Sharemax R200 000 claim hearing set for next month

Sharemax R200 000 claim hearing set for next month
April 13 2011 at 06:15pm
By roy cokayne

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A claim of R200 000 lodged with the fidelity fund of the Law Society of the Northern Provinces relating to the alleged illegal release of funds from the trust account of Sharemax Investments attorneys Weavind & Weavind is set to be heard next month.

Pierre Hough, the managing director of Chase International and a business strategist, lodged the claim in October on behalf of Johanna Bosman, one of his clients.

Jaco Fourie, a senior legal official in the disciplinary department at the law society, said yesterday he had received a response on Monday from Hough to the comments made by Weavind & Weavind on the claim.

He said the matter would now be placed before a committee of the law society to decide how to deal with it.

A date had not yet been arranged for the committee meeting. Hough also lodged a R200 000 claim with the Attorneys Insurance Indemnity Fund related to the same matter on behalf of another client, Toffie Risk.

But this claim was rejected on the grounds that the fund’s liability was excluded by section 47(1) (g) of the Attorneys Act and non-compliance with section 26 of the same act.

In terms of section 47(1) (g), the fund shall not be liable in respect of any loss suffered by any person as a result of theft of money which a practitioner has been instructed to invest on behalf of such persons.

Section 26 of the Attorneys Act relates to the purpose of the fund and, among other things, states the fund shall be applied for the purpose of reimbursing persons who may suffer pecuniary loss as a result of theft by a practising practitioner, candidate attorney or employee of any money or property “in the course of his practice”.

Both claims followed the halting of construction on the Zambezi Retail Park and The Villa projects in September last year when Sharemax funds dried up, which also coincided with investors in the syndications not receiving their monthly payment.

The registrar of banks subsequently appointed statutory managers to Sharemax to manage the repayment of funds to investors after an investigation found Sharemax’s funding model contravened the Banks Act. - Roy Cokayne

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Sharemax hopes for compromise from court
March 29 2011 at 06:00am
By Roy Cokayne
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The planned application by the new board of the Sharemax group of companies to seek permission from the High Court for an offer of compromise in terms of the Companies Act to creditors in schemes promoted and marketed by the company has hit a potential snag.

Chase International managing director Pierre Hough, a business strategist who conducts specialist forensic investigations, claims the planned offer of compromise is seeking to legalise an illegal act and prejudicial to the rights of “prospective investors”.

Hough said there were no investors or shareholders in either the Zambezi Retail Park or The Villa schemes because a condition that had to be met for the scheme to become effective had not been fulfilled.

This condition was the transfer of the properties into the syndication vehicle mentioned in the prospectus for both these schemes, he said.

Hough stressed both the Zambezi Retail Park and The Villa schemes had failed and, in terms of the government notice on property syndications, the money deposited by prospective investors into the trust account of Sharemax attorneys Weavind & Weavind must be repaid.

“In terms of the government notice, the money deposited can only be dealt with in one way. It must be repaid to the applicants. The issue of share certificates to prospective investors is highly irregular and possibly fraud.

“Prospective investors in Zambezi Retail Park and The Villa must not be duped into believing they are shareholders and debenture holders. They are merely prospective investors,” he said.

An investigation by the Reserve Bank found that Sharemax’s funding model contravened the Banks Act.

“You can’t take an illegal scheme and through a compromise arrangement move people from A to B. You must inform people correctly,” he added.

Dawie Roodt, the chairman of the Efficient Group and a director and spokesman for the new board of the Sharemax group of companies, said he was not in a position to comment on claims that there were no shareholders in Zambezi Retail Park or The Villa. He said he did not understand all the legalities around such claims.

But he said there was a lot of freedom around an offer of compromise provided the court was satisfied the alternative was worse for all concerned.

A statement issued by the Sharemax board last month stated the schemes of arrangement related to an offer of compromise were being structured “with the view to eliminating all and any contraventions of the Banks Act”.

