Friday, July 18, 2014
MEDIA RELEASE BY THE FINANCIAL SERVICES BOARD FOR THE ATTENTION OF INVESTORS IN THE SHAREMAX GROUP
The Financial Services Board (FSB) finds it necessary to comment on a Circular dated 6 August 2013 issued by Frontier Asset Management to debenture holders and shareholders who have acquired their rights in terms of Schemes of Arrangement involving a number of Sharemax companies.
The Schemes were sanctioned by the High Court on 20 January 2012.
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.
A number of determinations by the FAIS Ombud have been made against Sharemax, persons or entities associated with it and independent intermediaries who had advised their clients to invest in the Sharemax product.
Many of these determinations have been taken on appeal to the FSB Appeal Board where they are still pending. 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.
Enquiries: Ms Tembisa Marele
Financial Services Board
Email address: Tembisa.Marele@fsb.co.za
Telephone: 012 428 8025
083 754 2052
The luxurious lives of Sharemax bosses
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Sharemax malls may be saved
Questions haunt Sharemax arrangement
New hope for some Sharemax investors
New plan punted to save Sharemax
Why Sharemax deserves a death blow
Johannesburg - This is the luxury life of the two top managers of collapsed property syndication company Sharemax - while thousands of investors have lost most, if not all, of their money.
City Press has traced about R250m of assets owned by trusts and companies of Sharemax’s former managing director, Willie Botha, and his marketing manager, Andre Brand.
Botha and Brand were, for almost a decade, at the helm of Sharemax as about 40 000 people invested an estimated R5bn in the company’s 50 property syndicates.
The Reserve Bank ruled in May last year that Sharemax had contravened the Banks Act and had illegally collected deposits from investors.
City Press can reveal this week that one of Brand’s acquaintances, Wietz Nell, has handed incriminating documents and information to the police’s Hawks unit.
The Hawks would not say whether they have launched an investigation against Botha and Brand.
In the documents, Brand accused Botha in a memorandum of illegally pocketing at least R9m of money intended for investors.
Brand also alleged that Botha had, over a period of four years, pocketed R53m in “commission” from a Sharemax front company. Brand demanded a R24.5m share from Botha.
Botha this week ignored multiple attempts to get comment.
Brand said this week that Nell had obtained the documents dishonestly, but he did not deny their veracity.
Brand said that he had in the meantime cleared his complaint with Botha and that he withdrew any allegations against him. He said he now believed the money was paid legally to Botha.
Tomorrow, a group of Sharemax investors plan to bring an urgent court application to declare Sharemax bankrupt, and to freeze the assets of Botha and Brand.
Among the assets that the investors want frozen is Botha’s luxury yacht, which he keeps in the Egyptian port of Hurghada in the Red Sea.
The Italian-designed Scuba Scene is apparently worth between R120m and R150m, and is wholly owned by the Willem Botha Family Trust.
The boat has its own website and is described as “43 metres of classic nautical beauty and luxury”.
It says the Scuba Scene is a “true marvel of design, technology and style to provide all its passengers with an aesthetically pleasing masterpiece”.
The investors also want to ask the high court to prevent Brand from selling his 3 000 hectare game farm near Thabazimbi in Limpopo.
The game farm, Thaba Motswere, has been valued at R79m, and has giraffe, eland, kudu, gemsbok, cheetah and leopard.
The farm’s lodge alone cost Brand an estimated R20m to build and resembles a five-star hotel with all possible amenities.
Brand is desperate to sell the farm and even considered a price of R21.5m last month.
Botha has an equally luxurious game farm in Marken in Limpopo that is thought to be worth even more as it has the Big Five – elephant, rhino, buffalo, lion and cheetah.
Botha lives in a double-storey villa in the exclusive Silver Lakes Estate in Pretoria. Brand recently signed a contract to sell his mansion in Mooikloof in Pretoria for R15m.
Botha was in August “relieved” of his duties and resigned as director. Brand has also since left the company.
In September, the Reserve Bank put Sharemax under statutory management, ordering Sharemax to repay its investors, but there was no money left to do so.
The documents that City Press obtained shows that after Botha and Brand had left Sharemax, they were still paid R15m commission.
The company that is managing Sharemax on behalf of the Reserve Bank, Frontier Asset Management and Investments, did not respond to queries this week.
A forensic auditor, André Prakke, studied the documents obtained by City Press and concluded that there was evidence of money laundering, theft and fraud.
Prakke says that 80% of the money that was invested in Sharemax is gone.
Prakke has investigated Sharemax for many years and has submitted statements about the company to the high court.
He says that the commission that Brand refers to in his memos to Botha has never been revealed in any of Sharemax’s property portfolios.
- City Press
Read more about: property | investing | sharemax | fraud
Nova Property Group Holdings Limited 2011/003964/06
105 Club Avenue, Waterkloof Heights, Pretoria
Dominique Haese Managing Director, Connie Myburgh Chairman, Rudi Badenhorst Financial Director, Dirk Koekemoer Operations Director
SHAREHOLDERS / NOVA PROPERTY GROUP HOLDINGS LIMITED
DEBENTURE HOLDERS / NOVA PROPERTY GROUP INVESTMENTS PROPRIETARY LIMITED
31 May 2014
The Board of Directors of Nova Property Group Holdings Limited (“Nova Holdings”) and Nova Property
Group Investments Proprietary Limited (“Nova Investments”) report as follows.
