Developers dodge probe into fraud allegations

Developers dodge probe into fraud allegations


Metsi Pepa
investors contemplating criminal and civil charges against developers.
JOHANNESBURG –An increasing number of investors in the failed Metsi Pepa development near Potchefstroom in the North West province are contemplating criminal and civil charges against developers Nicola and Jaco Prinsloo. This after the couple sold the sprawling farmland earmarked for the development to government, allegedly for R39m, according to documents obtained from a deed search in the Pretoria office.

In return, they are offering investors 40c in the rand with a promise of further funds should their planned legal action against what they call “the professional team” be successful. The team comprises, among others, the engineers, architects and town planners that were employed to work on the project and who have been blamed for its failure.

According to records in the Deeds Office, the farm consisted of nine demarcated areas, seven of which were sold to the Department of Rural Development for the total sum of R39m. These properties were bought on June 27 2011 and were registered on August 29 2011. Another demarcated area was sold to an entity listed as MI Chiboo Farming (Pty) Ltd. According to the title deeds, this area was sold for R4m on September 13 2010 and was registered on March 10 2011.

There is a segment of the farm for which no deed of sale can immediately be traced.

Moneyweb has sent a detailed list of questions to the Prinsloos and their attorney Johan Botha of Botha Geldenhuys Incorporated asking them to confirm the sales reflected by the Deeds Office. They declined the opportunity to comment, saying only: “Should we not comment on the contents of your e-mail of aforesaid date, must it not be construed [sic] as an acknowledgement of the particulars thereof but rather seen as a denial of the entirety of contents of your aforesaid mail. Our clients reserve the right to react upon your allegations as stated in your aforesaid mail if the necessity arises.” Botha says the case is sub judice pending legal action.

Earlier this month Nicola Prinsloo informed investors she was planning to sue “the professional team” whom she blames for scuppering the project. Previously Moneyweb reported that some of the companies involved in the project included Als Roads, which had threatened to sue the development for outstanding monies. The matter was heard in the North Gauteng High Court and a settlement was reached, the details of which remained confidential. Als says its account has been settled recently upon the sale of the land.

The engineering firm Fick Hollenbach and Partners from Potchefstroom, which was also blamed for erecting tented structures that violated restrictions imposed by the Department of Water Affairs, was exonerated by the Engineering Council.

Several independent sources have told Moneyweb that the trouble began when Water Affairs and the Blue Scorpions found that the restrictions imposed in terms of the environmental impact study on the farm had been violated. It has also been alleged that Jaco Prinsloo removed reeds from the wetland area of the farm which was in violation of the law.

Initial calculations gleaned from an interim audit in 2008, revealed the money received from investors amounted to around R18m, excluding interest. At least three investors Moneyweb spoke to indicated their determination to recoup the full amounts invested with interest, saying the 40c in the rand offer is an insult. One says he/she will in the interim settle for the offer and try to recover the rest by laying criminal charges against the Prinsloos.

Moneyweb has been unable to obtain a final reconciliation of how the R18m was spent, despite asking both Cherie Eilertsen of Platinum Planet, which marketed and sold properties on behalf of the developers/ principals and Nicola Prinsloo for this information.

During a site visit to the location in February 2011, an investor said they were told by Eilertsen and Nicola that they would be issued with share certificates as a gesture of goodwill, but this never materialised. The offer was backed up by a letter from Botha.

In a letter dated September 23 2011, Botha made the offer of 40c in the rand. He also informed investors that the developers planned to proceed with legal action against the professional team, requesting permission from stakeholders to do so. The letter states that the Prinsloos hope to further reimburse investors with the proceeds of funds recovered should they succeed in successfully suing the team.

The letter further states: “You are hereby requested to accept the above mentioned offer of payment of 40c out of every rand in writing by no later than September 30 2011, and furthermore to undertake in writing your full support to institute legal action against the professional team.” The letter also undertook to start paying investors during the first week of October.

Several investors have indicated they will consider laying charges if this agreement is not honoured. Another has indicated he is not interested in pursuing the professional team as his contract was with Nicola Prinsloo who had in fact recruited the team.

On Wednesday afternoon an SMS to investors from Platinum Planet, advised them not to sign any offers on Metsi Pepa. “We have retained the services of BMV Attorneys and Adv Verster with a view to obtaining more info/better offer. A meeting with Metsi attorney Johan Botha has been set for Tues 4 October. Mr Johan Botha has given an irrevocable undertaking not to disqualify any investors whose acceptance/consent letters do not reach them by (the) 30 September (deadline). Platinum.” Eilertsen’s legal counsel, Antoon Botha, has confirmed the authenticity of the SMS. He said in an e-mail to Moneyweb: “As mentioned to you, Platinum is not claiming to act on behalf of ALL investors. There are however various investors whom have given Platinum Planet a mandate in this regard.”

In recent months Moneyweb has received numerous e-mails asking the same as investors have been unable to reach either Eilertson or her company, both of which have come under fire for their handling of the matter. At least two investors have spurned Platinum Planet’s offer to negotiate on their behalf, saying they want nothing to do with Eilertsen. Antoon Botha says the SMS was in response to a number of queries from other investors.

Eilertsen has maintained throughout that Platinum had at all times acted within its mandate in marketing the development and that the principals/developers should be held responsible for non-delivery. Antoon Botha has also indicated that Platinum is still owed a significant amount of money accruing from the development and that this will be addressed in the appropriate forum.