It said this was to make it possible for the directives issued by the Reserve Bank against all Sharemax companies, and the appointment of statutory managers, to be withdrawn once the High Court had sanctioned the schemes of arrangement.

Roodt confirmed the planned offer of compromise would probably involve four Sharemax schemes, Zambezi Retail Park, The Villa and Sharemax’s income and growth plans.

He said the new board had made progress and on behalf of investors had taken over all the claims of former Sharemax chief executive Willie Botha and chairman André Brand and “with a bit of luck” would be able to launch the High Court application soon. - Business Report

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Posted on 17-11-2010
The registrar of banks has reached an understanding with attorneys acting for Sharemax Investments to keep “in abeyance at this stage” high court applications to review the registrar’s directives issued against the company and its 33 syndications.

Roy Cokayne


The registrar of banks has reached an understanding with attorneys acting for Sharemax Investments to keep “in abeyance at this stage” high court applications to review the registrar’s directives issued against the company and its 33 syndications.

Sharemax intended to bring the applications to review the directives issued in September, in terms of which the registrar said Sharemax and its syndications had contravened the Banks Act, and appointed statutory managers to manage the repayment of investments or seek other legal remedies.

However, Michael Blackbeard, the deputy registrar of banks, declined to elaborate further on this matter in light of the understanding reached with Sharemax’s attorneys.

Blackbeard was responding to a number of questions posed to him by Business Report related to the impact of the pending review applications on the powers of the statutory managers.

The registrar of banks appointed statutory managers to Sharemax and its 33 syndications in mid-September, after construction on The Villa and Zambezi Retail Park syndications was stopped in early September. Construction was halted when the payment of funds by Sharemax to Capicol, the developer of the malls, dried up. Capicol’s monthly income payments to investors also stopped.

In letters sent to investors in The Villa syndication in September, Sharemax blamed the media for sensationalising “a difference in the technical interpretation of the Commercial Paper Notice of the Banks Act” between the regulatory authority and Sharemax, resulting in many potential investors and financial advisers deciding to adopt a “wait and see” attitude regarding further investments in The Villa.

It said this had resulted in Capicol experiencing cash flow problems and completion of the centre being delayed.

PG Booysen of attorneys Booysen, Dreyer & Nolte – who are acting for Sharemax’s attorneys Weavind & Weavind with regard to a demand from 11 investors for repayment of R1.55 million paid into Weavind & Weavind’s trust account – said in a letter to attorneys representing investors that there was a long-standing dispute between Sharemax and the registrar of banks over whether the property syndication schemes promoted by Sharemax contravened the Banks Act.

Booysen said Sharemax and “several other affected parties” had brought review applications, which were pending, in respect of each of the notices issued by the registrar for Sharemax property syndications. “Whether the Banks Act has been contravened is, therefore, a highly contentious matter (that) has not been resolved.”

Booysen said they had been led to believe it was the intention of the registrar and managers to “regularise” the affected syndications in the best interests of investors rather than to terminate them. This meant it was not necessarily correct that some of Sharemax’s syndications could not proceed, he added.

Blackbeard said the terms of the directives issued under section 83 of the Banks Act were fairly narrow and merely “(directed) the repayment of funds illegally obtained from the general public”.

But Blackbeard said the funds had been invested in fixed property that was housed in separate legal entities, which made immediate repayment impossible. “We have… instructed the managers to seek options that would preserve the value and that will have the least negative impact on investors. The plan is to have the shareholders of each legal entity decide their own future.

“The newly appointed independent directors… will call for general meetings to provide the shareholders of each legal entity with up-to-date financial information… and to present the options available to them in this regard.

“We are still hopeful that this process will yield the best results for the investors.”



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Fraud case lodged against Sharemax's Zambezi scheme
October 18, 2010

By Roy Cokayne


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A criminal case has been opened at the Brooklyn police station in Pretoria related to the Zambezi Retail Park property syndication scheme marketed by Sharemax Investments.

Brigadier Andre Wiese, Brooklyn police station commander, confirmed last week that a case of fraud had been opened and subsequently been transferred to the commercial crimes unit in Pretoria.