DEAR SHAREHOLDERS AND DEBENTURE HOLDERS
1. Second Year Capital Repayments
1.1 The Second Year of the existence of the Nova Group since scheme sanctioning has come and
1.2 After a difficult but very successful First Year, in which the first class of debentures of the
projected first year payment process were repaid in full, the Board is pleased to announce that
the first class of debentures of the projected second year payment process, namely the Hazel
related Debenture Holders, also received payment of their full historically invested capital
during April/May 2014 (full syndication value). 2
1.3 An interim return of 5% per annum was paid to Hazel related Debenture Holders month, for the
3 months period from 1 February 2014 to 30 April 2014, to accommodate the administration
process and allow sufficient time for the FICA processes.
1.4 We thank all the Hazel related Debenture Holders and the numerous other Debenture Holders
who expressed their appreciation, support and exceptionally positive response to the
successful implementation of the projected second year payment process in terms of the
Income Plans related Scheme.
1.5 The Board further is pleased to announce that the second class of debentures of the projected
second year payment process, namely the Village related Debenture Holders, will also receive
payment of their full historically invested capital at the end of July 2014 (full syndication
1.6 This decision was not taken lightly by the Board, in conjunction with the Receivers. As was
advised to Village related Debenture Holders, during February 2014, it was decided that the
optimal value creation in respect of the Village property had not yet been achieved to the best
benefit of the Group and all its stakeholders, and specifically the Village related Debenture
Holders. Consequently, investment payment in respect of Village related Debentures was not
made at the end of January 2014, as projected.
1.7 The Group continues to focus on upgrading activities in respect of Village property, so as to
procure maximum value creation in respect of the Village property, in order to achieve the
optimal market value of the Village property in the best interests of the Group, which could put
the Group in a position to procure alternative funding in order to make payment, in full, to the
Village related Debenture Holders by 31 July 2014.
1.8 An interim return of 5% per annum is currently being paid to Village related Debenture Holders
monthly, for the 6 month period from 1 February 2014 to 31 July 2014, to accommodate the
period required for alternative funding procurement, administration and FICA processes.
1.9 With regard to the third class of debentures of the projected second year payment process,
namely the Whale Rock related Debenture Holders, the Board had to take the difficult decision
that no payment, nor any part payment, in respect of historically invested capital, will be made
1.10 This decision is taken having regard to the current economic and market conditions in the KZN
South-coast property market. The optimal value creation in respect of the Whale Rock property
has not yet been achieved to the best benefit of the Group and all its stakeholders, especially
bearing in mind that there is a current (historically entered into) bank bond over the property, of
approximately R14 Million, which the Group is dealing with. This bond stands first in line to be
settled. Furthermore, taking into account the fact that there is presently only a subdued market 3
for sales of the remaining Whale Rock units, the Whale Rock debentures currently have no, or
little value, as the aggregate possible sale value of the remaining units may well not realise
sufficient funds to repay the bank bond in full.
1.11 The Group will however continue to focus on the possible Commercial Property Development in
respect of the Whale Rock property, so as to procure maximum value creation in respect of the
property, in order to attempt to achieve the optimal market value of the Whale Rock property in
the best interests of the Group and the Whale Rock related Debenture Holders.
1.12 It is not known at this stage when this Commercial Property Development process will
commence, or when it will be completed, nor whether payment will be able to be made to
Whale Rock related Debenture Holders from such Development. Whale Rock related Debenture
Holders will be kept abreast of any future developments.
2. Property Specific Updates
2.1 One of the purposes of the Schemes was for the Board to embark upon individual upgrading
programmes, aimed at enhancing investment returns, capital growth, and investment
repayments when same fall due in terms of the projections contained in the Schemes.
2.2 The Board has embarked on these programmes to the best of its ability, in the face of the
funding difficulties referred to below.
2.3 On most properties, many hours had been spent by the board and professional teams in
preparing and finalising documentation relating to various planned upgrades and
redevelopments. Architect’s drawings, artist impressions and plans of the proposed upgrades
and redevelopments had been completed, submitted to local municipalities, and approvals
2.4 Unfortunately, many of these upgrades and redevelopments have subsequently had to be
pended, as it proved extremely difficult, and ultimately impossible, and completely
unanticipated, to obtain loan finance from many of the regular Financial Institutions providing
such finance, notwithstanding the excellent values of the properties within the Group available
for security purposes and notwithstanding excellent serviceability of loans sought.
2.5 The reason for such difficulties put forward by Financial Institutions have proved, exclusively, to
lie with unwarranted, incorrect, biased, negative and malicious media reporting in the past, and
which certain journalists continued to busy themselves with to the extreme detriment of the
Group and its stakeholders, including, specifically Debenture Holders. 4
2.6 The stock standard response from Financial Institutions to a negative decision on their part, on a
well founded and well received funding request, has been so-called “reputational risk” to the
declining Institution, flowing directly from the destructive media reporting referred to above.
2.7 The Group had no choice but to take a view and was unfortunately forced, during last year, to
make the decision to rely on internal funding for its upgrading and redevelopment activities,
which activities are, as a consequence, smaller than initially planned and approved.
2.8 The above ties in directly with the negative impact on monthly investment returns to Debenture
Holders, and the current non payment of investment returns in respect of many of the various
classes of Debentures.
2.9 As previously reported, this position is expected to stabilise by the middle of 2015 on many of
the properties, specifically as the Group is presently focused on smaller refurbishments and
upgrades, which is expected to lead to retaining existing tenants, attracting new tenants,
minimising vacancies, increasing cash flow and ultimately increasing property capital values for
maximum capital payments to Debenture Holders in the long term.
