Man steals R1m but avoids prison

"In early 2007 financial journalist Deon
Basson (now deceased) implored the then
ministers of finance and trade and industry,
Trevor Manuel and Mandisi Mpahlwa to take
a closer look at Sharemax"


"Shortage of investigators "

The SIU was currently investigating 558 procurement contracts to the value of R1.9bn and 360 cases of conflict of interest where R3.4bn was involved.

Hofmeyr said the fight against corruption was hindered by a shortage of investigators and the low rate of criminal convictions of officials found with their fingers in the till.

"We should have 7 000 people whose job it is to investigate corruption and I think we have 700.









Man steals R1m but avoids prison
2011-10-12 22:46

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Johannesburg - A Western Cape property developer received a suspended sentence on Wednesday for stealing more than R1m from the trust account of an attorney's firm.

Pieter Johannes Groenewald, of Durbanville, was sentenced to three years' imprisonment suspended for five years by the Specialised Commercial Crime Court in Bellville, Cape Town.

He was ordered to repay the money in monthly instalments of R5 000.

Magistrate Amrith Chabilall said: "You are not going to prison today, but if you fail to make any of the payments on due date, or at all, the suspended jail sentence will be put into operation."

It emerged in court that Groenewald manipulated a conveyancing secretary, employed by the attorney's firm to steal the money.

He appeared in his personal capacity and also as the chief executive of Dangene Property Developers (Pty) Ltd, which is under liquidation.

The company - cited as "accused number one" on the charge sheet, while Groenwald was the second accused - was fined R100 000.

According to the charge sheet, the company bought an erf (plot) in Eversdal, which was bonded by Standard Bank, for R6.4m.

The property developer then sub-divided the property into seven portions.

Standard Bank consented to the sub-division on payment of R1 151 865 to release the property from the bond.

The conveyancing attorneys, MHI, paid the required release money to Standard Bank by means of an electronic fund transfer, but for reasons not explained the bank rejected the payment.

The money thus landed back in MHI's trust account.

MHI simply had to re-deposit the money, but Groenewald persuaded a conveyancing secretary to allow him to personally pay the rejected amount back to Standard Bank, on MHI's behalf.

In order for Groenewald to do this, the secretary made out a trust cheque to Dangene Property Developers.

According to the charge sheet, Groenewald then deposited the cheque into Dangene's account, instead of paying it to Standard Bank as he had undertaken to do.

As a consequence, MHI had to make good Standard Bank's loss.

Groenewald was found not guilty of fraud, and was instead found guilty on the alternative charge of theft.


- SAPA

Read more on: cape town crime

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Corruption.....Fraud ...Theft ...Who cares ?????


Consumer Complaints & Reviews
On 15 April 2010 we've started with an R 500.00 premium investment at Sharemax Investment Pty (Ltd). The investment was paid by a debit order on a monthly frequency. On Sunday 25 July 2010 we've noticed an article in the Sondag Rapport regarding Sharemax. In this article it was mentioned that there might be a possibility that the investor's contributions be in danger if they do not comply with certain regulations and my husband and I decided as we've previously had a bad experience with an investment that we would cancel our premium investment with immediate effect.

On Sunday 25 July at 16h54 I've send a email to the premium department (for the attention: Amanda O., Willie B. (Director), Andre B. (Director) and Gert G. (Director) whereby I informed Sharemax Investment Pty (Ltd) of the immediate cancellation of our R 500.00 premium investment. I've asked for the process and procedures for the paying back of our 4-month contribution (April 2010 to July 2010), which total up to R 2000.00.

On Monday 26 July 2010 I've faxed the cancellation letter, which was emailed to the persons: 09h10 to Mr Johan S. (Johan Smit Brokers), 09h11 to admin department (Sharemax Investment Pty), 09:13 to Amanda O. (Premium department at Sharemax Investment Pty), 09h15 to Mr Willie B. (Director), Andre B. (Director) and Gert G. (Director) at Sharemax Investments Pty. On 26 July 2010 I've received an email from Mr Johan S. (Johan Smit Brokers) whereby the investors are given the reassurance that they investments are not in danger and at 14h10 I've send a confirmation letter to Mr Johan S. (Johan Smit Brokers) to confirm that we want to proceed with the cancellation.

On 27 July 2010 at about 13h00 I've received a telephone call from Mr George S. regarding my cancellation and he said that he would send me a document regarding the article in the newspaper. I've asked him regarding our 4-month contributions (April 2010 - July 2010), which total to R 2000.00. He said that the paying back would be done as soon as possible. I've said to Mr S. that we still want to proceed with the cancellation.

