Monday, November 25, 2013

Financial statements reveal R2.2bn loss for Sharemax investors

Special Investigations

Author: Julius Cobbett|
2013 Report
Financial statements reveal R2.2bn loss for Sharemax investors



Download the financial statements Nova Group’s directors wouldn’t make public.

JOHANNESBURG – Financial statements for Nova Property Group show that investors who bought Sharemax products have lost R2.2bn. Nova is the company that owns all the properties that used to belong to investors in the various Sharemax property syndication companies. Nova was formed as a result of a ‘Section 311’ rescue scheme which received court sanction in January last year.

As Moneyweb has previously reported, these financial statements have been hard to come by. Moneyweb is aware of several debenture holders whose requests to Nova for financial statements have simply been ignored.

It is difficult to understand why Nova’s directors, Dominique Haese, Connie Myburgh, Dirk Koekemoer and Rudi Badenhorst, have been so unhelpful. After all, Nova Property Group is a public company. Its financial statements ought to be available to anyone who requests them. Why not simply e-mail them to investors, or make them available for download on the Internet?

Moneyweb made two separate requests for Nova’s financials to the disclosure division of the Companies and Intellectual Property Commission (CIPC). In both instances CIPC replied that there were no financials on record.

This prompted Moneyweb to ask CIPC spokesman Sizwile Makhubu if his organisation was concerned that no financial statements had been filed for this multibillion rand public company.

Makhubu investigated the matter and discovered that Nova’s financial statements had in fact been filed. He apologised for the mistake. Makhubu said the documents had been filed electronically. He says: “There are instances when electronic documents are not physically printed and filed.”

Makhubu provided Moneyweb with Nova Group financial statements for the period ended February 29, 2012. Investors and other interested parties can download them here.

One of the most interesting nuggets of information to be found in the financial statements is a R35m loan from Sharemax Investments to Nova. The loan is “unsecured, bears interest at rates determined from time to time, with no fixed terms of repayment”. It is unclear how this loan came about. Sharemax Investments is currently under business rescue.

The financial statements also provide some reasonably clear information about the debentures that have been issued to investors. Under the old Sharemax structure, about 33 000 investors were owed a total amount of R4.35bn by the various syndication companies. Under the Section 311 scheme, they were offered a choice of either shares or debentures, which would replace their claims against the syndication companies. It seems the vast majority chose debentures.

The values of the new debentures are linked to the “fair market values” of the relevant properties. Valuations for the properties were performed by DP Cohen, of DP Cohen Consulting.

For example, investors in the Rivonia Square property syndication were previously owed R258m. However, the Nova financial statements show that its subsidiary company, which owns the Rivonia property, was only valued at R113m. This means that investors in that syndication have suffered a paper loss of R145m.

In total, the new debentures were valued at R2.1bn at 29 February 2012. Thus, the investors had lost R2.2bn, or half of what they originally invested.

The financial statements also address the controversial issue of ownership of the two largest Sharemax-promoted shopping mall developments, Zambezi and the huge, unfinished Villa. Nova’s subsidiary companies currently own 50% of Zambezi and 30% of The Villa. However, the financial statements value the properties as if the subsidiary companies owned 100% of Zambezi and 80% of The Villa. A note in the financial statements refers to settlement agreements whereby Nova’s subsidiary companies would take ownership a further 50% of Zambezi and a further 50% of The Villa. These settlements came at a price: Provisions were made to pay Zambezi’s developer, Capicol, a settlement amount of R158m, and The Villa’s developer, Capicol 1, a settlement amount of R350m.

This version of ownership is strongly disputed by Capicol and Capicol 1. For more, see: Ownership of multimillion rand Pretoria shopping malls disputed. The financial statements note that “disputes and substantial litigation is ongoing” with Capicol and Capicol 1.

Valuations and cash flow questioned

Forensic accountant and longtime Sharemax critic Andre Prakke questions the valuations of the development properties. These properties are valued at R311m, and comprise Whale Rock Residential Estate, Mont Rouge Residential Estate, Stonewood Country Estate, Berg & Dal Residential Estate, Sharemax Waterfall Estate, Country View Retirement Village , Theresapark Retirement Village and Steenbok Crossing.

These developments are disclosed as “inventory”. Says Prakke: “The valuations of development properties are based on cost as if Nova is a fish and chip shop. No revaluations have been done and the values are grossly over-stated.”

