Info Service on Biodiversity and Traditional Knowledge (Oct13/03)
WORLD NETWORK BRIEFING PAPER
A shell company, chartered in Hong Kong and linked to a murky web of investment vehicles registered in unusual jurisdictions, has laid claim to a biofuel gene found in an African strain of green algae.
The gene was identified by an Australian university, funded by the mysterious company, which places the value of the gene patent claim at US $500 million. The French chemistry institute that first published on the strain and reportedly provided it to Australian researchers has not responded to requests for more information.
The algae itself, a strain of a strain of Botryococcus braunii is not suitable for commercial biofuel production as it grows too slowly. Instead, the company plans to genetically engineer the gene into other microorganisms, such as bacteria and yeasts. These transgenic microbes, the company says, will produce biofuels much more efficiently than present technologies.
The strain was collected in Lake Ayame in eastern C๔te d'Ivoire. Similar genes from other B. braunii strains are also covered by the company’s patent applications, but it was the high-producing Ivoirian strain from which scientists isolated the key gene sequences. The DNA codes for botryococcene, a complex oil which, if successfully produced in large scale microbial cultures, can be eventually converted into diesel, petrol, and jet fuel through the industrial process of hydrocracking.
Web of shell companies
The patent applications are owned by a Hong Kong limited liability company called World Wide Carbon Credits (WWCC).(1) WWCC’s owners have valued a 10% stake in the African-based algae intellectual property at US $50 million, implying a total value of the Lake Ayame algae gene of $500 million or more.(2)
WWCC’s international patent application (WO2011032213) filed under the Patent Cooperation Treaty of the World Intellectual Property Organization was published in 2011, and is advancing through patent offices worldwide, including those in Australia, Canada, China, Europe, Japan, Korea, Mexico, and elsewhere. The United States has already granted the application, where the Ivoirian gene is covered by patent 8,034,603.
Hong Kong-based WWCC was incorporated by two Australian passport holders, neither of whom lives in Australia (or Hong Kong), but rather in Malaysia. WWCC is in turn controlled by the General Equity Building Society, a private bank chartered in New Zealand but which does not do business in that country. General Equity is structured to take advantage of loopholes in that country’s banking laws to avoid filing tax returns and evade regulatory oversight. The bank claims that it controls assets worth more than US $5 billion, mainly in the form of alleged mineral reserves at undisclosed locations, but due to a lack of information this claim cannot be verified.
General Equity has come under public (3) and government scrutiny in New Zealand, whose Reserve Bank has issued a Caution (a formal public document) that the regulator “is not in a position to monitor transactions undertaken by New Zealand registered building societies that operate in overseas markets”. The Caution then names General Equity as such an institution. (4)
The investment funds and other financial entities that appear to hold a stake in WWCC extend to companies registered in the Cayman Islands and the British island of Jersey. The complex web of trusts, funds, and other entities are linked together, however, by the same few expatriate Australian (and one American) directors. WWCC’s ownership situation is so complex and secretive, however, it is impossible to say with certainty who owns this attempt to make biofuel from the African gene.
Another General Equity associated company, called Anametrics, is domiciled in the Marshall Islands with an office in Bangkok, and claims to have US $32 billion in assets (184 times the GDP of the Marshall Islands themselves). Anametrics shares directorship with General Equity and WWCC and says that it will construct a Russian-designed hydrocracking facility in Thailand, (5) presumably exploiting the WWCC gene patent to produce feedstock.
WWCC appears to take its name from a business plan, referenced in the patent applications, to sell carbon credits to help finance its fuel-producing operation. This somewhat counter-intuitive idea – after all, tailpipe emissions from engines burning diesel, jet, and other fuels are contributors to global warming – is based on the reasoning that microbes genetically engineered with the Ivoirian gene will consume carbon dioxide in the process of producing botryococcene, the precursor to biofuels.
