Report — From the July 2013 issue

Glaciers for Sale

A global-warming get-rich-quick scheme

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The Canadian dentist behind what may or may not have been the world’s first global-warming Ponzi scheme either lives or does not live in Iceland. His name is Otto Spork, and when I first learned of him, in 2008, he had secured the water rights to a glacier north of Reykjavík and quit his dental practice to run the most successful hedge fund in Canada. His Toronto investment firm, Sextant Capital Management — the name was chosen to honor his paternal grandfather, Johan Marinus Spork, a Dutch sea captain — had recently been claiming 730 percent returns for its investors. Spork’s sales pitch was simple: the world was warming and parts of it were running dry, so Sextant bought water companies. Hundreds of Canadian and offshore investors were persuaded to buy in — and Spork earned millions of dollars in management fees as money poured into his funds. The arrangement succeeded magnificently until December 8, 2008, three days before Bernie Madoff was arrested, when the Ontario Securities Commission accused Spork of a massive fraud.

Water is the medium of climate change — the ice that melts, the seas that rise, the vapor that warms, the rain that falls torrentially or not at all. It is also an early indicator of how humanity may respond to climate change: by financializing it. In the year following the release of Al Gore’s 2006 documentary An Inconvenient Truth, at least fifteen water-focused mutual funds were created. The amount of money controlled by such funds ballooned from $1.2 billion in 2005 to $13 billion in 2007. Credit Suisse, UBS, and Goldman Sachs hired dedicated water analysts. A report from Goldman called water “the petroleum for the next century” and speculated excitedly about the impact of “major multi-year droughts” in Australia and the American West. “At the risk of being alarmist,” it read, “we see parallels with . . . Malthusian economics.”

In the summer of 2008, I was starting work on a book about climate change when a Spork tip came in from a sales executive at the trade publication Global Water Intelligence. “The transportation of potable water is becoming increasingly popular as a solution to cases of acute water shortage,” wrote the salesman as he tried to entice me with a $1,060 subscription. The tankers that had sailed that spring between Marseille and a drought-stricken Barcelona had eventually been outcompeted by rainfall, he admitted. But “one of our subscribers (and the sponsor of our most recent conference in London), iGlobalWater . . . has recently been heavily involved in such projects.” He claimed that iGlobalWater — unlike the handful of stillborn bulk-water schemes in decades past — had moved beyond the planning stage. The company was already shipping water from Iceland. I didn’t buy a subscription, but I was intrigued.

The website was registered to something called Spork Capital. The name Spork led to Sextant Capital. Sextant and iGlobalWater turned out to be on the same floor of the same office tower at the Royal Bank Plaza, Downtown Toronto’s most prestigious address. (It would later become clear that iGlobalWater’s global headquarters consisted of half of a long table inside Sextant.) I phoned and emailed both companies repeatedly. No one ever responded. A few months later, the securities-fraud charges were unveiled and I began to understand why Spork had stonewalled me. According to his lawyers, Spork had moved to Iceland. It was the beginning of a five-year chase.

The dentist ignored Canadian authorities too, skipping meetings with investigators and appearances before the Ontario Securities Commission. On May 18, 2011, with almost $100 million from Sextant investors still unrecovered, the Ontario Court of Justice found him guilty. Nearly all Sextant’s funds had been funneled into two Icelandic water businesses that Spork himself controlled through a web of shell companies in Luxembourg and the Cayman Islands, and the dentist and his family had paid and loaned themselves close to $50 million. What wasn’t clear was whether Sextant had been a kind of Ponzi scheme from the start — or had Spork really believed he could sell Icelandic water to a drought-stricken world?

I decided to fly to Iceland with my friend Damon Tabor, a fellow journalist who had shared my Spork interest from the beginning, to see if we could find him and discover the truth. It was a small country. We would bring cameras and voice recorders and GPS units and binoculars and walkie-talkies. Before we left, we consulted the financial journalist Sigrún Davíðsdóttir, one of the few Icelanders to report on Spork. She told us about the poet Einar Benediktsson, who at the beginning of the twentieth century had gathered a bunch of Swiss investors and tried to sell them the northern lights. “What I think of Spork?” she wrote in an email.

It pains me to say (because also I would most certainly like to see the water export pump money and jobs) that I think he is, what we say in Icelandic, a “Northern Lights-salesman.”

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’s forthcoming book about climate change, Windfall, will be published in January by the Penguin Press. He is a fellow at the Investigative Fund.

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