawsuits** that have **marred his reputation**.
* 🏦 H2O Asset Management, founded by Crastes, initially thrived on **high-risk investments**, but their association with Windhorst led to a series of **convoluted transactions** that raised **suspicions of money laundering**.
* 📉 The turning point came in 2017 when H2O began pouring money into Windhorst's companies, leading to a **catastrophic loss of investor confidence** and a **staggering withdrawal of 8 billion euros in just eight days**.
* ⚖ Following the fallout, H2O faced severe regulatory scrutiny, culminating in a **historic fine of 75 million euros** and a ban on Crastes from fund management, marking a **dramatic fall from grace** for one of Europe's top fund managers.
* 🛥 As the scandal unfolded, Windhorst's questionable financial maneuvers continued, including a failed attempt to buy Hertha Berlin Football Club, which involved a **smear campaign orchestrated by private spies**, further tarnishing his **already fragile reputation**.
* 📉 Despite the chaos, Windhorst remains a **resilient figure in finance**, now seeking new opportunities while those affected by the scandal are left wondering **where their money has gone** and if they will ever **recover their losses**.

My story has been, from the beginning, entrepreneurship, hard work, risk-taking, and the relationships you build through business. This is a story of superyachts, spies, and scandal. This is a story about the lives of two consummate risk-takers

colliding, and through their collaboration, destroying hundreds of millions of investors' money. Bruno Crastes, one of the finest fund managers of his generation. Lars Windhorst, a racy financier with nine lives.

My estimated exposure is beyond 1.5 million euros. Real people, people's pensions, people's investments. Some of the underlying transactions could qualify as money laundering. I made mistakes, and I do work hard to rectify the mistakes I made

and help people who have suffered because of my mistakes and lost money, too. The big question for me is: where has the money gone? At the heart of this story, you have H2O Asset Management and its founder, Bruno Crastes,

one of the biggest stars of European investment, coming under the thrall of Lars Windhorst, a charismatic financier with a criminal past. My name is Lars Windhorst. I'm the founder and CEO of Tennor Group,

which is a private equity investment holding company. Why did you agree to do the interview? It's just my own gut feeling. I mean, how bad can it be? It's much better than hiding and not showing up.

The impression people might have is that I am driven by money, that I'm flamboyant. The reality is the opposite. Relationships motivate me more than money. My shortcoming has been that I have sometimes cared too little about money.

My name's Robert Smith. I'm the corporate finance editor at the FT. I'm Cynthia O'Murchu. I'm an investigative reporter. I've been following Lars Windhorst for the past decade, and Bruno Crastes and H2O.

I first started looking at Lars in 2017, and we realized that H2O was a really big part of the story very shortly afterwards. Lars Windhorst is one of the most enigmatic figures in European finance.

He's got friends in high places - Michael Douglas, the Hollywood actor, to Wladimir Klitschko, the heavyweight boxing champion. Since an early age, I had the dream to build a business empire. My first proper business was started when I was 14 years old

in 1991. By accident, into the PC business, I got a phone call from my main supplier, a Chinese businessman. I met the guy. "I'm Lars Windhorst. We have an appointment." "What? You? You are 12.

You are not 16." About a month later, he said: "Look, everyone thinks it's crazy, but there's something about you." The Chinese friend and business partner then moved into the guest room of my parents' home, and we started.

He went on a business trip with Chancellor Kohl, who was one of the most powerful politicians in Germany. This was not long after the Berlin Wall had fallen. Germany had this kind of yearning for this economic renaissance, and here,

burst onto the scene, this teenager. During that trip, we got closer, me and the chancellor, and became friendly. He invited me into a kind of informal economic advisory council of the government. I joined him on many different state visits

to Asia, to America. He was in all the media. It was a big circus around this young kid. Lars was planning to build the tallest skyscraper in Vietnam, Windhorst Tower. He got dubbed the 'German Bill Gates.'

He was the wunderkind of German business. Quite soon into his business career, questions started to emerge. Allegations of financial impropriety, business partners suing him. He had a string of lawsuits in his 20s.

It became a need to correspond to this amazing image. The beginning of the end, or the beginning of the first big failure, because it was too much, too quick, too fast, led to me becoming a bit careless.

In the 2000s, Lars had a string of corporate bankruptcies. He had a personal bankruptcy. He had criminal charges. I had to ask my mother, grandmother, sister, father, a Chinese group, to give me some money because I could not

access any cash. A painful period for me, also for my parents. They accused me of delayed bankruptcy filing, fraud, and breach of trust. The legal advice was this may take 10 years.