The financial statements only provide information for one month’s trading, because the properties were acquired on February 1, 2012. A further issue highlighted by Prakke, is that the properties only received rental income of R11m in this month. However, operating expenses, excluding depreciation, came to R10m, and finance costs, including payments to debenture holders, amounted to R5m.

Says Prakke: “The result is that this group is not generating enough operating cash to pay for expenses. They will have to borrow money at some stage to pay for day to day expenses, unless occupancy and rental income increases drastically.”

Thus, it is not surprising to read in the latest Nova Group communication, dated 27 April, 2013, that it had borrowed money. Investors were informed that an undisclosed amount of funding had been obtained from one of South Africa’s “leading commercial banks”. They were also informed that the funding had been obtained on “favourable terms”.

Prakke says that his comments do not reflect in any way on the audit performed by auditors BDO South Africa.

On Monday a copy of this article was e-mailed to all Nova Directors with the invitation to correct possible factual errors and offer comment before 5pm the following day. No response was received from any director.

The table below compares the values of the original Sharemax syndication companies with the relevant Nova debentures at 29 February 2012:


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Fraud case lodged against Sharemax's Zambezi scheme

17 October ( History Report )

By Roy Cokayne

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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Special Investigations

Author: Julius Cobbett|
Report 2013
FSB weighs in on controversial Sharemax opinion



Responds to Sharemax director’s comments on Fais Ombud complaints.

JOHANNESBURG – The Financial Services Board (FSB) has found it necessary to comment on a circular issued by Sharemax director Dominique Haese. The circular, dated August 6, 2013, suggests to investors that if they pursue complaints against their financial advisers with the Fais Ombud, they may forfeit rights to investment returns or repayments from the Nova Group. See: Sharemax director warns against Fais Ombud complaints.

The Nova Group has approximately 33 000 investors who acquired shares or debentures as a result of the restructure of property syndications promoted by Sharemax Investments. The restructure resulted out of a scheme of arrangement which was sanctioned by the High Court on January 20, 2012.

The Nova Group is controlled by four directors, two of whom, Dominique Haese and Dirk Koekemoer, played important roles in the promotion of Sharemax investment products.

On October 25 the FSB issued a media release in response to Haese’s circular.

Says the FSB: “The circular may be read as suggesting that the Fais Ombud no longer has jurisdiction to deal with complaints of former Sharemax investors, not only against the Sharemax companies themselves, but also against their directors or functionaries.”

“Further, that pursuing claims through the offices of the Ombud may be interpreted as that such claimants have abandoned and repudiated their claims arising from the schemes of arrangement.

“The FSB cautions, without suggesting a particular alternative, that views on the above issues are still subject to adjudication by the FSB Appeal Board and until this has been decided upon, investors are well advised to consult their legal representatives before taking a decision on the matter.”

The FSB’s recommendation that investors “consult their legal representatives” may be come as cold and cynical advice to those investors, many of them pensioners, who are struggling to finance living expenses, let alone legal ones.

The very purpose of the Fais Ombud’s office is to provide recourse to victims of bad financial advice, especially to those who can’t afford legal expenses.

The FSB notes that a number of determinations have been made by the Fais Ombud against Sharemax, persons or entities associated with it, and independent intermediaries who had advised their clients to invest in Sharemax products.

Haese is one of those people who have been on the receiving end of the Ombud’s determinations. For more, see Fais Ombud finds Sharemax directors liable for investor’s loss.

“”Many of these determinations have been taken on appeal to the FSB Appeal Board where they are still pending,” says the FSB. “In one such instance the Chairman of the Appeal Board has granted leave to appeal.

“The FSB is trying its best to have this appeal heard as soon as possible. However, nothing prevents any former investor in Sharemax from lodging complaint with the FAIS Ombud against any party considered to be liable for any loss suffered.

“Once the outcome of the appeal referred to, is known, the FSB will issue a follow-up media release in order to guide former Sharemax investors as to their further options.”

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Special Investigations

Author: Julius Cobbett|
Report 2013
Moneyweb is terrorising and extorting us – Sharemax director


Directors refuse access to shareholder registers of Sharemax-linked companies.

JOHANNESBURG – A director of Nova Property Group has accused this Moneyweb journalist of terrorism and extortion. This came after a reminder that the failure to allow access to a company’s securities register may constitute a criminal offence.