On 24 August 2010 (a month after the cancellation) I've followed up the progress of the paying back of our contributions with an email to Amanda O. (Premium department) at Sharemax Investments. On 31 August 2010 I've contacted Amanda O. (Premium department) at Sharemex Investments as I didn't received any feedback on email. I was informed that the repayment is almost ready to be released as it is for signature at the director.

On 1 September 2010 I've received an email from Mr Gert G. (respond to email from 24 August 2010). Mr Gert G. stated that the progress would be followed up immediately. On 3 September 2010 at about 09h30 I've send an email again to Amanda O. to follow up on progress of repayment as it was already 1 month and 10 days. I've also informed Sharemax Investment Pty (Ltd) that if my money is not in my bank account by Monday 6 September 12h00 I will take further action. Amanda O. phoned me at 10h26 and said that the application is now at the Director for signature and she will ask him to phone me immediately.

At 12h35 Mr Gert G. phoned me and said that he acknowledge the receipt of my email and am aware that I will proceed with further action as mentioned in email. He gave me an amount that will be paid back and said that it is the 3-month contributions. I've corrected him and said it is 4 months

(R 2000.00). He said that he is only aware of 3 months but will follow it up and contact me again. I am still waiting for his call.

On 6 September 2010 at 12h00 my money was not in my account and I've send an email at 14h00 to inform them that I will now proceed with further action. I have received feedback from Riette L. (client service) on 6 September 2010 that said our application for repayment is laying on Mr Gert Goosen's table and the premium department is just waiting for his instruction.

I think that we gave Sharemax Investments more than enough time (1 month and 11 days) to repay our 4-month contributions of R 2000.00. It is not a huge amount that needs to be paid back and I think waiting 1 month and 10 days is unnecessary. We request that the whole amount of R 2000.00 be paid back as we've had some expenses during the cancellation as we have to phone and send emails to follow up the progress. I also incur expenses for stopping the debit order at my bank.

Thersia of Pretoria, Other

consumeraffairs.com



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Sharemax: Investors suffering
20 Sep 2010



Investors in The Villa, the largest property syndication undertaken by Sharemax to date, have reason to feel aggrieved over not earning any further interest on their investments.

Capicol, the developer using Sharemax investors’ money to develop The Villa, a super regional shopping centre in the east of Pretoria, says the interest owed to Sharemax’s investors has already been paid in advance for the whole period until the opening of the centre in 2011.
Investors should thus have still received their interest until at least September 2011, unless Sharemax did something else with the money.

First investors should have still received their money until December seeing that The Villa would have opened its doors this year already.

Last month, when it appeared that investors won’t be getting their money, Sharemax sent out a circular to inform investors that Capicol is experiencing cash flow problems and can no longer pay investors their interest.

Paul Kyriakou, head of Capicol, denied this categorically at a news conference in Pretoria last week.

“The centre’s construction has indeed grinded to a halt after Sharemax failed to lure further investment, but the interest on money borrowed from investors to pay for the construction done to date, has already been paid in advance to Sharemax,” he said.

He says Sharemax earned R75m with every prospectus issued. R15m of this money was held back for the promoters’ money, marketing costs (brokers’ commissions) and a contingency fund.

Capicol also reimbursed Sharemax with R10m in order to pay interest to investors for the whole period during which construction was ongoing, which left about R50m for construction work.

There are also some contradictions regarding the payment of interest. Capicol says the money has already been paid over to Sharemax.

Willie Botha, former Sharemax chairperson, said the interest for the full term has been held back in order to protect the interests of shareholders.

How Capicol paid the interest doesn’t matter anymore. Capicol and Sharemax both confirmed that interest has been collected for the whole term, and one should think that the interest should have been held in a trust.

When Botha, who is no longer chairperson of Sharemax, was later confronted about it, he said the money should have been used to pay the builders after negative press coverage closed the project’s investment tap. But this excuse does not hold water.

Sharemax has already received R1,59bn from investors, but only R1,056bn of this money has been paid to Capicol for construction work.

Work worth R1,2bn has already been completed, which means that the contractor GR Irons is owed another R150m.

Of the R540m received from investors and not spent on construction, R318m went to Sharemax itself.

Investors can’t complain about this as it is clearly stipulated in the prospectus.

However, there is another R220m left that leaves several question marks. The largest part of this is probably the interest component that Capicol has to pay to investors – a part was indeed paid out to investors.

But where is the interest for the rest of the term and what happened to the contingency fund which holds 3% of investors’ money?

These are some of the questions the South African Reserve Bank’s (SARB) statutory managers probably have to ask Sharemax’s management.

In the case of Zambesi Retail Park the picture is slightly different. This centre has already been completed and Capicol paid the rental income, from which investors were compensated, to Sharemax until August.