Leeuwpoort Street Investment
The tenant, The South African Revenue Service (SARS), the only tenant in the building who had occupied
the building on a month to month basis for the past 6 (six) years, gave 3 months’ notice of termination
and will be vacating the property on 31 May 2014.
The Board has previously informed the Debenture Holders to remain aware of the risks associated with
month to month leases, particularly as the tenant could give notice to vacate at any time.
Fortunately, the Board had always anticipated this and managed to sell the property for a reasonable
Athlone Park Shopping Centre
Cosmetic upgrades to Athlone Park Shopping Centre have been completed and have been very well
received by both tenants and the public. Structural repairs to the property are currently underway and
are expected to be completed within the next few weeks.
Some success has been had with the placement of new tenants and more than 500m² has recently been
taken up and another 400m² is under negotiation. The placement of Intercare into approximately
1,350m² has been delayed due to circumstances beyond the parties’ control and is expected to be
finalised during the second half of 2014.5
The anchor tenant, Checkers, has vacated the property and Checkers will not return as the anchor tenant
as they have decided to consolidate their Benoni Hyper and Lakeside Mall shops into one shop and this
will be at Lakeside Mall. The line shops occupancies converted to a month to month basis on expiry of
the Checkers lease agreement and many of these line shops have decided to vacate the property. The
planned major redevelopment has been cancelled due to Checkers Hyper’s decision to open in Lakeside
Mall. Alternative uses for the property, such as wholesale, etc, are currently being investigated and
pursued based on market demand.
Carletonville Shopping Centre
The refurbishment or redevelopment of the property is currently under investigation. The property will
continue to underperform until such time as either of these actions has been implemented and finalised.
Shoprite has confirmed their intent on upgrading their premises and renewing their lease agreement.
Alternative uses for parts of the building are being investigated based on market demand.
De Marionette Shopping Centre & Shoprite Secunda
Negotiations for the renewal of the anchor tenant’s lease at Shoprite Secunda have commenced and it is
likely that the renewal thereof will be on a standard lease and not on a head lease basis, as it currently is.
We expect finalisation of this matter within the next month or two.
A major redevelopment of De Marionette Shopping Centre will no longer take place. Cosmetic
refurbishments are expected to commence within the next three months and are expected to have a
very positive impact on occupancy levels.
Homemakers Village & Shoprite Virginia
Homemakers Village was sold.
Checkers occupies Checkers Virginia under a head lease, which is due to expire toward the end of this
year. Talks with the tenant surrounding their future occupation of these premises have been finalised
and the lease agreement will be renewed for a further 5 years.
The occupation date for the new supermarket has been extended to March 2015 due to delays in
obtaining local authority approvals. Other national tenants, for approximately 3,500m², have also
confirmed their interest in taking space based on the placement of the supermarket. We remain
confident that vacancies will be taken up as soon as the anchor tenant(s) is in place.6
Part of the placement of these tenants will include cosmetic upgrades to the property and the
Lydenburg Pick ‘n Pay
The property is 100% occupied and all the proceeds are being utilized to service the bank bond on a
monthly basis as per the mortgage bond agreement.
Magalieskruin Shopping Centre
As previously reported, the anchor tenant, Woolworths Food, will not be renewing their lease when it
expires in June 2014 and appropriate steps are being taken to secure Pick ‘n Pay as a new anchor tenant.
A national food anchor will occupy approximately 1000m² and the cost to place them will be almost R4
Million. The anticipated lease agreement should be finalised in the next 3 months.
The shopping centre has received cosmetic upgrades, which was done in order to retain existing tenants
and attract new tenants, especially now that a new shopping centre is planned to open within close
proximity to the property. These cosmetic upgrades have been very well received by both the tenants
and the public.
Nelspruit Pick ‘n Pay Hyper
A notable increase in demand was experienced after cosmetic upgrades to the property were completed
and the bulk of the vacancy has been taken up. Retailers in Nelspruit do however remain cautious due to
a current oversupply in the market as a result of new shopping centres being built in Nelspruit and
neighbouring Mozambique. A downward pressure on rentals is currently being experienced and is
expected to continue for the foreseeable future. Ingress and egress to the property has been improved.
Major damage to the interior of the property caused by a burst sprinkler system was successfully
managed and repaired.
All the sections will be sold off one by one as a result of the successful sectional title conversion.
Parkside Shopping Centre & Secunda Plaza
Parkside Shopping Centre has been sold.
Secunda Plaza is in need of cosmetic upgrades in order to retain existing tenants, especially now that a
new shopping centre has opened within close proximity to the property. The planned cosmetic upgrades
will commence in the next 2 months. Downward pressure on rentals is currently being experienced due 7
to an oversupply of retail space in the market, which is expected to continue for the foreseeable future.
An increase in vacancies is expected and appropriate steps are being taken to secure suitable
Range View Shopping Centre (Carnival Décor Centre)
A notable increase in demand has been experienced since cosmetic upgrades to the property were
completed and more than 800m² of the vacancy has been leased out to DIY DEPO. We expect an
increase in demand as soon as this tenant commences trading in June 2014. The name of the centre will
change to “Carnival Décor Centre”.
Both new tenants, Mr Price and Capitec Bank, are trading. The renewal of the anchor tenant’s lease
agreement is currently under negotiation and is expected to be finalised within the next 4 months.
The Village Shopping Centre
The anchor tenant, Spar, as well as another large tenant are both looking to expand their premises.
Proposed layouts have been prepared by the property’s architect and we await further advices from the
tenants in this regard.