Pierre Hough, the managing director of Chase International, said on Thursday that he had opened the criminal case on behalf of one of his clients.

Hough also lodged a claim with the Fidelity Fund of the Law Society of the Northern Provinces after Sharemax's attorneys, Weavind & Weavind, failed to respond to a demand to repay his client's R200 000 deposit paid into their account.

In an affidavit, Hough claimed that theft was committed by Weavind & Weavind of the money, and that there was fraudulent non-disclosure and misrepresentation in the Zambezi Retail Park prospectus.


Sharemax and Weavind & Weavind did not respond to several requests for comment.

Hough said his client's funds appeared to have been withdrawn from the trust account soon after they were deposited and prior to the transfer of the property.

A Department of Trade and Industry (dti) notice on property syndications issued in 2006 in terms of the Consumer Affairs (Unfair Business Practices) Act of 1988 prohibits the withdrawal of funds from a trust account before the properties have been transferred to the syndication vehicle.

Neither Zambezi Retail Park nor The Villa had been transferred to the syndication vehicle specified.

Sipho Tleane, the director for legal support and prosecutions in the consumer and corporate regulation division of the dti, said the division had not received any complaints about the alleged contravention by Weavind & Weavind but if it did, it would be referred to the SAPS.

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BONATLAs SHAREMAX OFFER HINGES ON LEGITIMACY OF CAPICOL REBELLION - Roy Cokayne
Business Report
15 Sep, 2010 at 06:51
BONATLA is prepared to walk away from its proposed acquisition of SHAREMAX INVESTMENTS if a planned transaction by CAPICOL is legitimate, but BONATLA CEO NICKY VONTAS said it intended to pursue the remainder of the proposed transaction. CAPICOL, the developer of The Villa and Zambezi Mall, last week said it was breaking ties with SHAREMAX and forming a partnership with shareholders in the syndications and international financiers, who would facilitate the completion of the two projects. SHAREMAX defaulted at the end of last month on monthly payments to investors in two syndications - this led to some investors lodging complaints with the FAIS Ombud. VONTAS said SHAREMAX had failed to give BONATLA access to the relevant information and documentation for due diligence. BONATLA last month announced the proposed acquisition of 39 entities owning a variety of properties syndicated by SHAREMAX in a share-based transaction valued at R4.98bn. The exclusion of The Villa and Zambezi Mall from the proposed transaction would reduce its value to about R2.5bn.

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September 2010 23:13 Statutory managers appointed at Sharemax: Michael Blackbeard - deputy registrar of banks, SARB
Interviewer ProfileAlec Hogg is a writer and broadcaster. He founded Moneyweb and is its editor-in-chief.

Statutory managers appointed at Sharemax: Michael Blackbeard - deputy registrar of banks, SARB

Reserve Bank moves decisively to help Sharemax investors.
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ALEC HOGG: Well, I guess the guys who put their money in Sharemax are wishing they had listened to Deon Basson years ago, and are wishing they put their money into something like Discovery Invest because unfortunately, as they say in the classics, the fit has hit the shan, and Advocate Michael Blackbeard is the South African Reserve Bank. He's the deputy registrar there. Michael, you've put into place now - it's called statutory managers, but the same thing as the curators that were put into place at Fidentia. They are now going to try to get money back for the investors.

MICHAEL BLACKBEARD: Yes, good evening, Alec. The position is that we did find that the funding model of Sharemax was indeed a contravention of the Banks Act, and the only administrative powers that we do have in such a case is to order repayment and then to appoint managers to manage the repayment process.

ALEC HOGG: Why did it take you so long? The late Deon Basson was writing about this for years. We have also at Moneyweb. Julius Cobbett has been unpacking individual parts of these portfolios and showing that they are completely unsustainable. Was it not possible to move quicker?

MICHAEL BLACKBEARD: Look, hindsight is 20:20 vision. There are various factors. Firstly, it's a question of was the law clear enough? And the lawyers of Sharemax made a big issue about whether the commercial paper notice was clear enough and whether there was room for interpretation, and we have to ... these submissions by the lawyer. So there were lawyers involved.