Moneyweb has applied to inspect the shareholder registers of three entities: Nova Property Group, Frontier Asset Management and Centro Property Group.

Nova is the company that owns all the properties that used to belong to investors in the various Sharemax-promoted property syndication schemes.

When the Sharemax investors voted in favour of a rescue scheme, they become either shareholders in the Nova Group or debenture holders in a Nova subsidiary.

It remains to be seen how much say these investors have, if any, in the appointment of directors at Nova. An inspection of the securities register would clarify the situation.

Nova is currently under the directorship of its managing director Dominique Haese, chairman Connie Myburgh, financial director Rudi Badenhorst, and operations director Dirk Koekemoer.

On July 24, Moneyweb submitted applications to inspect the securities registers of Nova, Frontier and Centro Prop. The applications were made in terms of Section 26(2) of the Companies Act, which grants any member of the public the right to inspect and copy a company’s securities register, provided the correct process is followed.

On August 14 Centro Property Group financial director Erna Grobler denied Moneyweb access to the securities register on the basis that it is a private company.

Moneyweb replied that the fact that Centro Property Group is a private company is no basis upon which to refuse access to the securities register. Moneyweb informed Grobler that in terms of Section 26(9) of the Companies Act, the failure to comply with a legitimate request for access renders the company, and every director or officer who is knowingly a party to the refusal, guilty of a criminal offence.

On August 15, Moneyweb received responses from Nova Property Group, Frontier Asset Management and Centro Property Group. The responses can be downloaded here (Nova), here (Frontier) and here (Centro).

The responses are virtually identical for each company. In the Nova response, Haese claims that the right to information which Moneyweb wishes to exercise is qualified by and subject to the provisions of the Promotion of Access to Information Act (PAIA).

Haese says that Moneyweb’s reference to Section 26(9) of the Companies Act “is not only ill-considered and misplaced, but also unlawful, as same is clearly written in terrorem, and intended to be extortive”.

Haese continues: “…all our rights and the rights of the ‘directors and officers’ who you clearly intend to terrorise and abuse, are reserved.

“As indicated to you previously, no purpose has ever been served in responding to or dealing with you.”

It seems reasonable to ask whether all of Nova’s directors are best suited to manage the property portfolio in the interests of investors. For example, Dominique Haese is one of four Sharemax directors who have been accused by Fais Ombud Noluntu Bam of running “nothing more than a Ponzi scheme”. This comment was made by the Ombud in connection with the Zambezi investment scheme that was promoted by Sharemax under the control of Haese and her co-directors.

Corporate lawyer Connie Myburgh has previously acted for Garek, a scheme that resulted in some 2000 investors losing R74m. Long-time Moneyweb readers will remember Myburgh for his aggressive defence of Garek.

A circular distributed to investors at the time of the rescue reveals that Haese, Koekemoer and Badenhorst jointly held 43.2% of Nova’s issued shares. This would ensure that there is little danger of the directors being voted off the board, should the former Sharemax investors wish to remove them.

Sharemax Investors’ Forum representative Herman Lombaard tells Moneyweb that he has repeatedly asked the Nova directors how they acquired this large stake in Nova and what it cost them.

Furthermore, Lombaard notes that Haese benefits from the rescue scheme in other ways. For example, Haese is a director of and shareholder in Frontier Asset Management, which supplies administrative services to Nova Property Group.

Lombaard also claims that Haese has a shareholding in Centro Property Group, which has been contracted by Nova to manage its property portfolio.

Moneyweb is currently seeking legal advice on how to proceed with the application to inspect the companies’ securities registers.

Prior to publication, a copy of this article was sent to Haese with the invitation to correct possible factual errors or offer comment. Haese's response follows:

Dear Mr Cobbett,

Your email and draft article below refers.

We are not prepared to comment.

This response should however not be assumed by you as you being correct or not.

All rights remain reserved.

Should you wish to print anything, we insist that you print this response.

Regards
Dominique Haese
Managing Director
Nova Property Group

Topics: DOMINIQUE HAESE, CONNIE MYBURGH, RUDI BADENHORST, NOVA PROPERTY GROUP, FRONTIER ASSET MANAGEMENT, CENTRO PROPERTY GROUP, GAREK, HERMAN LOMBAARD, SHAREMAX, ERNA GROBLER
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FSB linked to Sharemax "licence for hire" scheme



Wife of former Sharemax director is top official at FSB.