I decided at that time in 2009 to do a plea bargain where I had to pay a fine and accept a suspended sentence, and I had a criminal record from then. It got deleted after 10 years. And he avoided going to prison. But he had to stand up in court and admit that he misappropriated company funds.

I did not procure properly signed board resolutions. To admit this is a lesser problem for me than to have a fraud charge. I did not have a hidden bank account where I misappropriated funds. Some people might have been destroyed

by all of this - not him. Lars is a great corporate survivor, but he's also a literal survivor. He survived a plane crash. The plane needed to do a fuel stop on the way, which was Almaty, Kazakhstan, and it was winter.

Immediately, when it was in the air, it started to shake and then almost flipped 90 degrees to the right. The plane broke apart and the back part exploded. The front part, where I was in, separated. One pilot, sadly, died.

The other one had more severe injuries than me. The German ambassador, when I woke up, was there. A Kazakh nurse came in and started to, with scissors, cut my jeans. I said: "Stop. I have only one pair of jeans with me."

Don't destroy my jeans. I need to go to Hong Kong." And then the ambassador said: "Listen, shall I bring a mirror? You will not go anywhere." A week or so later, he announces that he's become one of the biggest shareholders in Air Berlin.

The deal from the hospital bed. After the criminal conviction, his reputation in Germany is pretty much in the dirt. So what does he do? He sets up in London. Mayfair is the place where Russian oligarchs and billionaire sheikhs strike deals.

The most fascinating and intellectually interesting and challenging business, which is, kind of, in my view, the Champions League of business, is finance. That is the lubricant, the fuel which keeps the whole world economy going. He basically starts brokering investments for people.

This is a world of low interest rates, quantitative easing. It's quite hard for people to make a buck, and he turns a lot of heads. His office in Mayfair is on Savile Row, and the office is incredible.

The penthouse floor, he totally remodels the place. It becomes all black marble, modern art, floor-to-ceiling wine fridge. A lot of people are bamboozled by the glitz. OK, this guy has some skeletons in his closet.

But as the thousand-pound wine is tinkling into their glass, all those concerns seem to melt away. It has been useful to have an office in London's Mayfair the last 10 years to receive and meet clients and investors.

from all over the world. It is beneficial for a banker who lends money to a client to have a relationship and to know firsthand what's going on, what is he thinking, how is he feeling? Does he look good? Does he look confident?

Does he look scared? I think all of these soft factors do matter, even in the age of Zoom calls and emails. Well, money begets money. A billionaire is more likely to talk to someone who he thinks is also a billionaire.

So he had this amazing yacht called 'The Global.' It's like 74 meters. It had space for 12 guests. It got sold a while ago, but when I had a yacht I did use it, again, for meeting people,

for relationships. He was bringing Bruno Crastes onto the yacht, the family of Bruno Crastes. Bruno Crastes is a suave silver fox. He's got this winning smile and this deep Mediterranean tan. Here you have a guy who says, 'I'm

going to take a lot of risks, but I'm going to make you rich.' So Bruno sets up H2O Asset Management, his own firm, in 2010. He took big risks. He used a lot of leverage. He took big bets.

He's someone who held his nerve when things got really tough. That trait has brought him riches, to not go where the crowd goes and the ability to hold steadfast. It served him really well in the time of the financial crisis.

against all odds. They got seed investment from Natixis and they took off. His investment philosophy is that risk management and regulation make you cut your positions when they go against you. He says that's when you should hold your nerve.

Ordinary savers can put their money in H2O. I'm Lionel Paillet. I'm French. The money I invested into H2O funds came from savings, and it's essentially family money. When I looked at H2O, I didn't know that company.

The performance that was discussed by H2O, from my advisors, was exceptional, but also de-risked by the names on the tickets. When you look at Natixis, you look at KPMG, CACEIS,

you're like, wow, you feel confident. Vincent Chailley is the chief investment officer of H2O. Our strategic positions are doing really well. He's essentially like Bruno's business partner. Vincent was the one that first established this relationship

with Lars. Some people even said Vincent was besotted with Lars. In 2015, H2O started entering into transactions with Lars Windhorst and related companies. Right from the start, it appeared to go wrong.