Office vacancies remain a challenge, and currently 370m² of office space letting is under negotiation.
The Tarentaal Centre will not undergo any major redevelopment as initially planned. The property will
however be upgraded and this process will commence during the latter half of this year. It is expected
that this upgrade will have a positive effect on tenancy levels.
Waterglen Shopping Centre
A major redevelopment of Waterglen Shopping Centre will no longer take place. Cosmetic
refurbishments are expected to commence within the second half of 2014 and are expected to have a
very positive impact on occupancy levels, which are currently low. This will include tiling the common
area, upgrading all ablution facilities, modernizing the building façade, new clear view fencing around
the building perimeter, landscaping, changing certain shop fronts, increasing Pick ‘n Pay size to
approximately 2200m² and painting the centre, inside and outside. The expected refurbishment cost will
be R20 Million. 8
Interest from retailers remains strong but the placement of tenants is being handled on a selective basis
in order to achieve an optimum tenant mix for the shopping centre. The shopping centre needs to be
upgraded in order to retain suitable existing tenants and attract suitable new tenants. The anchor tenant
Checkers Hyper 550m² expansion was successfully completed and their lease was renewed for another 5
years. The construction of the new Taxi Rank and Bus Stop on site was finalised end of May 2014.
There has been a notable increase in interest from retailers but, as previously advised, the placement of
tenants is being handled on a selective basis in order to achieve an optimum tenant mix for the shopping
centre. Two large tenants have recently been secured and are expected to be trading during the second
half of 2014. This will undoubtedly have a very positive impact on occupancy levels. The refurbishment
of the property has been well received by the public and is now attracting interest from national tenants
such as Sheet Street, which has recently been secured. The construction and refurbishment of Flora will
be finalised towards September 2014.
The Board has concluded 3 Joint Venture Agreements with reputable residential developers. New
development planning is currently in progress based on the latest market researches, which will include
new architectural layouts, drawings, rezoning and marketing planning in respect of a number of
Tshwane China Shopping Mall (previously known as Zambezi Mall)
We are pleased to confirm that we have secured Oriental City on a head lease basis. The head lease
covers all lettable area in the building and will be taken up on a staggered basis. Approximately 60% of
the total lettable area has been taken up since late 2013, with the remainder expected to be taken up
during the course of 2014. Marketing of the shopping centre has been undertaken and footfall at the
shopping centre has increased drastically.
The Moloto road access to the centre still has a negative impact on the centre’s full trading potential and
until this is finally addressed, the traffic flow to the centre will remain a challenge.
The south eastern access road and intersection problems are correctly being addressed, and should be
solved within the next 3 months, which should have a positive impact on accessibility to the centre.
Unfortunately the litigation with Capicol Proprietary Limited, the historical developer of the centre, is
Debenture Holders and Shareholders will be kept advised of any significant further developments
Villa Retail Park
Unfortunately the litigation with Capicol 1 Proprietary Limited, the historical developer of the Villa Mall,
Debenture Holders and Shareholders will be kept advised of any significant further developments.
Please note that this information will be available on the Company Secretarial Services Provider Frontier,
website www.frontieram.co.za. You are welcome to visit this website for regular updates and
Debenture Holders and Shareholders will be informed directly via sms of any communication placed
onto the web.
Kindly take note that the Nova Group intends communicating every four months, namely April, August
and December of every year.
If you, as a Debenture Holder of Nova Investments and/or Shareholder of Nova Holdings, do not
receive such communications from us, please contact Frontier, as invited below, and ensure your
correct details are reflected on their system.
Queries may be directly addressed by contacting the Frontier Client Services at 0860 77 7722 or on (012)
425 5000 or emailing firstname.lastname@example.org.
The Nova Group Board
--------------------------------------------------------------------------------------------------------------------------------------------The targeting of Adv Glynnis Breytenbach
Dr Loammi Wolf
08 February 2012
Loammi Wolf says NPA is killing awkward prosecutions by removing competent prosecutors
Threatened suspension of top prosecutor would be arbitrary and unconstitutional
Sharemaxing the high life....Why is there still No Prosecution in the Sharemax case ??????
The Scuba Scene
High Court applications in Egypt and South Africa, criminal charges and threats of more criminal charges, a luxury lodge development in Mozambique, a Reserve Bank investigation into millions leaving the country and a tycoon’s yacht floating in the Red Sea.
These are the ingredients of yet another chapter unfolding in the Sharemax saga as the riches of the two top managers of the failed and beleaguered property syndication are being exposed.
Revelations of the wealth of former managing director Willie Botha and marketing director André Brand also come in a week that a Free State farmer prepares to apply for the liquidation of the R5bn Sharemax group.
Farmer AC van Zyl of Hoopstad says in his North Gauteng High Court affidavit that he invested R3m in Sharemax’s two biggest property syndications, The Villa and Zambezi Retail Park.
He says the syndications of both The Villa and Zambezi were illegal and have failed. There’s no money to repay him or any of the other investors – as the Reserve Bank has ordered, so the liquidation of Sharemax is the only option.
The liquidation application was due to be heard this week.
While many Sharemax investors are coming to terms with the fact that they’ve lost most, if not all, their investments in Sharemax, the focus has now shifted to the dazzling wealth that Botha and Brand have walked away with in the face of devastated and in some cases, impoverished shareholders.
Botha is fighting battles on all fronts.
Brand has also accused Botha in writing of pocketing R9m of investors’ interest – although he quickly withdrew the statement after Media24 Investigations started asking questions.