ALEC HOGG: They kicked you into touch though, playing for time, and in the period that they were playing for time more people presumably put their money into this crooked lot.

MICHAEL BLACKBEARD: Yes, unfortunately that is usually the case. We receive a complaint, we have to react, we do react. The question is do we react too quickly, then we are also not very popular, because we are destroying the goose that lays the golden egg. If we obviously respect the rights of the other and we take too long we are also not - so it's a very thankless task.

ALEC HOGG: It is. It's never easy to be a state employee and to be an honest one at that. You guys really are. But, Michael, from your perspective, what can the public do, we as journalists? And again I'll just refer to Deon Basson - the poor man went out there and attacked Sharemax all on his own. Naspers, his employers, refused to support him in the court action against Sharemax. He's passed on now and we know that the stress that was involved probably had a role in that. What can the public, what can journalists do perhaps if they get exposed to a similar...

MICHAEL BLACKBEARD: Look, I think there have been so many articles in a lot of newspapers that that's spot-on. If it sounds too good to be true, it usually is. And do your homework. Is it a reputable business, do you foresee problems? But the problem is I think it's always the carrot. There's a monthly interest to be earned, and that carrot would appear to erase all the cautionary elements.

ALEC HOGG: There's also slimy salesmen in between, aren't there?

MICHAEL BLACKBEARD: That is unfortunately also the problem.

ALEC HOGG: What is going to happen now to those who have been responsible for harvesting all this money from investors? Are they going to be brought to book?

MICHAEL BLACKBEARD: Look, it is our policy that once we find that the Banks Act was contravened, we hand the matter over to the police. But I must caution that the test we have is that we have to be satisfied. So it's a very easy test - we have to be satisfied that the act was contravened. In a criminal case there is a beyond-reasonable-doubt test. So the police and the prosecutor sometimes have difficulty in proving reasonable doubt. ...

ALEC HOGG: Let's hope that this time round you are able to do it but, more than that, that the South African public can take a lesson from this. We've had Masterbond, we've had Fidentia, now we have Sharemax and there have always been people out there warning against these schemes. If it's too good to be true, as the deputy registrar was saying, believe it, it is. Wayne McCurrie, you've often used that credo.

WAYNE McCURRIE: Alec, I have. If you stick to one simple rule in investments - it's just diversify your portfolio, don't ever put more than 8% or 10% of you money in any one investment. You'll probably escape all of the things that you've said there, that have gone wrong for investors.

ALEC HOGG: I just wish that they would go after the consultants in a case like this. You think of the PR consultants, a guy like this Johan Geertsema, who was involved with Saambou - he was involved here as well. They lend some kind of credibility sometimes to it through their silky tongues and unfortunately it means that the ordinary people in the street get encouraged to go ahead and put their money in there and lose it. It doesn't seem fair.

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Sharemax transfers arouse suspicions:
News Trust funds 'released early' By Roy Cokayne
INVESTOR funds, held in attorney trust accounts for the Zambezi Retail Park and the Villa Property syndications marketed by Sharemax, were allegedly released - in contravention of a government prohibition - prior to the transfer of the property. Neither Zambezi Retail Park nor The Villa has been transferred to the property investment syndication vehicle. The funds were allegedly released by Sharemax's attorneys, Weavind & Weavind, and paid to Capicol, the developer of the two syndicated projects. The allegations are supported by various sources. Jaco Spies, the director of...
Business Report 2010-09-27
Read full article

'Sharemax transfers arouse suspicions'
Probe into Sharemax structure concealed Business Report Hearing looms for Sharemax mall price Business Report Claims lodged over Sharemax funds Business Report Sharemax lawyers called to pay back Business Report Sharemax and registrar hold fire Independent online (SA) Fraud case lodged against Sharemax's Zambezi scheme Business Report Sharemax still owes Capicol Independent online (SA)