JOHANNESBURG - A Financial Services Board (FSB) official used to be involved in a company that “rented” licences to Sharemax brokers.

Sharemax is a failed property syndication promoter.

Rinate Goosen, wife of former Sharemax Director Gert Goosen, is a manager in the FSB’s FAIS enforcement department.

However, Rinate Goosen’s involvement with a company called Unlisted Securities South Africa (USSA) may be seen by some as a black mark on her career.

USSA came under scrutiny by Fais Ombud Noluntu Bam last week. In her latest determination against a Sharemax broker Bam wrote that USSA’s business amounted to “nothing short of the hiring out of a licence for a small monthly fee”.

Many brokers were not licensed to sell Sharemax’s share-and-debenture products. Gert Goosen solved this problem by setting up USSA, a company licensed to sell both shares and debentures. For a small fee of R150 per month, a Sharemax broker could become a “representative” of USSA.

Bam’s determination describes how USSA helped Sharemax brokers to obtain the necessary licence to sell property syndication products. At its peak USSA had 1 376 representatives listed on its FSB licence.

Bam’s determination can be downloaded here.

Rinate Goosen is still listed on the USSA website as the company’s compliance officer. Her husband Gert Goosen is USSA’s sole director and key individual. Gert was also a director of compliance at Sharemax. Gert Goosen is also reportedly the brother-in-law of former Sharemax managing director Willie Botha.

At the time of its collapse, in September 2010, Sharemax’s 33 syndication companies owed R4.5bn to about 30 000 investors.

USSA’s high number of representatives has raised eyebrows in financial services circles. Paul Kruger, editor of Moonstone Monitor, a publication associated with compliance company Moonstone, asks why USSA was allowed to operate as it did.

Kruger says it would have been “impossible” for USSA to fulfil its obligations correctly. He notes that an FSB notice, effective 2009, requires financial services providers to “directly supervise” representatives selling shares and debentures.

Says Kruger: “With 1 376 representatives under supervision, it would have been impossible for USSA’s one key individual to comply with this requirement.”

Moneyweb approached Rinate Goosen for a response but she replied that she was not available for comment.

Moneyweb asked the FSB's Gerry Anderson to comment on Rinate Goosen’s links to Sharemax.

Anderson confirmed that Rinate Goosen was employed by the FSB from 1991 to 1999. She left the FSB in 1999 to join Liberty Collective Investments (which later became Stanlib) where she spent five years in a compliance officer position. Goosen later joined USSA where she spent at least four years as that company’s compliance officer.

Last year Rinate Goosen was re-employed by the FSB. This means that she was not employed by the FSB while her husband worked for Sharemax.

Anderson denies there is any conflict of interest: “At the time of her re-employment, it was known to the FSB what the position of her husband was. It is not believed that there is a conflict of interest. Rinate was employed on her own merits and despite being married to Mr Goosen, based on career history.”

Financial journalist and long-time Sharemax critic Deon Basson has also questioned the FSB on its relationship with the property syndication company.

Basson wrote to Anderson in March 2007 to ask about a paragraph that appeared in a Sharemax newsletter. The paragraph read as follows:

Sharemax’s compliance awareness week that ran from 1 to 7 February 2007 was a big success. The closing speech was by Mr. Gerry Anderson, deputy chief executive of the Financial Services Board and responsible for the implementation of FAIS, at Sharemax House. It was a privilege to be able to listen to him and he was pleased with Sharemax’s role in compliance."

Anderson comments: “I was asked at the time (a reasonable request) by Sharemax to address a group of representatives, both connected to it and independent, on the FAIS Act. Such presentation did take place and the duration was about an hour. This is seen as regulatory assistance and I find it strange that, notwithstanding the fact that similar presentations are given to many groups by senior staff of the FSB, this is singled out specifically.”

Click here to read Basson’s full correspondence with Anderson.
( Moneyweb Special Investigations)
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Report of 2013
Sharemax property investors misled by 'copy-and-paste error'

Sharemax's directors told their auditors they made a "copy and paste" error in the prospectus of the Zambezi property syndication that misled investors about the security of their investments.