Besides his Sharemax woes, Botha is also embroiled in a bitter feud with the man who built his ultra-luxury yacht and who says he invested millions in the yacht as well.
Peet Gericke, owner of Scuba Scene diving in Pretoria, has also gone to war with Botha, accusing him of breach of contract and claiming that Botha intimidated him. He has laid charges at the Brooklyn police station in Pretoria.
At the heart of their dispute is the 43-metre Scuba Scene yacht thought be worth between R120m and R150m, which is owned by Botha’s family trust.
Gericke says he built the luxury yacht over more than four years and that he owns a substantial share.
Not so, says Willie Botha, who claims on his yacht’s website that Scuba Scene is fully-owned by the Willem Botha Family Trust. The website, which showed Botha and friends frolicking and diving on the yacht during a recent Red Sea holiday, was this week promptly removed from the web.
The yacht’s Facebook page detailing the feud between Botha and Gericke was removed. Finweek was, however, able to retrieve a copy of the page which gives a fascinating insight into the dispute.
Gericke says his battle with Botha has resulted in four High Court applications in Pretoria and two in Egypt. Litigation continues unabated.
Gericke confirms that he’s been visited by Reserve Bank investigators looking into millions that left the country through his accounts for the construction of the yacht. Much of the money came from Botha, he says, adding the investigators left with a substantial volume of documentation.
Gericke has also consulted with a private investigator in Pretoria, who in turn handed a pile of documents to Willie Hofmeyr, head of the Asset Forfeiture Unit.
Threats of liquidation
On the Facebook page, the Botha camp claims to have loaned R600 000 to Gericke and says if he doesn’t repay the Botha Trust in December, they will liquidate him.
Botha and his advocate visited Egypt in October and say they laid fraud charges against a business partner in Egypt.
The Scuba Scene yacht, which boasts 13 en suite cabins, a crew of 14 and the finest finishes, has been locked down in Hurghada in the Red Sea (see pictures).
Although Gericke still advertises dives from the Scuba Scene on his firm’s website, he confirms that the boat is no longer operational.
Botha also claims that he holds a 50% shareholding in Jupitrax, which owns the Scuba Scene shop in Menlyn Park in Pretoria and a multi-million rand resort development in Mozambique.
Gericke is busy developing the luxury Praia Paraiso coastal estate in Ponta Do Ouro in southern Mozambique. If Botha’s claim to own half of Jupitrax is correct, it would mean he also has a stake in the Praia Paraiso developments, which offer fractional ownership.
Meanwhile, questions are being asked about Brand’s accusation against Botha that the latter had illegally pocketed R9m of investors’ money in October 2009.
Documents pertaining to this payment are now in the hands of the Hawks.
Finweek has pieced together the events surrounding the money, and despite assurances by Botha – and suddenly Brand – that there was nothing illegal about the payment, questions remain.
Brand wrote a memo to Botha on 7 July claiming he was owed R24.5m in unpaid commission. He claimed that between March 2007 and February 2011 Botha had earned almost R50m in commission from Brandberg Investments, a property company that does business with Sharemax.
This money does not include the commission they earned from selling shares worth R5bn over 10 years to 40 000 investors.
Brand said he only got around R7m from Brandberg and demands another R24.5m from Botha. Botha claims he never received the memo.
Brand’s claims come after he started an investigation to trace commission that he thought he should have received from Botha but never did.
One of the people he visited was Capicol MD Paul Kyriacou. Capicol was the developer of Zambezi Mall and The Villa. Kyriacou confirmed that he’d told Brand about the R9m he transferred to Botha in October 2009.
“I notified André Brand about this and gave him a copy of all the documentation many months ago,” Kyriacou said. He claims it was for his share in a company he sold to Botha and that there was nothing illegal about it.
But Brand didn’t agree and wrote the July memo.
Enter Wietz Lourens Nell, a Pretoria businessman who buys and sells property. Brand wanted to get rid of his game farm near Thabazimbi in Limpopo Province, valued R79m according to a 2010 auditor’s report.
Nell found a buyer, and Brand signed a letter agreeing to sell the farm for a mere R21.5m. But, according to Nell, he wanted cash.
The sale never materialised but, says Nell, Brand asked him to help him get his money out of Botha and he gave Nell the July memo.
At around that time, Brand realised that the R9m payment from Capicol to Botha might be questionable. On 26 October he wrote to Botha distancing himself from the transaction saying the money had been wrongfully transferred from Capicol to Botha’s helicopter company.
Brand wrote: “These funds should be transferred to Sharemax for purposes of an interest payment.”
Brand also gave the memo to Nell, who in turn passed it on to the Hawks and the lawyers now bringing the liquidation application. He also made an affidavit about his dealings with Brand, now in Media24 Investigations’ possession. The Hawks will not comment on their investigation.
When Media24 Investigations approached Brand and Botha for comment last week, Botha refused to entertain any questions.
However, at midnight last Friday, both responded by saying that they had spoken to one another and that Brand was withdrawing any allegation against Botha and that he was now satisfied that the money was paid legally to his former business partner.
Brand never denied that the memos were authentic, simply that they had been obtained “dishonestly”.
- Jacques Pauw ( Finweek )
Now for the rest of the story
The pending suspension of adv Glynnis Breytenbach, who heads the NPA's Pretoria office of the specialised Commercial Crimes Unit and who has made her mark as a graft buster, caused quite a stir. From a constitutional point of view, it will be an infringement upon the principle of prosecuting independence as laid down in section 179(4) of the Constitution should she be suspended from office.