Lifebelt thrown to investors in Sharemax
2010-09-20 Business Report
Controversial property syndication company Sharemax and its related companies have had statutory managers appointed by the Reserve Bank. The registrar of banks has appointed Neels Alant, partner in law firm Hahn & Hahn, and Jaco Spies, director of Facct Forensic Consulting, as statutory managers. The Reserve Bank and Capicol, the developer of Sharemax's two largest... read more Managers' appointment halts court application

2010-09-30 Business Report
By Roy Cokayne
A planned High Court application to place Sharemax Investments under judicial management was stymied by the appointment of statutory managers to the troubled property syndications marketing company. The application - scheduled to be heard next week - was lodged in the Pretoria High Court on September 16, the same date on which statutory managers were... read more


Gloves off in Sharemax debacle
2010-12-17
Independent online (SA) Paul Kyriacou, the chief executive of Capicol, the developer of projects that were syndicated by Sharemax Investments, has denied claims that he visited Cyprus with former Sharemax chief executive Willie Botha to arrange a transfer of money to that country. Kyriacou said his lawyers were considering legal action over the allegations. Capicol is a developer of the controversial Zambezi Retail Park... read more Sharemax lawyer files defamation suit2011-01-14 Independent online (SA) Sharemax Investments attorneys Weavind & Weavind, along with its seven directors, have instituted a multimillion-rand damages claim against three people and a company over allegations that the law firm had misappropriated funds from its trust account. Weavind & Weavind’s particulars of claim lists a number of statements alleging that funds deposited into the firm’s trust fund... read more Bonatla 'will not hesitate to withdraw' from troubled Sharemax deal.

2010-10-08 Business Report
By Roy Cokayne
BONATLA will take a final decision next week on the future of its offer to acquire the entire property portfolio of troubled Sharemax Investments. The listed property holding company's chief executive, Niki Vontas, said this week that the company would "if necessary, not hesitate to withdraw" the share-based transaction valued at R4.98 billion. The company... read more Capicol seeks to rescue Sharemax mall investors2010-09-17 Business Report Developer warns that syndications stand to lose a lot By Roy Cokayne Submit your comment Capicol, which last week severed ties with controversial property syndication company Sharemax, admits many investors and shareholders in Zambezi Mall and The Villa stand to lose a lot of money, but its proposal provides them with a solution. The developments of The Villa, a R3.5 billion retail... read more Legal wrangle caused delay in Sharemax action - registrar2010-10-12 Business Report By Roy Cokayne Submit your comment The registrar of banks delayed taking action against troubled Sharemax Investments because of a challenge to "certain legislative prescriptions" by lawyers acting for the property syndications promotion and marketing company. Michael Blackbeard, the deputy registrar of banks, confirmed the reasons for the delay last week after investors in Sharemax... read more Sharemax hopes for compromise from court2011-03-29 Independent online (SA) The planned application by the new board of the Sharemax group of companies to seek permission from the High Court for an offer of compromise in terms of the Companies Act to creditors in schemes promoted and marketed by the company has hit a potential snag. Chase International managing director Pierre Hough, a business strategist who conducts specialist forensic investigations, claims the planned... read more Sharemax attorneys form new company2010-12-13 Independent online (SA) Sharemax Investments’ attorneys Weavind & Weavind, a 105-year-old firm that faces possible liquidation over its alleged illegal release of funds deposited into its trust account by investors in two Sharemax syndications, has registered a new corporate entity. Companies and Intellectual Property Registration Office records show that W and W Associates was registered by Doreza van Wyk, an... read more

Bonatla's Sharemax offer hinges on legitimacy of Capicol rebellion
2010-09-15 Business Report
By Roy Cokayne
Bonatla, the listed property company, is prepared to walk away from its proposed acquisition of The Villa and Zambezi Mall property developments syndicated by Sharemax Investments if a planned transaction by property developer Capicol is legitimate. But Nicki Vontas, the chief executive of Bonatla, said it intended to pursue the remainder of the proposed...

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