This is revealed in the latest determination by Noluntu Bam, the Ombud for Financial Services Providers, in which she orders an adviser, who is an accredited Certified Financial Planner, as well as Sharemax and four of its directors, to make good the loss suffered by an elderly woman who invested in the scheme.

The Zambezi property is now an empty shopping centre, and millions of rands need to be spent to rectify problems with the roads around the centre, the ruling reports.

Investors stopped receiving payments in 2010.

In her latest ruling, Bam relates replies from Advoca Auditors, then known as Act Audit Solutions, to her questions about whether the auditors reported the transfer of investors' funds out of the trust account of Sharemax's attorney, Weavind & Weavind, to the developer of Zambezi as an irregularity to the Independent Regulatory Board for Auditors (Irba).

The transfer was irregular because the Zambezi prospectus stated that investment funds would remain in the trust account of Weavind & Weavind until the property was transferred into investors' names.

Property syndicates are also required to keep investors' funds in an attorney's trust account until the property is transferred to the syndicate. This is in terms of a general notice issued under the Consumer Affairs (Unfair Business Practices) Act by the Department of Trade and Industry (DTI) in 2006.

The promise that funds would be held in a trust gave some peace of mind to investors such as 73-year-old Mrs B, who invested R490 000 in Zambezi on the advice of her financial adviser, Edward Carter-Smith.

Bam says most investors would not have participated in the syndicate had they been informed their funds would not enjoy the protection of an attorney's trust account.

But despite the DTI's notice saying it applied to all property syndications, Advoca told Bam it obtained legal advice that the general notice did not apply to the Zambezi syndication or Sharemax's other troubled scheme, The Villa.

Advoca also told Bam that the Sharemax directors said the transfer of the money from their attorney's trust account was no reportable auditing irregulatory because the reference to the money being held in trust should not have been in the prospectus and was a "bona fide 'copy and paste' mistake" made during the drafting of the prospectuses.

Bam says it is "startling" that the directors are claiming there was a mere mistake in the prospectus, as it was a material clause and the prospectus had been issued repeatedly between 2007 and 2010.

The ombud says the claim is disingenuous and against the probabilities.

She says the auditors do not give any details about when the error was discovered and what action, if any, was taken to inform investors.

Bam says the auditors did not accept the directors' explanation and reported the matter to Irba anyway. However, they did not report the matter timeously, she says, and they ought to have known that investors' money was being lent to the developers of Zambezi, who used the same funds to pay 14 percent interest back to Sharemax.

In an earlier determination, on a complaint by Mrs S, a widow who invested R649 000 in Zambezi, Bam also asked Sharemax's directors to explain the irregularity, and reported Weavind & Weavind to the Law Society.

In her latest ruling she says she found their explanation "unacceptable".

The only reasonable conclusion that can be drawn from the directors' conduct is that they were "involved in a scheme calculated to defraud members of the public", the ombud says.

Bam says Sharemax was a Ponzi scheme and its directors broke the law.

For this reason, as in the earlier matter, Bam found Sharemax and its four directors, Gerhardus Goosen, Johannes Botha, Dominique Haese and Andre Brand, liable together with the adviser who recommended the scheme to the pensioners.

A company trading as Unlisted Securities South Africa, which allowed advisers and brokers who were not qualified to use its licence to sell Sharemax to investors, was also held liable.

Sharemax has appealed the earlier matter.

Bam says Mrs B complained that she and her 71-year-old husband were in poor health and had told Carter-Smith she was a conservative investor and did not want "all her eggs in one basket".

Carter-Smith told Bam that Mrs B had invested in the PIC (Picvest) property syndicate previously and she found the Sharemax syndicate better suited to her needs.

Carter-Smith told Mrs B she could earn a 50-percent return on Zambezi in the first year, and the risks were as remote as that of the banks collapsing

Bam says that, as an adviser with 25 years' experience, CarterSmith should have realised that a return of 50 percent "is ridiculously extravagant" and questioned how it was possible.

She says Carter-Smith failed to comply with the code of conduct under the Financial Advisory and Intermediary Services Act by failing to give advice "honestly, fairly, with due skill, care and diligence".

She says Carter-Smith failed to apply his mind to the fact that Mrs B was a pensioner, unable to tolerate risk, and she had asked for her capital to be guaranteed with some growth and an income. Carter-Smith asked Mrs B to sign a disclosure document that made it clear that Sharemax represented a risk to capital and that income was not guaranteed.

