18 December 2024
FT Film (2024) ¦ Lars Windhorst und H2O: Skandal, Spione und die Superyacht
A fall from grace: H2O, Windhorst and the cost to ordinary investors
The Financial Times Film documentary traces how a relationship between two high-risk figures in European finance — Bruno Crastes, the founder of H2O Asset Management, and Lars Windhorst, the charismatic and controversial financier behind Tennor Group — produced dramatic losses, regulatory action and a crisis of confidence that hit ordinary savers hard. The film follows Windhorst’s meteoric rise from teenage entrepreneur to international dealmaker, his personal and corporate failures, and the sequence of opaque transactions that linked his businesses to H2O’s funds. The narrative exposes a pattern of risky, leveraged bets, convoluted repo-style trades and apparent conflicts of interest that left billions of euros at stake and led to some of the harshest sanctions ever imposed on a fund manager in France.
From wunderkind to courtroom defendant
Windhorst’s early story reads like a parable of rapid success: a teenager building a PC business, rubbing shoulders with powerful figures and being hailed in the media. But his career was punctuated by a string of bankruptcies, lawsuits and, ultimately, a criminal conviction for misappropriation that resulted in a suspended sentence. After moving his base to London, Windhorst cultivated an image of wealth and influence — a Savile Row office, a superyacht and elite social connections — which helped him secure new partners and investors despite his past. The documentary makes clear how his resilience and charisma drew other prominent players into his orbit.
The seduction of risk: Bruno Crastes and H2O
Bruno Crastes, once celebrated as a top European fund manager, founded H2O with an investment approach that prized contrarian bets and concentrated exposures. H2O’s early success attracted institutional backing and retail savers seeking higher returns in a low-rate environment. That success also created the conditions under which judgment could be clouded by performance, reputation and personal relationships. The film shows how Crastes and his team began dealing in increasingly illiquid, opaque securities, some connected to Windhorst, and how personal bonds between managers and Windhorst — including family trips on the superyacht — blurred professional boundaries.
Complex trades, intercompany loops and warning signs
The core of the controversy centers on a series of repo-style transactions and repeat trades in which bonds and cash circulated among Windhorst-related entities and external counterparties. These arrangements often involved transfers that were hard to trace — bonds moving between multiple Ladder companies, sideways transfers, and transactions routed via banks with troubled records. Falcon Private Bank, and its former chairman implicated in the 1MDB scandal, appears in the documentary as one such node; internal reviews flagged a number of trades tied to Windhorst that lacked clear economic rationale. H2O’s internal staff raised concerns as exposure mounted, but commercial incentives and personal trust delayed decisive action.
Crisis, freezing of funds and regulatory fallout
As markets turned and the Covid crash hit, H2O’s liquid assets plunged and the proportion of illiquid, Windhorst-linked holdings ballooned. Redemptions surged, investors panicked and the firm breached regulatory limits on illiquid exposure. H2O’s response — public reassurances followed by carving out around €1.6bn of assets linked to Windhorst into segregated structures — did not restore confidence. Mass withdrawals, heavy losses in some funds and investigations by French and UK regulators culminated in a record €75m fine in France, a UK settlement that included investor compensation, and bans and fines for H2O executives, most notably a multi-year prohibition on Bruno Crastes from managing funds.
The human cost: savers, lawsuits and trust lost
The documentary foregrounds the experiences of private investors who placed family savings with H2O and watched values evaporate over years. Lawsuits proliferated: investors sued H2O, Natixis, the auditor and custodian banks. Plaintiffs argued that multiple safeguards failed — due diligence, oversight by affiliates, auditor scrutiny and custody controls — and that H2O misrepresented or hid key information from regulators and investors alike. For many shareholders and savers, the scandal was not only financial but existential: it eroded trust in institutions that channel ordinary people’s pensions and savings.
Spies, smear campaigns and the Hertha Berlin episode
In an episode that underscores the documentary’s theme of moral hazard and shadowy methods, Windhorst’s attempt to buy football club Hertha Berlin involved hiring private investigators with former intelligence backgrounds. The investigators allegedly ran a smear campaign against the club president, spreading fake fan forums and caricatures; litigation ensued when they were not paid. The episode illustrates how personal vendettas and aggressive tactics intersected with Windhorst’s business ambitions, amplifying reputational damage.
Where did the money go?
The film leaves open the central question that haunts the story: did funds channeled to Windhorst’s businesses fund genuine but failing ventures, or were they misdirected to sustain a lavish lifestyle and opaque corporate structures? Investigations documented over €1.4–2.7bn of exposure between H2O and Tennor-related entities, depending on calculations. Windhorst maintains he has repaid parts of the exposure, insists much of the spending was legitimate business investment, and says he remains committed to rectifying losses. Regulators and courts have imposed fines and sanctions on H2O and some individuals, but Windhorst himself has largely avoided direct regulatory punishment in this saga.
Lessons and implications for investors and regulators
The H2O–Windhorst story underscores several enduring weaknesses in financial markets: the power of reputation to mute scrutiny, the risk of concentrated exposures in supposedly liquid funds, and the difficulty of policing complex, cross-border transactions. It shows how close personal relationships between managers and counterparties can warp incentives, and how regulatory and custodial safeguards can fail when confronted with sophisticated intercompany structures and opaque trades. For ordinary investors, the episode is a stark reminder that high returns often come with hidden risks and that transparency and independent oversight matter.
A story unfinished
By the documentary’s end, legal battles continue, compensation schemes and settlements are being evaluated, and Windhorst is depicted as already moving on to new ventures, introducing high-profile associates and seeking fresh capital. The film frames the scandal not as tidy closure but as an ongoing chapter in European finance: an unresolved accounting of where billions went, who should be held to account and how to rebuild trust in investment intermediaries.