However, Capicol started holding back the rental income in August as Sharemax apparently weren’t fulfilling its contractual obligations to Capicol.

The agreement entailed – and this applies to The Villa – that the developer borrow money from Sharemax’s investors to build the centre, and that Sharemax companies in which investors invest their money would then buy the building from Capicol when the centre opens its doors.

Sharemax has been delaying the process for months as it owes Capicol and the contractor lots of money. This is why Capicol has closed the income stream tap.

The result is that investors in Zambesi have invested money in a property syndication that owns no properties. – David van Rooyen, Sake24

Readers' Comments Have a comment about this article? Email us now.


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Financial wizardry in R3.5bn property scheme


Further revelations regarding Picvest?s failure to transfer buildings to investors.
JOHANNESBURG - A picture of financial wizardry is emerging at Picvest (formerly PIC Syndications), one of the country’s biggest property investment schemes. Despite assurances that investors’ assets are rock solid, there is no proof provided to back up these claims.

Last month Realestateweb reported that properties supposedly worth R3.5bn have not been transferred to investors, as was originally intended. Now we can reveal that investors’ money has been released from the trust account of transfer attorney Eugene Kruger. The properties that were intended for investors are still mostly held in the name of the seller, Nic Georgiou’s company, Zephan Properties. What’s more, most of these properties have mortgage bonds registered over them.

In short, what ought to have been a simple sale of buildings from Georgiou to Picvest investors has turned into a sticky mess.

The investments in question are the property syndication companies Highveld 19-21. The total value of the four syndications is R3.5bn. Most of this amount will have been funded by public investors, with a high concentration of senior citizens.

A summary follows:

Syndication name Prospectus
expiry No. of buildings to be sold Total selling
price

HIGHVELD SYNDICATION NO 19 LTD 23-Jan-07 13 R 602,000,000
HIGHVELD SYNDICATION NO 20 LTD 4-Dec-07 16 R 678,900,000
HIGHVELD SYNDICATION NO 21 LTD 8-May-09 11 R 1,332,000,000
HIGHVELD SYNDICATION NO 22 LTD 10-Aug-09 8 R 888,000,000


48 R 3,500,900,000

The Picvest property investment model is simple enough to understand: investors hand over their money and in return they receive buildings. However, the syndications Highveld 19-22, which are the four most recent investments sold by Picvest, had extra features to make them more attractive to investors.

The syndications Highveld 19, 20 and 21 had head lease and buyback agreements. This meant that the seller of the buildings, Nic Georgiou, undertook to rent them from investors for five years. Georgiou also promised to buy the buildings back from investors after five years at the price at which they were originally sold.

This was supposed to provide certainty for investors; they could expect a predetermined monthly income and a return of their money after five years. This made Picvest’s products popular among those who required a stable income.

The return offered to investors varied, depending on the syndication. Highveld 19 offered an initial return of 8%, increasing by 8.5% each year; Highveld 20 offered 10%, increasing at 4.2% each year and Highveld 21 offered 12.5% fixed for five years

Highveld 22 was slightly different. It had no head lease agreement and offered investors no income. But it had a buyback agreement in which Georgiou promised to buyback the buildings after five years at twice the price investors paid for them. In other words, investors could expect to double their money after five years.

Picvest frequently described the head lease and buyback agreements as “guarantees”.

The prospectuses for each of these four syndications did not disclose past financial statements for the buildings to be sold. This meant that investors and their financial advisers had no way of checking whether the buildings had a realistic chance of earning the income that was promised.

Furthermore there were no financial statements provided for Georgiou and his associated entities. This meant there was no way of checking to see whether he was capable of honoring the “guarantees”.

Financial adviser Magnus Heystek described the situation thus: "If one follows the [Picvest] argument then virtually any private individual can come to the market with a financial product with a ‘guarantee' and when asked for proof of ability to honour to the guarantee say ‘sorry, we are a private company. We don't disclose that kind of information.'”

What went wrong?

It is clear by now that things did not go according to the plans laid out in the prospectuses. Investors paid the money but buildings were not transferred into their names. However, investors were mostly placid because they received the monthly income that was promised to them. It was only in April 2011, when their income was sharply reduced, that most investors started demanding answers of Picvest CEO Rikus Myburgh.

Myburgh attributes most of Picvest’s current troubles to the South African Reserve Bank.

In August 2008 the Reserve Bank informed Picvest that it was under investigation to determine whether it was conducting the business of a bank. If this was the case, Picvest would be operating in contravention of the Banks Act, because it does not hold a banking licence.