( Money Web )

--------------------------------------------------------------------------------
It never ends..............

Sharemax restrictions expire in The Villa deal


The acquisition by the troubled Sharemax Group of The Villa, the partially completed R3.5 billion retail development east of Pretoria, is now unconditional.

The Villa was syndicated by Sharemax Investments and funded by about 8 000 investors.

The acquisition follows the failure of Capicol, the developer of both The Villa and the Zambezi Retail Park, to come up with an alternative solution for The Villa by August 15.

Sharemax defaulted on monthly payments to investors from September last year and construction on the Zambezi Retail Park and The Villa ground to a halt in the same month when funds due from Sharemax to Capicol dried up.

About 40 000 shareholders have invested R4.5bn through Sharemax's various property syndications.

The boards of the Sharemax syndication firms last month concluded an agreement to buy ownership of the Zambezi Mall and 80 percent of The Villa from Capicol subject to this suspensive condition.

Sharemax financial director Dominique Haese confirmed yesterday that the acquisition agreement became unconditional last week and the first 30 percent undivided share of the Villa Mall property was scheduled to be transferred to Villa Retail Park Investments from Capicol.

Haese said the board of the Sharemax syndication company was actively engaged with various interested parties about securing funding to complete the project.

"It is envisaged that such a funder would potentially require (that it) obtain a large portion of the balance of the equity in the Villa Mall in consideration for providing the required funding," she said.

Transfer of a further 50 percent undivided share in The Villa would follow in the process of the implementation of the acquisition agreement.

A Sharemax spokesman previously disclosed that some of the Sharemax firms were bankrupt and Sharemax did not have the money to pay outstanding amounts to allow the transfer of ownership of these two developments to take place.

Sharemax Investments owes R64.5 million to Capicol in terms of an arbitration award related to the Zambezi Retail Park. GD Irons Construction, the building contractor for The Villa, has a lien for more than R100m over the property for completed but unpaid work.

But Haese explained last month that the settlement agreement reached with Capicol was structured in such a way that payment to Capicol was only due "in the future".

Haese added yesterday that transfer documents in respect of the transfer of the first 50 percent undivided share in the Zambezi Mall property from Capicol to Zambezi Retail Park Investments had been finalised and transfer was expected after clearance figures had been obtained from the relevant authorities.

She said the portion of the Zambezi Mall that was due to be transferred encompassed the main shopping centre building. The balance of the properties constituting the precinct would follow in the process of implementing the acquisition agreement.

The timetable for the finalisation of the scheme of arrangement processes for the Sharemax syndication companies remained the end of next month and was achievable in terms of "current expectations and prevailing circumstances", Haese added.

Business Report


Posted at 11:55AM Aug 23, 2011 by Editor in Commercial |

-------------------------------------------------------------------------------

How much of R4.5bn can be salvaged?
A meeting on Wednesday will shed light.
JOHANNESBURG - Pickvest investors will meet on Wednesday to discuss the prospects of “rescuing” the companies they are invested in. The meeting will be held in Centurion at 15:00. In attendance will be Hans Klopper, who was recently appointed business rescue practitioner to seven of the eight Pickvest syndication companies.

On the agenda for discussion is the business rescue process and its prospects of success.

Many of Pickvest’s estimated 25 000 investors, who have invested as much as R4.5bn in its schemes, were unaware of Klopper’s appointment until a week after it happened, when it was reported on Moneyweb last Thursday.

Wednesday’s meeting has been hastily convened, but Klopper says there is nothing sinister in this. Klopper says the Companies Act dictates that a business rescue practitioner must convene, and preside over, a first meeting of creditors within ten business days of being appointed.

The only syndication excluded from the meeting will be Highveld 19. It was recently reported that a liquidation application had been lodged against Highveld 19, which prevented it from being placed under business rescue. However, Klopper told Moneyweb that this matter has since been settled, and he expects to be appointed to Highveld 19, too.

Ben van der Linde, a director of all eight Pickvest syndications, says that because of limited time, notices were only sent by e-mail to all known addresses.

The meeting will be held at Full Gospel Church Camping Grounds, 3C, 8 Jan Smuts Avenue, Irene Centurion. Financial advisers are welcome, but they must have at least one proxy from a shareholder.

Klopper says he was initially approached by Des Hudson, a director of the Highveld syndication companies, with a view to being appointed as business rescue practitioner. Klopper was later approached by Ferdinand Hartzenberg, a legal representative for the syndication companies. Hartzenberg is the son of Judge Willie Hartzenberg, who was appointed last year as chairman of the various Sharemax syndication companies.

Klopper’s fees will be paid by the income earned from the syndication companies, in accordance with the companies Act. The fees are prescribed by legislation and are currently capped at R2 000 an hour. Klopper says that a performance-related fee may be presented to investors and affected persons for their approval.

Klopper has 25 business days (unless an extension is granted) to present a business rescue plan to investors and other creditors for their consideration and possible adoption.

This plan should give investors a better idea what their companies are worth. For example, it’s been reported that there are substantial amounts owing to Nic Georgiou, who is intricately involved in the Pickvest schemes.

The business rescue plan must include a complete list of all assets and debt of the company. The practitioner must produce a projected balance sheet and income statement for the next three years, prepared on the assumption that his plan is adopted.

Klopper says he is busy familiarising himself with the Highveld syndication companies. He says he has had only one meeting with Georgiou, which took place on Wednesday last week.

( Moneyweb)