The problem is of a bigger dimension though than this incident. Although state prosecutions should be based on the rule of law with criminal laws applying in general to everybody, political office bearers seem to be immune to prosecution with the exception of a few sacrificial pawns like Yengeni. If one looks at the case of Malema, for example, who is alleged to be involved in corruption and having evaded taxes to the tune of millions and Carl Niehaus, who committed fraud in a number of instances, who were never prosecuted, it is clear that there is a two-class prosecution policy: one for the well-connected ruling class and another for ordinary people.
The main problem is that the Westminster system's separation of powers has been perpetuated although South Africa switched to the constitutional state model in 1994.
During the Codesa deliberations one of the main issues was that people wanted a clear break with the weaknesses of the Westminster system. They no longer wanted a system of parliamentary sovereignty where any legislation - irrespective of whether the laws were fair and just - should be enforced. They no longer wanted a system where criminal prosecutions could be manipulated by the executive. In short, they wanted a written constitution with a bill of rights, containing a limitation clause clearly spelling out how state power should be exercised, and making it possible to declare legislation that is not in conformity with constitutional norms, unconstitutional. This is a system of rule of law instead of rule by law.
It is a well-known fact that excesses of state power, and an abuse of executive power in particular, typically crop up in systems where prosecutors can be controlled by the executive. This is one of the principal weaknesses of the Westminster system. The most extreme forms of abusing power in the sphere of criminal justice are found in authoritarian systems - be that military dictatorships or systems like the socialist regimes of the former East Bloc. A typical feature of these regimes was that judges and prosecutors were executive appointees and that such positions were only open to trusted cadres.
Reports on how the criminal justice system of East Germany functioned leave no doubt about its crudeness and negation of basic human rights. "Political offences" were prosecuted by the Stasi (secret police) with harsh justice being meted out for any form of dissidence. Even a cursory reading of the three decades of articles by Tiziano Terzani on the communist regimes in South East Asia like China, Vietnam and Cambodia, makes clear how prone these systems were to corruption of cadres. Despite the lofty ideals of communism the abuse of power in criminal justice, directly or indirectly controlled by the executive, was endemic. This should make one think twice before these systems are idealised in the revisionist manner, which is currently so en vogue.
Differences between Westminster and constitutional state criminal justice
The constitutional state model foresees three equally strong branches of state power: the legislature, the executive and the administration of justice through prosecution and adjudication (judiciary; prosecutors). Unlike the Westminster system, where prosecutors were historically a split-off from the police as "law-enforcers" who also prosecuted criminal offences, the prosecutors were split-off from the judiciary in Continental European constitutional states to separate the investigation of criminal offences from adjudication.
In the Westminster system, prosecutors are thus part of the executive branch, and not the third branch of state power. As a result, one cannot clearly define criminal prosecutions as part of the administration of justice. One also cannot clearly delineate criminal investigations and prosecutions (criminal law) from executive state administration (administrative law) because the boundaries of the applicable law are completely blurred.
The current Constitution, however, makes clear that the state prosecutors are the second organ next to the judiciary in the third branch of state power. How they should exercise these powers are regulated by Chapter 8 of the Constitution in conjunction with sections 34 (access to the courts) and 35 (rights to fair treatment in criminal investigations, trials and the execution of sentences) of the bill of rights. This must be clearly distinguished from executive powers and the right to just administrative action (section 33 of the bill of rights) that could be taken by such state organs. In the field of public law, the former is regulated by criminal law and the latter by administrative law.
In other words, prosecuting policy which could be made by the national director of the prosecuting authority in terms of section 179(5) of the Constitution should not be confused with executive policy on how to implement powers conferred upon them in terms of legislation.
The minister of justice is therefore not the boss of the prosecutors - even if Mr Zuma seems to espouse this view -- but runs a department of the executive branch, which is obliged to facilitate a liaising role insofar as executive state organs (the police, tax authorities, customs and excise, etc) have to assist in criminal investigations.
One must therefore clearly distinguish the powers of the police force to secure public safety and order in terms of section 205(3) of the Constitution from their assistance to prosecutors to investigate criminal offences. Their powers as part of the executive branch (ie to secure public safety and order) are subject to the norms of just administrative action as laid down by section 33 of the bill of rights. This prohibits police officers, for example, to use excessive force when they exercise their administrative powers.
Criminal investigations, however, are headed by the prosecuting authority as an organ of the third branch of state power. The power to prosecute has explicitly been conferred upon them by section 179(2) of the Constitution and depends on criminal law. Unlike Westminster systems where police officers may also prosecute, this is precluded in constitutional states. Section 13(5) of the SAPS Act of 1995, which confers prosecuting powers upon members of the police force, is therefore obviously unconstitutional.
Prosecutors are bound by the principle of legality and have to invoke criminal law "without fear, favour or prejudice" (section 179(4) of the Constitution). It is therefore not the national director of the NPA who decides whether a specific act is a criminal offence based on some value judgements but the law.
Prosecutors are obliged to prosecute all matters with a reasonable chance on success (the pre-trial prima facie standard) when the elements of a specific crime can be proved. In S v Basson the Constitutional Court held that it is the constitutional obligation of the prosecuting authority "to prosecute those offences that threaten or infringe the rights of citizens".
In Nkdimeng v National Director of Public Prosecutions, the Gauteng High Court equally stressed the right of victims and held that it would be unconstitutional if the prosecuting authority would refuse to prosecute "where there is a strong case and adequate evidence to do so".