To this day, the Reserve Bank has not reached a decision on the matter. However, Picvest appears to think that the Reserve Bank will find against it. The Bank’s inspectors have apparently obtained a legal opinion stating that Picvest is contravening the Act.

Myburgh suggests that investors’ sharp reduction in their monthly income can be blamed on this negative finding (which has yet to be accepted by the Reserve Bank).

Readers may well question how something as simple as a lease agreement can be a contravention of the Banks Act.

Myburgh responds that the lease agreements themselves do not contravene the Act. However, he claims that the lease agreements for Highveld 19-21 are “reliant” upon the buyback agreements. In other words, if the buyback agreements fall away then so do the lease agreements.

Realestateweb has found no clause to this effect in the prospectuses, and Myburgh has not yet stated where such a clause exists or whether it has been disclosed to investors.

According to Myburgh, the legal opinion obtained by the inspectors of the Reserve Bank indicates that the buyback agreements will be deemed to be contraventions of the Banks Act and this allowed Georgiou to “cancel” the lease agreements.

That may explain the reduction in income, but what about the failure to transfer buildings to investors’ names? This too is blamed on the Reserve Bank.

Picvest has proposed that all of its investors’ properties be bought by an entity called Orthotouch, with payment made over five years. The Reserve Bank, the Securities Regulatory Panel and, most importantly, Picvest investors have yet to approve this transaction.

Says Myburgh: “In the middle of last year we discussed the issue of consolidating all the properties into one big company. We informed the Reserve Bank inspectors that we would put the transfer of all properties on ice until such time as the deal would be approved or rejected.

“Some properties take as much as 17 months to transfer. To transfer the properties to the syndication company and then back again to Orthotouch would be a waste of time. If this new Orthotouch deal is refused by either the Securities Regulatory Panel or the shareholders, then those properties - they are paid for - will be immediately transferred into the syndication companies.”

Myburgh’s response may explain why some of the 48 buildings have not been transferred to investors. But it does not explain why none of them have been transferred.

For example, the prospectus for Highveld 19 expired as long ago as January 23 2007. Surely at least one of its 13 buildings would have been transferred by now? Here, Myburgh is at a loss for an explanation; he says he only joined Picvest in March 2008 and was thus responsible for the marketing of syndications Highveld 20 and 21. All previous syndications were sold under the watch of the previous Picvest owner, Durand Botha, the brother of former Sharemax managing director Willie Botha.

Myburgh refers Realestateweb to transfer attorney Eugene Kruger, who has yet to respond to our queries.

Could it be that the real reason why the buildings have not been transferred is that they are mired in debt? Deeds searches for properties that were supposed to be transferred to investors reveal outstanding mortgage bonds. The lenders include: Nedbank, Investec, FirstRand and Absa.

And why has investors’ money already been transferred out of Kruger’s trust account? Under “normal” property transactions, money is held in an attorney’s account and is only released once transfer has taken place. Myburgh responds that the prospectus and sale agreements allow for funds to be released from Kruger’s account once occupation takes place.

It is convenient for Picvest and its financial advisers to blame the Reserve Bank, but the problems are deeper than a simple failure to comply with the Banks Act.

The proposed Orthotouch deal has been sold to investors as a way of complying with the Banks Act. But it would also give Georgiou a welcome respite, making transfer of the properties unnecessary, and giving him time to get out of any financial problems he might currently find himself in.

Julius Cobbett:

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Beleggers verloor dalk alles


Dec 09 2010 09:46 AM
David van Rooyen

Beleggers in Sharemax se tweede grootste eiendomskema, Zambezi Retail, word deur ’n potensiële ramp in die gesig gestaar, asof die feit dat hulle nie meer ’n inkomste op hul belegging verdien nie, nie genoeg is nie.


’n Onafhanklike arbiter, adv. Johan Louw, het teen Sharemax beslis in die geskil tussen Sharemax en Capicol, die eiendomsontwikkelaar wat die Zambezi Mall-sentrum in die noorde van Pretoria namens Sharemax ontwikkel het.


Die arbiter het beslis Sharemax skuld Capicol steeds R64,5 miljoen en die sentrum wat ingevolge die ooreenkoms tans nog aan Capicol behoort, kan dus nie aan die beleggers oorgedra word voordat dié bedrag nie betaal is nie.


Hulle gaan dus nie net nog ’n ruk lank sonder inkomste sit nie, maar die huidige situasie kan ook daartoe lei dat hulle van hul kapitaal, of selfs alles, kan verloor.


Die ooreenkoms tussen Sharemax en Capicol was dat Sharemax beleggings sou werf en die geld vir die bouwerk aan Capicol sou voorskiet, waarop Capicol rente aan die beleggers betaal het.


