McKenzie Funk Searches Iceland for the Man who Tried to Sell Glaciers
“There was no country more in the thrall of commercial banking and paper wealth. . . . All this helped explain why no one in Iceland seemed worried about building an economy on water, not when the last one had been built on air.”
“People come up with a great dream, then they get into that dream,” says Kenneth Krys, who worked to unwind Bernie Madoff’s Cayman Island funds and played a similar role for a hedge fund founded by a dentist named Otto Spork. In 2008, Spork secured the water rights to a glacier north of Reykjavik, quit his dental practice and founded Sextant Capital Management, the most successful hedge fund in Canada. His pitch was simple: the world was warming and water was running out. Sextant bought water companies, hundreds of Canadian and offshore investors bought in, and all went smoothly until December 8, 2008 — three days before Madoff was arrested — when Spork was accused by the Ontario Securities Commission of a massive fraud. Spork then disappeared.
“Spork inflated fees — that was his rip-off,” says Krys, who, in twenty years in the Caymans, has seen only half a dozen true Ponzi schemes. “Madoff never invested his money. It just sat in his bank accounts,” he says. Spork spent nearly all his money. “I just don’t think he’s given up the dream of selling Iceland’s water,” says Krys, who has yet to determine the amount that will be returned to Sextant’s investors. Harper’s Magazine contributor McKenzie Funk travels to Iceland, where Spork may or may not live, in attempt to find the man and determine whether Sextant was a kind of Ponzi scheme from the start, or if Spork truly believed he could sell Icelandic water to a drought-stricken world.
“I think the next war in the world is about water,” says the mayor of Rif, an Icelandic fishing village sought out by water seekers from all over the world. He’s seen companies from England, from Norway, from Denmark, he tells Funk. “An Arab from Kuwait. An agent for a guy from China.” Spork was the first outsider to build anything tangible to collect Icelan’s water. “Otto could sell the Northern lights, he was such a good salesman,” says Reykjavík banker Sverrir Hermann Pálmars, Spork’s onetime fixer, “but I think he was trying to honestly establish this company. We worked long hours. He worked long hours with us. Maybe Otto was maybe five or six years too early, because I think the price of water is going up.” Since Spork vanished, Sverrir has been consulting on a water project involving Chinese buyers.
“He goes from being a dentist to a hedge-fund manager. That’s quite a leap,” says Eric Sprott a Canadian self-made billionaire who made wildly successful bets on gold and silver, and who Spork may have been trying to emulate. To him, the plan to export Icelandic glacier water does not seem outlandish. “Lots of people invest in commodities,” he tells Funk. “There are all sorts of waters that we get all the time, and they’re all from some special goddamn place,” he says. “Iceland might make some sense.”