H2O is called H2O Asset Management because it's supposed to invest in liquid and transparent financial products. What Lars is selling are illiquid investments, incredibly hard to sell and incredibly opaque as well.

There are some very complicated transactions. So H2O is often doing something called repo. These were repurchase agreements where Windhorst companies would sell H2O a bond. That bond would then get repurchased by a Windhorst company.

It would go on and on and on, happening multiple times - buy, sell, buy, sell, buy, sell. Bonds were not just moving up, down towards H2O and down to Windhorst companies and back.

They were also moving sideways from one Windhorst ladder company to another. So you'd have the holding company of Lars buying bonds related to a lingerie company, for example, from a company that was set to back an oil venture.

It's pretty strange. It's a bit like the shell game. You have to follow where all this money is and you can't. Back then, we did several transactions which looked to us not too exotic, intra-group activity

within companies we controlled. In retrospect, you can look at it and say, was that the smartest thing to do? There was liquidity in our bonds, and there was a wider audience of investors trading those bonds. The things we did were not out of the ordinary.

Some of these companies, their funding, it comes out later in court that they're making loans to Lars himself. There's a sort of intermingling of Lars's personal finances and the corporate finances. And you have to ask, who's paying for the private jet?

Who's paying for the superyacht? Who's paying for the Savile Row office? Who's paying for the wine? I do not believe that there has been mingling between private and business because everything we have done, I have done.

I spent my time on... the last few years has been predominantly business. The real big turning point came in 2017. They started pouring money into Lars Windhorst related companies. Chailley himself is worried about this.

He sends an email to Bruno saying Lars is leveraging himself on our balance sheet, borrowing too much money from us. And he says, we have to do something. Lars, in his communications to H2O, he's pretty upfront.

There are emails he sends to Bruno where he says we need to clean the balance sheets of various companies. And he essentially asks H2O, can you buy some of these bonds to take them off the balance sheet before an auditor or bank looks at them?

If someone asks you to help them clean their laundry, that's probably OK. But someone asking you to help clean their balance sheet should set off a few alarm bells. At the start, it seems like Bruno might be a bit skeptical about Lars.

It'd take five minutes of looking on the internet to see if there might be some red flags. He seems to get seduced by Lars. Bruno wrote to Lars to thank him for a week-long New Year's trip on the yacht and said it was a family relationship.

Lars Windhorst likewise replies, saying it's also, for me, extended family. And this is when the personal and professional lives of Lars Windhorst and Bruno Crastes really start to intertwine.

It was like Bruno and Vincent were brothers. And then Lars turns up, charismatic, charming, also very much into risk-taking. Bruno's always insisted that he thought there was great upside. By betting this money, he could make

even more for his investors. They may have believed there was value in this, or there's something else going on, something darker. I'm Dominique Stucki, a partner in Paris. I've been working on the H2O case for five years now.

Some of the underlying transactions made by Tennor with the funding of H2O could qualify as money laundering. One of the intriguing subplots in this is the link between Lars Windhorst and a bank in Switzerland called Falcon Private Bank

and its former chairman, an Emirati businessman called Khadem al-Qubaisi. Falcon Bank and al-Qubaisi were implicated in the 1MDB scandal. This is the Malaysian sovereign wealth fund.

Billions of dollars were siphoned off by high-level Malaysian officials and their associates and then laundered all over the world. Some of that money went through Falcon Bank. In 2016, Swiss and Singaporean regulators

found that Falcon Bank had breached money laundering regulations on some of these trades. KPMG did an internal investigation into Falcon and found that al-Qubaisi had a fund at the bank which carried out 100 transactions linked to Lars Windhorst.

KPMG was concerned that some of them didn't make any economic sense, and that some were used to help Windhorst manipulate prices and benefit him. We can see from emails between Lars and H2O that Lars suggested

a number of transactions with Falcon Bank, in some cases even after serious questions were raised about Falcon and 1MDB. One of the early trades H2O did with Lars involved Falcon. H2O had to chase Lars and Falcon for weeks to settle the trade.

It really was a warning sign for trading problems to come. One in 2016 was very convoluted. So Lars asks H2O to do a quick and urgent trade, and it involves bonds and cash moving from one party

to the other in a daisy chain. When Vincent asks why Falcon is selling the bond, Lars explains that the point of the daisy chain is to get money to a third party altogether. Two banks refused to clear the trade on compliance grounds,

leaving them to look for someone else to step in. We asked H2O about these trades, but they didn't specifically address them. Twelve years ago, thirteen years ago, Falcon Private Bank, as a bank, decided to invest into various opportunities we brought to them.