Ná die projek voltooi is, wat in April gebeur het, sou Sharemax die sentrum oorneem teen ’n ooreengekome koopprys, gegrond op die huurinkomste wat die sentrum verdien. Die geld wat Sharemax voorgeskiet het, sou as betaling op die koopprys afgaan.


Capicol het egter tot nou toe eienaarskap van die sentrum behou omdat die partye nie op die koopprys kon ooreenkom nie. Die huurinkomste uit die sentrum is dus ook nie aan die beleggers oorbetaal nie.


Die arbiter het egter nou ’n prys bepaal en op grond hiervan skuld Sharemax vir Capicol nog R64,5 miljoen as hy die sentrum namens die beleggers wil oorneem. Die arbitrasiebevel is dat die betaling binne 90 dae moet geskied, maar dit is geen geheim nie dat Sharemax nie in staat is om die bedrag te betaal nie.


Capicol se siening, volgens sy uitvoerende hoof, mnr. Paul Ky­riacou, is dat Sharemax kontrakbreuk pleeg as die geld nie betaal word nie, wat Capicol die reg gee om op die sentrum beslag te lê, wat beteken dat beleggers groot verliese sal ly.


“Ek sal verkies dat Sharemax die geld betaal, ons die eiendom oorhandig en van die projek wegstap. Maar as ons nie geld kry nie, kan dit ernstige gevolge vir die beleggers inhou,” sê Kyriacou.


Die groot probleem is dat Capicol die bouers nog geld skuld, en die geld wat Sharemax aan hom verskuldig is, nodig het om dié skuld af te los.


Solank die bouers, wat al nege maande vir hul geld wag, nie betaal is nie, kan hulle om likwidasie aansoek doen.


Dit lyk asof Sharemax dink dat hulle die probleem kan oplos deur aan Capicol ’n belang in die sentrum te gee. Dit sal beleggers se deel van die inkomste verminder, maar minstens het hulle ’n belang in ’n bate. Sharemax se beleggers het immers ’n eis teen Capicol vir die geld wat vir die bouwerk aan hom voorgeskiet is.


In dié stadium lyk dit nie of ­Kyriacou lus is om daaraan te byt nie.


As Sharemax nie betaal nie, sal Capicol geld teen die sentrum moet leen om die bouers te betaal, en volgens hom is daar geen sprake daarvan dat banke geld teen die Zambezi-sentrum sal leen solank daar enige sprake van ’n verbintenis met Sharemax is nie.


Die tekort op die koopprys is nie die enigste geld wat Capicol van Sharemax eis nie. Capicol het ’n proses aan die gang gesit wat moet bepaal watter skade die maatskappy as gevolg van Sharemax se wanbetaling gely het, en volgens Kyriacou kan die eis selfs baie meer wees as die R64,5 miljoen wat nou verskuldig is.


Sharemax se nuwe direksie het van die arbiter se bevel kennis geneem, maar het nog nie besluit oor wat die pad vorentoe is nie.


Capicol se direksie verwyt Sharemax se ou bestuur vir die dilemma waarin beleggers in die Zambezi-skema hulle tans bevind.


Dié ontwikkelaar van die sentrum het in September vanjaar ’n skriftelike ooreenkoms met Sharemax beklink (waaroor Sake24 berig het), waarvolgens Capicol alle bande met Sharemax sou verbreek en Sharemax se verantwoordelikheid teenoor die beleggers sou oorneem.
Die voorstel was dat Zambezi Retail en The Villa (’n onvoltooide Sharemax-winkelskema) in een maatskappy saamgevoeg sou word.
Dié maatskappy sou dan finansiering bekom, waaruit beleggers ’n inkomste sou kry, en The Villa voltooi sou word. En ná drie jaar sou die sentrums verkoop word en die beleggers hul geld terugkry.
Die een voorwaarde van die plan, wat Sharemax aanvaar het, was dat dit deur die beleggers in die twee maatskappye aanvaar moes word, maar die skema is nooit deur Sharemax aan die beleggers voorgelê nie.
,
Dieselfde swaard wat oor Sharemax se beleggers in Zambezi Retail hang, hang ook oor die beleggers in The Villa, hoewel hul probleme baie groter is.


Capicol beweer dat Sharemax ook by The Villa, ’n halfgeboude winkelsentrum in die ooste van Pretoria, ’n yslike klomp geld aan Capicol skuld vir bouwerk wat gedoen is, en waarvoor die geld nie voorgeskiet is nie.


Daar is nou ’n proses aan die gang gesit om die omvang van die eis, asook moontlik skade weens vertragings vas te stel.