He also failed to offer Mrs B alternative products, Bam says.

Personal Finance

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Swazis robbed of E24m

17 November, 2013
07:00:00
By Thembeka Dlamini

The Financial Services Regulatory Authority chief executive officer Sandile Dlamini yesterday stunned Swazis who invested in a product allegedly sold by Isambulo Investments, when he told them that all their savings had disappointed into thin air.

In total, Swazis have lost E24 million of their savings in what appears to be a pyramid scheme.
This happened at a highly charged meeting held at UNISWA, attended by members of the scheme.
Soldiers were the hardest hit by this, as their co-operative had invested E4m of their savings into this scheme, which it was revealed yesterday was inadequately registered.

According to Dlamini, all those who had invested into this scheme would not be getting their money until they took a definitive stand by petitioning for a lawyer to fight their cause.

Representatives from the Central Bank, Hlalawati Savings and Cooperatives (the USDF members); SUFIAW, former SAPPI employees; former SPTC employees; Ludzidzini Indvuna TVMtetwa, Musa Mthethwa (Sylvia Mthethwa’s husband) and other pensioners, attended the meeting yesterday. Dlamini was giving a report into the SHAREMAX issue and how Swazis were duped into investing E24 million in an inadequately registered company. He revealed that the company had no permit to accept deposits nor was it recognised by the Central Bank, nor paid any deposit insurance that could then be used to bail it out in the event it failed to pay its stakeholders.

Dlamini further explained that the Central Bank only had money that would be used in helping it and government since there were no deposits by this company made towards the Central Bank, so there was no legal remedy that they could offer since the company had a Swazi cover yet operated in South Africa. He said as a regulator they could not take the company to court, hence it was up to the members to make a collective report to the police and ask the Justice Minister or the prime minister for assistance through a petition to get them a lawyer.

The first people who invested in this company were able to get two to three interest payments thus they were able to believe that the scheme was legitimate.
Due to the fact that SHAREMAX operations were stopped after they were banned from collecting deposits by the South African Reserve Bank, their so called investment would not pay out and they would have to wait for 10 years before they could realise any returns.
SHAREMAX operated under Isambulo Investments and sold the SHAREMAX insurance as a product. Workers who were retrenched in SAPPI claimed at yesterday’s meeting that representatives of the company were allowed to come to the company premises and pitched a tent of a recognised insurer, in the presence of a Liqoqo member (name withheld) and a Vilakati woman, as well as a director of Isambulo Insurance Brokers.

SHAREMAX was registered in the ministry of commerce, industry and rrade but it was not registered to collect any money. Dlamini said they as FSRA did not know of the involvement of the insurer’s connection with SHAREMAX and it was the first that they had heard of it. Hlalawati Savings and Credit Cooperative Society Limited invested over E4 000 000 in the scheme, thus becoming the single biggest loser.


Indvuna TV Mtetwa disgruntled

Ludzidzini Indvuna, Timothy Velabo Mtetwa, who sat quietly but in an agitated manner, left the meeting a disappointed man.
He did not answer any questions posed to him and kept saying they had been robbed and that he hoped that the petition would help them get they money back.

Meanwhile, the Swaziland Union of Financial and Allied Workers (SUFIAW) invested E100 000 in the pyramid scheme.
Heated SUFIAW Treasurer, Jimson Gwebu minced no words and said the Reserve Bank of South Africa spoilt things for them by exposing SHARMAX since the company had been able to complete 29 other projects using the same operations they had employed in Swaziland and the investors had received their returns.

“So how would their ‘projects’ be completd because the company is no longer allowed to collect money
as capital?” he asked. He said he had been hoping to hear

that they were getting their investment back since the union had deposited E100 000 with the hope of making millions.


Churchill Dlamini invested E150 000

Winnie Dlamini (LaPhakathi) said she had hoped to be given a cheque since her husband, the late Prince Maphevu’s son, Churchill Dlamini was sickly after the failure of SHAREMAX to live up to its promises.

She lamented the fact that her husband had invested over E150 000 and they had never received any interest or any feed back in the last three years. She said when her husband made the choice to invest it was so that they would be able to pay the mortgage on the farm that they bought when her husband retired.