Securities, stocks, and bonds, not even directly from us, but through the issuing bank who issued those securities. There has been a bank-to-bank transaction like it is usually done in the financial markets. And what the bank then does with the securities they have bought

on their own book is solely a decision and a discretion of the bank, and nothing where we can be or have been involved with. We had no direct business relationship with Khadem al-Qubaisi. I cannot imagine, given the nature of how transactions were

executed and booked, that a money laundering risk could be something which would face us or them. Lars has had so many near-death experiences in a corporate sense, and we keep hearing, "Oh, well, he got out of this scrape because H2O gave him some money."

What evidence is there for this? I spent quite a bit of time pulling together all the amounts, all the different companies that we knew were connected to Lars Windhorst. We were thinking, you know, maybe this will spit out

a few hundred million. If it gets to half a billion, that'd be great. That's a nice, sexy round number. And we got to over 1.4 billion. We can hardly believe it. One of the most revered fund managers in Europe

has bet over a billion euros with a guy with a criminal conviction behind it all. Days before we publish our investigation, Vincent sends an email talking about all the problems with this exposure related to Lars. And he says, "Confidence takes a long time to build,

but it can vanish quickly. At this moment, he doesn't
realize that confidence is about to vanish very quickly in H2O. It's like a bomb going off. The stock price of H2O's parent
company, the French bank Natixis

crashes. There are questions raised about
the liquidity of H2O's funds. Investors got really spooked
and started yanking their money out, around eight
billion euros in eight days. And in the middle of this,
Bruno tries to halt

this crisis of confidence. If he talks directly
to investors, he can stop the stampede. And there are a couple of
video addresses he does. There were a number of investors
who originally pulled money out. There were other investors
who were convinced.

Bruno, as we understand,
really thought this was going to
blow over in no time. The second video
was less confident. "We never gated, and
we will never gate. Volatile periods have always
been a great opportunity."

"We will never gate the funds." He will never stop
investors from being able to withdraw their money. It's a sort of magic
spell that stops the stampede. Those messages gave
me zero confidence. Natixis was trying
to get out of H2O.

You've got, like, very
tangible information out there. I understand you're trying
to calm everybody down, but there is bad news. Why hide it? Bruno's a risk-taker. He's ramped up all these
leveraged positions

and he runs into the COVID crash. H2O's funds crash. They crash as much as 50 percent. And that's really problematic because Bruno has to stay within regulated caps on how much illiquid exposure they have.

And as the liquid investments crash in value, the illiquid investments become a bigger proportion of the funds, and you start to breach some of these thresholds. Again, it's this holding the nerve, going against the grain

that everybody else does, which is kind of the tagline of H2O. H2O's approach is, and has always been, to go where others don't. Bruno promised investors that he'd never gate the funds.

Regulators effectively do that for him. And a whole number of funds were frozen. Essentially, the investors could not take their money out anymore. What H2O does is carve out these Windhorst bonds.

It creates a sort of wall around this toxic exposure, and it walls off 1.6 billion euros of investors' money and says, "We can't give you this back until we get the money back from Lars." I looked at my bank statements.

Every month you just see the valuation of that asset diminishing and diminishing like snow under the sun. It's dark. My opinion about them is really... is very poor, to say the least. According to the investors who are suing H2O,

They've calculated that H2O was exposed by between 2.3 and 2.7 billion euros to Lars Windhorst related companies. H2O disputes that figure. This document, which is minutes by the H2O Executive

Committee, you have this sentence at the beginning of the document that states: "Currently, H2O Funds' exposure to the Tennor Group, nine entities, amounts to 2.7 billion euros." The French regulator holds an enforcement hearing.

H2O gets handed down the biggest fine for an asset manager ever in French history, 75 million euros. He's had to pay a massive settlement to avoid a fine in the UK. Bruno Crastes was fined 15 million.

But more seriously, they ban him from fund management. Bruno isn't allowed to run funds for half a decade. This is the most serious sanction against a fund manager in France, and it's handed down to someone who

was once one of its biggest stars. It's an incredible fall from grace. Vincent Chailley fined 3 million, a lesser fine because he had raised the alarm. But they continued on. Vincent Chailley remains as chief investment officer.