Unknown Route from Africa
Research to identify the Ivoirian gene was funded by WWCC and conducted by Andy Ball, a professor both at Australia’s Flinders University and RMIT University in Melbourne. Ball is listed as the inventor on the company’s patent applications. According to a Director of WWCC, Pierre Metzger, a French academic, gave Ball the Ivoirian algae (and other strains).(6)
Metzger is a senior biochemist at the Paris Institute of Technology (Chemie ParisTech), a public research institute in France, and has published papers related to the Ivoirian and similar strains since the 1980s, when he became interested in their potential for producing biofuels.(7)
Neither Metzger nor the Chief of Staff of Chemie ParisTech responded to e-mail queries about the Ayame strain and its provision to Ball and WWCC. Thus it is not clear when the strain was collected what access and benefit sharing understandings exist with Ivoirian institutions, if any. Nor is it clear what financial relationships, if any, exist between Chemie ParisTech, Ball, and WWCC.
As the source of the Ivoirian biofuel gene was apparently collected in the 1980s, this case again shows the importance of tracking ex situ collections of biodiversity, in order to ensure that appropriate benefit sharing arrangements are put into place when these genetic resources are put to new uses. The Nagoya Protocol on access and benefit sharing under the Convention on Biological Diversity, concluded in 2010 and gathering the required 50 ratifications to enter into force, stipulates that benefit sharing is triggered by utilization of a genetic resource. Thus the Ivoirian gene would fall within the scope of the Nagoya Protocol if the necessary national law is in place.
The Ivoirian gene also shows that collections made for academic purposes, which might be construed (at least at the time of collection) to be “non-commercial”, may sooner or later wind up being used in for-profit applications. This means that countries developing access and benefit sharing law, particularly pursuant to ratification of the Nagoya Protocol need to take care to ensure that their legislation does not presume academic studies are non-commercial in nature and requires benefit sharing by all biodiversity collectors in the event of commercialization, including third parties who receive resources, regardless of the collector’s institutional base.
Some aspects of this case indicate secretive financial interests are at play, such as the undocumented claims of multi-billion dollar assets made by WWCC-affiliated companies as well as their reliance on unusual jurisdictions not known for tight financial oversight. With the patent applicants hiding behind layers of shell companies, it is difficult to know who exactly stands to benefit from the Ivoirian gene. If the patent applications and technology proceed, clarifying these interests is of importance.
One important place to start this process is with Australia’s Flinders University, where the gene was isolated. Flinders has allied itself with the murky interests behind WWCC but, as a public institution of higher learning, should adhere to higher standards of transparency and accountability. At a minimum, Flinders should disclose all it knows about WWCC and its ownership and, perhaps, the University should also seriously consider, if it is appropriate for it to be affiliated with WWCC at all.
1. See http://wwcc-energy.com
2. The “WWCC Super Energy Fund”, a Cayman Islands entity whose asset is a 10% stake in the patent applications, is valued by WWCC at US $50 million. See: General Equity Annual Report 2011, page 32.
3. Vaughn, G (2012). Registered here and operating overseas (web page). URL: http://www.interest.co.nz/news/58855/registered-here-and-operating-overseas-three-building-societies-feature-us55-bln-mine-ass (accessed 25 July 2013).
4. Reserve Bank of New Zealand (2009). Clarification on Building Societies (web page). URL: http://www.rbnz.govt.nz/regulation_and_supervision/cautions_and_notices/3765520.html (Accessed 25 July 2013).
5. Anametrics (2013). Anametrics and One Anametrics Intertrade Ltd (web page). URL: http://www.anametrics.net/2012/02/anametrics-and-one-anametrics-intertrade/ (accessed 25 July 2013).
6. Jayasankaran S (2010). Researchers fired up by algae that converts CO2 into fuel. Business Times (Singapore), 17 November.
7. Metzger P et al (1988) Botryococcene distribution in strains of the green alga Botryococcus braunii. Phytochemistry 27:5, p. 1383.