En as daar dalk iemand is wat die geld voorskiet om The Villa te voltooi, sal die geld wat Sharemax aan Capicol verskuldig is van die beleggers se eis teen die skema afgetrek moet word.


Net soos met Zambezi word The Villa se bouers ook baie geld geskuld (sowat R150 miljoen), wat beteken dat hulle op die projek kan beslag lê ten koste van beleggers.


Die Noord-Gautengse hooggeregshof hoor Vrydag ’n aansoek aan van ’n klomp beleggers in Sharemax wat vra dat sewe van die omstrede eiendomsmaatskappy se beleggingskemas onder geregtelike bestuur geplaas word.


Moneyweb berig dat die hof gevra gaan word dat The Villa, Zambezi Retail, Waterglen, Rivonia Square, Stonewood, Nelspruit Hyper en Sharemax Waterfall onder geregtelike bestuur geplaas moet word.


Die versoek is dat die Reserwebank se statutêre bestuurders, wat aangestel is om na beleggers in Sharemax se sake om te sien, saam met verskeie likwidateurs as geregtelike bestuurders aangestel moet word.


Geregtelike bestuur lei dikwels tot likwidasie, wat beteken dat beleggers dikwels net ’n fraksie van hul geld terugkry nadat die likwidateurs hul deel van die geld gevat het.


Die aansoek om geregtelike bestuur betwis onder meer die arbitrasiebevel, waarin bevind is dat Sharemax vir Capicol nog R64,5 miljoen moet betaal, voordat die sentrum na beleggers oorgedra kan word.


Bewerings word gedoen dat Realcor “fiktiewe huurooreenkomste” aangegaan het om die waarde van die sentrum te verhoog, maar die arbiter het dié bewerings verwerp.


Sake

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COMMUNICATION AND LIAISON
News Desk
Tuesday 05April 2011
FSB
FSB issues Realcor warning
The Financial Services Board (FSB) has
issued a warning to consumers not to
conduct financial services business directly
with Realcor. This warning comes too late for
thousands of investors who lent more than
R415m to Realcor to fund its hotel.
The FSB said Realcor is rendering financial
services without being allowed to do so. On
January 3 2011, the FSB provisionally
suspended Realcor's authorisation to conduct
financial services. This came after an
investigation into its affairs.
Realcor ran into cash- flow problems during
the fourth quarter of last year. It was unable
to pay interest on debentures held by
thousands of its investors. It was later
revealed that Realcor's bankers, Absa, had
applied for its liquidation. In December, one
of Realcor's contractors launched its own
liquidation application.
Readers might criticise the FSB for failing to
protect investors from toxic property
investment schemes like Sharemax, PIC
Syndications, Realcor, Bluezone, Kingfin etc.
However, their criticism may be misplaced.
The FSB has repeatedly washed its hands of
property syndications, noting that they are
regulated by the Department of Trade and
Industry (DTI). The DTI is vocal about
matters as diverse as competition in the paint
industry, but it has been astonishingly silent
on property syndications.
In early 2007 financial journalist Deon
Basson (now deceased) implored the then
ministers of finance and trade and industry,
Trevor Manuel and Mandisi Mpahlwa to take
a closer look at Sharemax. His letter can be
read here. Basson received no response.
The FSB advises consumers who wish to
conduct financial services business with an
institution or person to check beforehand
with the FSB on either its toll-free number
(0800 110 443) or on its website
(www.fsb.co.za) whether or not such
institution or person is authorised to render
financial services or whether the institution
or person is appointed as a representative of
an authorised financial services provider.
Realestateweb

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Avocado Investments
Press Office Feature : Response to Willie Botha and Sharemax

--------------------------------------------------------------------------------
Company: Avocado Investments
Author: Andre Matthews
Email: editor@itinews.co.za
Posted: 09 Dec 2007

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Email this article Comment on this Article Print this article

We can’t have our supporters experience problems with the products we have on offer

Thank you for the opportunity to respond to Willie Botha’s letter. Considering the fact that Willie believes the best approach to the problem is to cast suspicion on my independence, I think I need to address this first.


Avocado is an independent financial services group made up of an asset management company (AIM), a financial services distribution company (ADS) and an IT company (AIT). I launched it as a broker and, over time, developed a vision to grow Avocado to become a meaningful player in the financial services industry.

The question was how to penetrate the market? Our funds’ performances were good, of course, but so were our competitors’. What additional competitive edge could we bring to the table?

One thing I have often noticed was that several of the big players underestimate the importance of the broker community. Of course, the brokers get taken on holidays, meals, etc. but we think we have something far better to give.

We believe that empowering the broker (teaching him to fish rather than giving a fish) will go much further, as his skills will improve and he will be more competitive with all the financial and emotional benefits that flow from that.

