Unit trust manager received R15m from Herman Pretorius

SPECIAL INVESTIGATIONS

Author: Julius Cobbett|
20 June 2013 23:57
Unit trust manager received R15m from Herman Pretorius



Financial advisers connected to RVAF Ponzi testify in insolvency inquiry.

JOHANNESBURG – An insolvency inquiry has revealed that one-time unit trust manager Michal Calitz received more than R15m from Herman Pretorius.

Calitz was one of Pretorius’s closest friends. A rare public photo of Pretorius shows him posing with his two sons and Calitz on the golf course. Calitz and Pretorius went to the same Bible study group, which met every second Friday.

Calitz referred many investors to Herman Pretorius’s Relative Value Arbitrage Fund (RVAF), which has since been exposed as a Ponzi scheme. It has been estimated that the scheme solicited more than R2bn from some 3 000 investors.

One investor, Mike le Sueur, told Die Burger that he had invested R60m with Pretorius on Calitz’s advice.

The insolvency inquiry suggests that Calitz was very well remunerated for these referrals.

In a recent update to investors, the RVAF trustees noted that Calitz was one of the more prominent brokers that received a so-called profit share on investments in excess of R15m.

Calitz and other financial advisers connected to RVAF were compelled to give sworn testimony in an insolvency enquiry. This helped RVAF’s trustees establish how Pretorius had spent investors’ money.

RVAF trustee Rynette Pieters informed investors that Pretorius did not keep proper financial records, which made it almost impossible to determine the terms of a transaction from the mere flow of funds.

Calitz’s testimony helped the trustees to establish the terms of an oral agreement between him and Pretorius regarding the payment of commission. The trustees were able to verify the amounts received by Calitz. They announced that “a substantial amount” of investors’ funds had been paid to Calitz.

At the time of writing, Calitz had not responded to e-mailed and telephonic requests for comment.

The investor update states that Calitz testified that the payment of investors’ funds had been an ex gratia (voluntary) payment.

“Sufficient information has now been obtained from Mr Calitz to make a final decision on the appropriate action to recover funds,” writes Pieters.

Calitz is himself a financial services professional. He used to be a director and fund manager at 4i Asset Management. 4i has since changed its name to Autus Fund Managers, which manages in excess of R1.5bn in assets.

Calitz disassociated himself from 4i/Autus after the RVAF was exposed as a Ponzi scheme. He resigned as a director, and is no longer listed as a fund manager of its various unit trusts.

However, Calitz is still associated with a entity registered with the Financial Services Board (FSB), a close corporation called Impact Financial Consultants. Calitz is a member of this close corporation and he is also listed on the FSB’s website as a representative of Impact Financial Consultants.

When the RVAF collapsed, the FSB announced that it had initiated an investigation into the brokers who sold the scheme to investors. On Thursday morning, Moneyweb asked Gerry Anderson whether any action had been taken against these brokers. At the time of writing (Thursday afternoon), Anderson had not yet replied.

Calitz has also been associated with the failed Leaderguard scheme. His name appears in a Fais Ombud determination dating back to 2009.

Calitz was not the only financial adviser to be subpoenaed in the insolvency inquiry. Pieters reported that other brokers interrogated were Wilhelm van Wyk, Wilhelm Erwee and Alfie Pretorius.

“From their interrogation, the amounts that they received (at least since 2005) and the terms of the oral agreements, as they understood it, were verified under oath. As is the case with Mr Calitz, the trustees are in a position to make a decision on appropriate further action against these brokers,” writes Pieters.

After publication of this article, the FSB's Gerry Anderson provided the following update: "Progress has been made in the investigation of the activities of all the brokers identified in the Herman Pretorius saga and we are engaging with each broker, which is the next phase. Unfortunately, it is not possible at this time to estimate when such engagements will be finalised and decisions taken on whether regulatory action should ensue or not."

Topics: HERMAN PRETORIUS, RELATIVE VALUE ARBITRAGE FUND, MICHAL CALITZ, RYNETTE PIETERS