If the prosecutors should be allowed to drop charges in a prima facie case, this would boil down to a de facto acquittal without a trial. This, however, would constitute an usurpation of judicial power which is an unconstitutional practice in terms of section 41(1)(f) of the Constitution.
If prosecutors would refuse to prosecute a person in a prima facie case, a victim could therefore invoke section 34 of the bill of rights to get access to the courts and thus force the prosecutors to institute criminal proceedings in a specific matter. Along this route one can say that the state organ, who exercises a kind of oversight over the prosecutors to ensure that they do not drop criminal charges arbitrarily, is the judiciary.
It is laudable that Dene Smuts of the Democratic Alliance in her defence of adv Breytenbach, has told the top officials of the NPA that they should remember that the NPA is accountable to Parliament. Smuts relied on section 35 of the NPA Act of 1998. This provision, however, is just as unconstitutional as section 13(5) of the SAPS Act, which conferred prosecuting powers upon the police. In terms of section 55(2) of the Constitution, Parliament has the power to oversee state organs exercising executive power. The administration of justice (ie prosecution and adjudication) is not an executive power though.
Illegal orders to drop charges or purposely aborting cases
What is at issue, is that adv Breytenbach has been taken off a fraud case by the former head of the NPA, Menzi Simelane just before he lost office, involving Imperial Crown Trading in the Kumba Iron Ore case r - alleged due to pressure by well-connected persons.
She was apparently also forced not to pursue a fraud and murder case involving the crime intelligence boss Richard Mduli by the new director of the Commercial Crimes Unit, Lawrence Mrwebi. Apparently Mrwebi is also due to give evidence in another matter where she is the prosecutor. He authorised a transaction of his colleague Ledwaba during his time as head of the Scorpions in Natal, in which the latter siphoned off over R500.000 from a confidential funds of the Scorpions.
In its letter to adv Breytenbach, the NPA cited only an alleged abuse of powers in the criminal investigation of the multibillion-rand Sishen iron ore mining deal. A portion of the prospecting rights to the mine was initially awarded to Imperial Crown Trading, whose beneficiaries include President Jacob Zuma's son, Duduzane, Deputy President Kgalema Motlanthe's partner, Gugu Mtshali, and Jagdish Parekh, who heads the Gupta family's business empire. After a challenge by Kumba Iron Ore, the award to Imperial was invalidated by the Pretoria High Court last year.
It has been alleged that such tactics are employed when the top structure of the NPA want a court case to fail. This also happened in the case of druglord Glenn Agliotti, when Gerrie Nel was taken off the case. Simelane also instructed Gauteng's acting deputy director of public prosecutions, Gladstone Maema, to replace Gerrie Nel, as prosecutor in Mphego's trial. Nel charged Mphego, a former head of the SAPS's crime intelligence unit, for defeating the ends of justice in the Selebi trial. Shortly afterwards the case was struck off the role. Mphego was apparently also involved in passing the disreputable spy tapes on to Zuma's lawyer, Michael Hulley, which then served as a reason to drop charges against Zuma.
Breytenbach's lawyer, Gerhard Wagenaar, said that his client had denied abusing her powers and had written to the NPA to request more details about the alleged abuse.
The question is therefore whether directors of the NPA may give orders to prosecutors to drop charges in a prima facie case or whether they may cause the deliberate abortion of a prosecution by taking successful prosecutors, who investigated a matter and know all its details, off a case?
The directors of the NPA are bound by the principle of legality and must invoke the law in an unbiased and scrupulous manner. The rule of law is cemented by section 1(c) in conjunction with section 179(4) of the Constitution. With such behaviour they would forsake their constitutional duties. They themselves could be charged for improper interference with criminal prosecutions (section 32(1)(b) read with section 41(1) of the NPA Act). Originally such interference was sanctioned with up to ten years imprisonment, but at the behest of the executive the legislature watered this down to a maximum of two years' imprisonment.
Such improper orders would also be a ground to remove the national director from office if he would be involved in such arbitrary dropping of charges or wilfully abort cases by taking prosecutors, who investigated a specific off cases with the sole purpose that the case should fail (section 12(6)(a)(i), (ii) and (iv) of the NPA Act). The point is just that this is not likely to happen if the President who is supposed to do that is himself a beneficiary of such improper action. It is doubtful whether this provision in its current form would survive the scrutiny of its constitutionality, because it transgresses the separation of powers.
The Constitution demands impartiality from judges and prosecutors and make them subject only to the Constitution and the law. There are obviously differences between judicial independence compared to prosecuting independence though.
Judicial independence means that there is no internal hierarchic structure in the judiciary where a judge president or chief justice may give orders to other judges how to adjudicate in a specific matter. The different tiers of courts exercise judicial power in their respective jurisdictions and their powers are regulated by the Constitution, the law and the system of precedent (stare decisis), where lower courts are bound by legal rules that crystallised in judgments of higher courts.
Prosecuting independence primarily denotes independence from political influence of the justice minister and the executive branch. In S v Basson a unanimous bench of the Constitutional Court stressed the independence of the prosecuting authority as state organ to institute criminal proceedings under section 179 of the Constitution on behalf of the state. Although the internal organisation of the prosecuting authority is hierarchically structured to enable an efficient administration of criminal prosecutions, all prosecuting decisions are still subject to the principle of legality. It would therefore be an unconstitutional exercise of power if a director of public prosecutions would force prosecutors to drop charges in prima facie cases.