If Avocado could help the brokers to become better “fishermen”, both the brokers and Avocado will be able to extract value from the relationship. The brokers would become highly capable, confident and the natural progression will be stronger business flows for them and for Avocado. That is first prize!!

Though we have many friends in the industry, we don’t have time to write articles on their behalf. We have our own dream, our own vision, and we are going after it! We see it, taste it, smell it and we want it! And the joy of it is we can add value to the lives of others while doing it.

So the articles on global growth, Sharemax, market volatility, “knock absorption” etc. are for the brokers and through them, for Avocado. We have written over 100 reports, notes, opinions, etc. and only two (we think) about Sharemax.

As to Mr Botha’s claim that ADS (our distribution arm) was remunerated by Dividend Investments in the past, it is absolutely true. It is also true that ADS now receives distribution fees from Capital Investments (from the merger between Dividend Investments and City Capital), Cadiz, BOE, Blue Ink and Avocado Investment Managers.

What is suspicious about that?

Had we taken up the offer by their marketing manager, Mr Evert Laubscher, 4 weeks ago to distribute their product, ADS would be earning fees from Sharemax as well. In order to grow, we must generate money as best we can and Capital Investments don’t offer property investments below R100 000.

This fact was conveyed to Mr Laubscher. We want distribution rights for smaller investments. However, if we want to achieve our goals, we can’t have our supporters experience problems with the products we have on offer and, considering our view on the latest Zambezi offering, how could we accept a contract?

That aside, to suggest that we are writing about them because we are distributing the products of Capital Investments, who we believe has a far superior product, is silly. You don’t see us writing letters about Blue Ink, Cadiz, or BOE’s competitors, do you?

I see words like “cheap” and “untrue” (I recall a reference to “idiotic” in a previous letter), but I will rather stick to the facts. No matter how hard I try, I can’t equate illustrating our thought processes to brokers a marketing campaign. Then, claiming that I could not make a balanced conclusion without talking to Sharemax was even more confusing.

Isn’t it more sensible to make conclusions from the actual documents (prospectus) provided by the company? In fact, the company makes a big thing about its prospectus and claims others, who don’t have, or can’t have due to legislation, such a document should not be trusted.

Furthermore, considering the threats Sharemax issues to any who question them, would my findings not have been exposed to the risk that Sharemax may have had time to get an interdict to keep me quiet? Also, is message now conveyed that the facts we based the analysis on (from the prospectus) are wrong and there is another version?

It is claimed that my sources are not mentioned. The analysis clearly refers to the Prospectus and Rode & Associates’ opinion of the place, both of which can be accessed on the ITInews website.

Many people know who Erwin Rode is, though I don’t know him personally, but I read thousands of pages of economic research from SA and around the globe year and, if a property economist is involved, Erwin Rode’s opinion is the opinion sought.

Only 3 weeks ago Cees Bruggemans (Chief Economist at FNB and highly respected in SA) had a round table meeting with economists from a range of sectors in SA and Erwin Rode represented property.

In light of the sources I used (Rode and Sharemax’s prospectus) one may find it hard to agree with an assessment which claims that “one must therefore assume that he has pulled most of his conclusions from the air”.

I have studied the “answers to draw a picture of the incorrect assumptions”. Suffice to say that my report was not studied as carefully, as the response was not appropriate for the issues dealt with. The sources of my data is there all to see on the ITInews website, while enough calculations to support our opinion appear on Moneyweb’s site.

Also, there seems to is no sense in talking about Menlyn in Pretoria, or any other place for that matter, as the evaluation by Rode and Associates is about Zambezi Retail Park. Not a “for instance”, but the very same place.

I wish to point out that point 4.3.2.1 clearly states the cap rate is 9.8% and not the 10.4% referred to now. Furthermore, I do not know Capicol, nor do the brokers or investors. All I know is that its website www.capicol.com (as I recall), clearly shows that they have dealt with Zambezi 1& 2, as well as being busy with their first big project.

Assuming that Capicol is great, how can one justify risking investors’ money and giving them nothing in return? Capicol does not even pay prime, but prime less 4.5%. The investing community trust the financial services industry to look after their interests. I think it is silly to refer to me being as “unethical” for raising this very valid issue.

The facts are there for all to see in the prospectus. However, using its existence as some sort of defence or justification makes no sense. The reference to an external auditor helps as little as the national rental data is outside his field of experience.

Common sense dictates that we rather take Rode & Associates’ opinion as to what the appropriate mix between nationals and line shops are across SA, what the rate per square meter should be, etc.

As to an apparent parting gift of “we reserve our rights to further handle Andre Matthews’s modus operandi in the forum of our choice”, I advise that we did what our principle of empowering the broker (which includes protecting him against future claims from his clients) demands and my job is done.