She said they had to sell their car and other possessions just to survive and since they were unable to make the installments each month, she had tried to sell the farm with a four bedroom house in Siteki but there were no buyers.


Regulator warns of pyramid schemes


Sandile Dlamini warned Swazis that if the investment scheme sounds too good to be true by offering very high returns, then they should rest assured that it is indeed too good to be true and should not entertain other members who ask them to join.
He noted that Swazis willingly pay out huge sums of money to companies they didn’t know anything about and then later go to the authorities and ask them to come to their rescue once they realised that they have been taken for a ride. He encouraged them to ask the pertinent questions before they take a risk with their hard earned money.

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SWAZIS INVEST, LOSE E23 MILLION
17/11/2013 07:12:00 BY MFANUKHONA NKAMBULE

KWALUSENI – Swazi companies, co-operative societies and individuals have invested their pensions and terminal benefits worth over E23 million with a collapsing South African real estate investment scheme called Sharemax.


In total, 34 000 investors, including Swazis, face losing half of the E4.4 billion they invested in Sharemax schemes.
Swazis invested between E200 000 and E300 000 each.
They invested their terminal benefits and pensions after being retrenched by their various companies.


Sharemax Investments (Pty) Limited is a real estate property investment company that engages in renting, operating, and managing commercial properties for shops and offices.
The company was incorporated in 1998 and is based in Pretoria, South Africa.


As of October 4, 2011, Sharemax Investments (Pty) Ltd. operated as a subsidiary of Realcor Holdings (Pty) Ltd.
People invested in these assets and were promised good returns.
One woman, Zandile Dlamini, wept when she narrated how her relative lost over E100 000 in the scheme. A local cooperative society is said to have invested E4 million.


The scheme faces liquidation in South Africa.
Victims of the Sharemax investment scheme include among others Hlalawati Cooperative, Credit Society, Swaziland Union of Financial Institutions and Allied Workers (SUFIAW). Others are the Swaziland Investment Consortium and a certain scheme for employees of the Swaziland Posts and Telecommunications (SPTC).


Not too long ago, the Manzini City Council invested E11 million in a South African pyramid scheme that was liquidated.
Swa zis also invested in the Channel S Club managed by jailed Qhawe Mamba.
A sum of E17 million was invested in the club.


The Financial Services Regulatory Authority (FSRA) and Central Bank of Swaziland (CBS) told investors at a meeting held at the University of Swaziland (UNISWA) yesterday that Sharemax Swaziland was also not registered in Swaziland.
About 200 investors attended the meeting. They had been promised that their investments would mature in five years but they only could reclaim their investments in two years time. Interests varied from nine to 12 per cent per annum and could increase when there was boom in the market.


Sharemax is a real estate investment that set up malls and other commercial buildings. Swazis were urged to invest in property because its market was lucrative.
The set part, according to the investors, is that they realised late that the contract they entered into with Sharemax through Sambulo Investments was written in Afrikaans – a language they did not understand. Sambulo Investments, an insurance broker, has since been suspended.


Sandile Dlamini, Chief Executive Officer (CEO) of the FSRA, said they had no locus standi (legal authority) to pursue the matter in the courts of South Africa.
He advised the investors to seek the services of an attorney who could take up the matter with the South African Ombudsman and Reserve Bank.
Dlamini said there were views that government should release its attorney to represent them. The CEO advised them to write a letter to the office of the Prime Minister or Minister of Justice and Constitutional Affairs and request for the services of a government attorney.


Dlamini said they told him that they did not have money to hire the services of a private attorney; hence government should come to their rescue.
The South African Moneyweb released financial statements for Nova Property Group which showed that investors who bought Sharemax products have lost E2.2 billion.
Nova is the company that owns all the properties that used to belong to investors in the various Sharemax property syndication companies.
Nova was formed as a rescue scheme.


Business Report in South Africa quoted Noluntu Bam, the Ombudsman of the Financial Services Board that Sharemax Investments, its network of financial advisors and four of its directors were allegedly involved “in a scheme calculated to defraud members of the public.
The advisors were Gert Goosen, Willie Botha, Dominique Haese and André Brand.


Carter-Smith who promoted Sharemax products in Swaziland was quoted by the Business Report complaining that he had been misled by the directors of Sharemax and called them “liars”.
The FSRA in Swaziland has also suspended Carter-Smith.

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