NEW YORK — Harvard University’s endowment arm sold 33,600 acres of forest to Ikea Group, exiting a foray into Romanian timberland.
Harvard Management Co.’s strategy of investing in overseas forestry went awry in Romania, where an agent it hired was convicted of bribery and money laundering last year. Prosecutors said the agent arranged with sellers to inflate prices that Harvard-owned Scolopax Srl paid for timberland in exchange for $1 million in cash. He denied committing any crime.
“It highlights the outsize risk of going into these frontier markets,” said Joshua Humphreys, president of the Croatan Institute, a social and environmental research group in Durham, N.C.
Paul Andrew, a spokesman for Harvard, declined to comment.
Scolopax put the land up for sale in late 2013, asking for about 383 million lei, which was then equal to about $116 million. A spokesman for Ikea declined to say how much it paid for the land.
The purchase makes Ikea the biggest private forestry owner in Romania and gives it a local source of wood for manufacturing. The Swedish furniture retailer has said it bought the forests from Greengold European Capital SA, which is owned by Harvard through a series of investment vehicles. Scolopax sold the property to Greengold last year, Romanian Newspaper Jurnalul de Buzau reported.
Sorin Chiorescu, chairman of Greengold in Stockholm, and Cristina Gheorghita, a lawyer for Scolopax with TPA Howarth in Bucharest, declined to comment.
Harvard Management, which oversees Harvard’s $36.4 billion endowment, began buying the forests a decade ago under a strategy of acquiring timber and farmland in developing countries such as Brazil and Argentina, as well as in Eastern Europe.
Dragos Lipan Secu, the agent for Scolopax, was found guilty of bribery and money laundering at the Tribunal of Botosani in June 2014. His wife, Mariana, charged with complicity, was also convicted. They each received a three-year suspended sentence, and the court ordered the seizure of $1.1 million, the amount of the cash portion of the bribes. The verdicts were upheld on appeal.
“I’m not an angel, but I know the law and what I can do and how much I can bend it,” Dragos Lipan Secu said in a phone interview, adding there was no fraud in the transactions. He said all the lands he purchased were at market prices.
“They were not inflated,” he said. “They reflected the emerging-market pricing, and I had to do an active marketing.”
Harvard has said Lipan Secu was an outside contractor, and its relationship with him ended in December 2012.