Bruno was re-titled Group Corporate and Strategy Director. It's easy to point at H2O, but that's not the entire story. We're not only suing H2O, we're also suing Natixis Investment Managers, KPMG, and CACEIS Bank.

Natixis is responsible for supervising the management of its affiliates. Relating to internal control and money laundering control, CACEIS banks should have checked whether all the assets in the funds were duly invested in liquid securities.

KPMG, the auditor of the funds, also has an oversight responsibility. At the heart of this, there's ordinary savers' money. Billions that were placed with what seemed like a reputable investment firm have sort of gone up in smoke.

The safety valves that are built into the financial system failed to operate properly. Internally, in H2O, why did these safety valves not work? In the case of the FCA, H2O basically tried to cover things up.

It submitted false documents to the regulator. It created board minutes for meetings that didn't happen. When they asked them, "Oh, have you had any sort of personal trips with Lars?", they didn't really tell them anything.

Bruno had flown around the world and taken these superyacht trips. When it comes to the FCA, rather than fining them more, they were settling with them to get H2O to pay back investors. The decision by the FCA states that €250 million would be

dedicated to all investors, whether they decide to sue or not. H2O has decided to discriminate against those who want to get their money back. They can either take a relatively small amount of money, this €250 million, divided amongst all these investors,

and it's a fraction of what they believe that they're owed, and in return, not sue any of the other parties that, in the eyes of the investors, should have had a responsibility for preventing this from happening. Or they can wait, and H2O has indicated that they

might have to wait six years. You need to trust asset managers and the financial markets. As a private investor, I think this really goes against it. It will bring a lot of distrust to the system. And time has passed, so time is not making the story better.

It smells worse. Right amidst the whole scandal, Lars Windhorst announced he was going to buy Hertha Berlin Football Club. He was supposed to have paid a down payment, and he turned to H2O to give them the liquidity and the money

to pay. One person he didn't get on with was the president of the club, called Werner Gegenbauer. Well, the problem is, the president's elected by the members. So Lars can't just fire the guy.

Lars Windhorst and H2O: scandal, spies and the superyacht | FT Film

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Financial Times

Introduction to the story of two risk-takers, Bruno Crastes and Lars Windhorst, whose collaboration led to significant financial losses for investors.

Focuses on entrepreneurship, risk-taking, and the resulting scandal involving superyachts and spies.

Introduces Bruno Crastes as a successful fund manager and Lars Windhorst as a financier with a questionable past.

Highlights the impact on investors, potential money laundering, and Windhorst's attempts to rectify his mistakes.

Background on H2O Asset Management and Lars Windhorst's early career.

Details H2O's founder, Bruno Crastes, and his connection to Lars Windhorst.

Explores Windhorst's motivations and public persona, emphasizing relationships over money.

Covers Windhorst's early business ventures and rise to prominence as a teenage entrepreneur in Germany.

Discusses the emergence of financial impropriety allegations and lawsuits against Windhorst.

Windhorst's financial and legal troubles, his resilience, and his move into London's financial scene.

Recounts Windhorst's bankruptcies, criminal charges, and plea bargain.

Describes Windhorst's survival of a plane crash and his continued business dealings.

Explains Windhorst's move to London and his focus on finance, attracting investors with a lavish lifestyle.

Bruno Crastes and H2O's involvement with Lars Windhorst and the questionable transactions that followed.

Introduces Bruno Crastes' background and H2O's investment strategy.

Shares investor perspectives and the perceived trustworthiness of H2O.

Details H2O's transactions with Windhorst, including complex repurchase agreements and questionable bond movements.

Raises concerns about the intermingling of Windhorst's personal and corporate finances.

Growing concerns about Windhorst's leverage and the intertwining of personal and professional relationships.

Highlights concerns raised by Vincent Chailley about Windhorst's leveraging on H2O's balance sheet.

Describes Windhorst's requests to H2O to clean up his companies' balance sheets.

Illustrates the deepening personal and professional relationship between Crastes and Windhorst.

Investigation into the H2O scandal, the fallout, and the ongoing legal battles.

Discusses potential money laundering and the link to Falcon Private Bank and the 1MDB scandal.

Reveals the extent of H2O's exposure to Windhorst-related companies, exceeding initial estimates.

Describes the market crash, investor panic, and H2O's attempts to control the crisis.

Covers the French regulator's fine against H2O and the ban on Bruno Crastes from fund management.