I have more important things to do than to keep warning the warned. Be that as it may, I don’t know what was intended with the above statement, but we are not overly concerned.

I repeat that there is no marketing campaign. Nor are we watching specific companies all the time. Issues are studied at random, or upon request from a broker/s, with the purpose of establishing a relationship of trust with brokers and to show them how we think.

The more they read, the sharper they become. This will create a level confidence that improves their hit rate. Over time, that will reflect in Avocado’s growth.

In closing, and as evidence that our loyalty to brokers’ welfare drives us rather than Mr Botha’s referral to remuneration from the earlier Dividend Investments and current Capital Investments, I invite any who doubts me to phone Mr Chris Sickle of Ernst & Young in Cape Town to confirm the following:

Avocado obtained agreement from Capital Investments to appoint our own independent auditors, rather than using their BDO Spencer, to do a monthly check on a host of activities.

This includes a detailed check on the entire property acquisition process, the disposal of properties, as well as certain managerial responsibilities of the directors to the property portfolio.

I don’t wish to bore readers with the details, but it is very comprehensive and aimed at ensuring the protection of investors (and through that brokers) as best one can.

Anyone wishing for details of that list, which will be constantly updated upon the suggestions of Ernst & Young and/or Avocado, may request it from Avocado at andrem@avocado-investments.com or may look up Ernst & Young’s number in Cape Town and speak to Mr Sickle himself.

Ernst & Young have issued a media statement with regard to the above. Please read Correction of factual inaccuracies in "Response to Willie Botha and Sharemax"


Comments: Rudolph: Sharemax 53 Projects, 19 Projects sold 100% Track Record (10.12.2007 17:21)



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A blast from the past..........

THE DIRECTORS of the Villa Retail
Park Holdings Ltd, whose names are given
in paragraph (3.2), collectively and individually
accept all responsibility for the
accuracy of the information given and ver -
ify that, to the best of their knowledge and
belief, no other facts have been omitted
from the prospectus, which would make
any statement herein false or misleading
and that they have made all reasonable
enquiries to ascertain such facts and that
this prospectus contains all the information
requir ed by law.”
The names of the dir ectors in paragraph
(3.2) are as follows:
Botha Johannes Wi llem ID
6701285015084.
Brand Andr é Daniel ID 5512145028089.
Koekemoer Diederick Rudolph ID
7403055005085.
Haese Dominique ID 7107080148063.
The above is the exact intr oductory
statement in each of the 20 prospectuses
that Sharemax – as a promoter – attracted
R1,44bn from the public over the past two
years through linked units for the planned
pur chase of the shopping centre The Vi lla,
curr ently being built by developer Capicol
1 Pr oprietary Ltd.
It’s also the exact intr oductory statement
of the _rst 30 prospectuses, each for
R75m, registered last month for ordinary
shar es and with which Sharemax plans
to attract another R2,25bn for the project
before its planned completion date of September
next year.
Nowher e in any of these statements do
the dir ectors mention to prospective investors
that over the period in which money
has already been attracted there’s been
a dispute with the SA Reserve Bank, in
which the Bank feels Shar emax’s method
of _nancing is in violation of South Africa’s
Banks Act, because it’s essentially of a
deposit-taking natur e.
Th at was an important omission of
material information, as the events of the
past month clearly indicate.
On 30 April, the Registrar of Banks
(part of the Reserve Bank) instr ucted Shar emax
to discontinue its curr ent method of
deducting funds from 1 May. The registrar
also gave Sharemax a cut-off date of 15
July 2010. On or before that date, Sharemax


Readers might criticise the FSB for failing to
protect investors from toxic property
investment schemes like Sharemax, PIC
Syndications, Realcor, Bluezone, Kingfin etc.
However, their criticism may be misplaced.
The FSB has repeatedly washed its hands of
property syndications, noting that they are
regulated by the Department of Trade and
Industry (DTI). The DTI is vocal about
matters as diverse as competition in the paint
industry, but it has been astonishingly silent
on property syndications.
In early 2007 financial journalist Deon
Basson (now deceased) implored the then
ministers of finance and trade and industry,
Trevor Manuel and Mandisi Mpahlwa to take
a closer look at Sharemax. His letter can be
read here. Basson received no response.
The FSB advises consumers who wish to
conduct financial services business with an
institution or person to check beforehand
with the FSB on either its toll-free number
(0800 110 443) or on its website
(www.fsb.co.za) whether or not such
institution or person is authorised to render
financial services or whether the institution
or person is appointed as a representative of
an authorised financial services provider.
Realestateweb