In terms of section 32(2) of the NPA Act all prosecutors have to take an oath that they will enforce criminal law impartially and will uphold and protect the Constitution and rights entrenched by the bill of rights. If adv Breytenbach's superiors would therefore force her to break her oath, this not only has consequences as an unfair labour-law practice because it forces her not to perform her duties properly, but can be contested at a constitutional level as well. She would be able to take the matter to the Constitutional Court on the basis of a dispute concerning the powers and functions of a state organ (section 167(4)(a) of the Constitution.)
The appeal of the Democratic Alliance's case about the legality of dropping of charges against Zuma at the time when he was president of the ANC shortly before the 2009 elections and which made the way free for him to run as President, has been scheduled for a hearing in the Supreme Court of Appeal on 15 February 2012. This will be a litmus test for impartial state prosecutions and upholding the rule of law.
* Loammi Wolf specialises in public law and has a special interest in constitutionalism and state organisation law. She obtained an LLM at the University of Virginia as well as a doctorate in constitutional law at Unisa. Currently she runs the initiative Democracy for Peace. She published extensive research on the topic of prosecuting independence.
Why is NPA trying to suspend Glynnis Breytenbach? - Dene Smuts
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by Oblio on February 09 2012, 04:28
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LABELS: ADV GLYNNIS BREYTENBACH COMMERCIAL CRIME UNIT CARL NIEHAUS YENGENI
Author: Julius Cobbett
31 January 2013 00:57
Fais Ombud finds Sharemax directors liable for investor's loss
Scathing determination declares Zambezi syndication 'nothing more than a Ponzi scheme.'
JOHANNESBURG – Fais Ombud Noluntu Bam has found four Sharemax directors liable for an investor’s loss.
The determination is unusual because it is normally only financial advisers who are held liable for bad investment advice.
However, in a lengthy determination, Bam has set out why she believes the Sharemax directors should be held accountable. The determination was signed on Tuesday. It can be downloaded in two parts here: part 1, part 2.
The determination could pave the way for thousands of other investors to claim losses from Sharemax’s directors.
In her latest determination, Bam is scathing of the Sharemax directors, who she accuses of “violating the law.” Bam's determination was received after close of business on Wednesday and the Sharemax directors were not immediately available for comment.
Bam writes: “The facts before this office support the conclusion that the investment, as promoted and executed by Sharemax, was nothing more than a Ponzi scheme. The directors of Sharemax violated the law and on this basis [they too] must be held liable for the investors’ loss.”
The complaint in question was laid by pensioner Gerbrecht Siegrist, 73, who is now destitute after investing her capital in two Sharemax-promoted syndications: Zambezi and The Villa.
The complaint was initially laid against her financial adviser, CJ Botha. However, the following six respondents were added to the complaint: Sharemax Investments, FSP Network (trading as Unlisted Securities South Africa), and the following four Sharemax directors: Gert Goosen, Willie Botha, Dominique Haese and Andre Brand.
Siegrist’s late husband left her an amount of money which was intended to provide her with an income. This money was placed in conventional investments, but on Siegrist’s broker’s advice, she invested R460 000 in Zambezi on April 2, 2008, and a further R120 000 in The Villa on July 15, 2008.
Siegrist’s broker, CJ Botha, claims that Siegrist instructed him to invest in Sharemax. But, says Bam, in the same breath Botha “admits that the complainant wanted an investment where her capital would be safe.”
Bam notes that Zambezi was a risky investment unsuitable for pensioners. Yet she notes that brokers who sold Sharemax products “almost without fail targeted pensioners.”
Bam found that the directors of Sharemax and FSP Network “were aware of the fact that the scheme [Zambezi] was both illegal and not commercially viable and yet they recklessly took investors’ funds. Investors whom within their knowledge were almost without exception pensioners who could ill afford the inevitable loss.”
Key to Bam’s determination is the finding that Sharemax and its directors were ultimately responsible for advice rendered by CJ Botha.
Bam links Sharemax to Botha through FSP Network, which traded under the name Unlisted Securities South Africa (USSA).
USSA provided many financial advisers with the necessary Financial Services Board (FSB) licence necessary to sell Sharemax products. The business was described by Bam in a previous determination as “nothing short of the hiring out of a licence for a small monthly fee.”
For more on USSA, see: the following articles: Broker offers widow costly Sharemax advice, FSB linked to Sharemax “licence for hire” scheme, and FSB official’s husband pays 13% return.
At its peak, USSA had 1376 representative brokers, all of whom sold Sharemax products. Bam notes that all of USSA’s registered brokers were only allowed to market Sharemax products.
What’s more, Sharemax director Gert Goosen was also USSA’s sole director and key individual.
Bam writes that Sharemax and USSA were “joined at the hip.”
“What Sharemax attempted to do was to create a buffer between itself and the brokers and the investors,” notes Bam. “This was a futile exercise as in law, Sharemax and its directors will, ultimately, be responsible for the conduct of their section 13 representatives.”
Bam says that Sharemax director Dominique Haese “gives no explanation as to why Sharemax stood by and took money from investors, via their ‘supervised’ broker network, who were clearly investing in a product that was not suitable for them.
Bam says that Haese must have known that the majority of the investors brought in by the representatives were pensioners.
Bam ordered all seven respondents, jointly and severally, the one paying the other to be absolved, to pay Siegrist the amount of R580 000. If the respondents comply with the order, they are entitled to Siegrist’s share certificate.
Image source: A risk-reward matrix from Bigstock
Topics: Fais Ombud, Sharemax, Noluntu Bam, Dominique Haese, Rinate Goosen, Gert Goosen, The Villa, Zambezi Retail Park