Tuesday, November 29, 2016

Staggering salaries of directors' of Sharemax rescue vehicle

Staggering salaries of directors' of Sharemax rescue vehicle

Ryk van Niekerk

29 November 2016

The salaries of the four directors of Nova Property Group have been extremely controversial and a comparison to industry salaries clearly shows that they may be grossly overpaid. This has a significant impact on the company's cash flow and ability to pay debenture holders.

Moneyweb recently revealed that the four board members collectively own 87.1% of the company and 91% of the voting rights and can therefore set and pay their own salaries.

Nova also informed debenture holders last week that interest payments to debenture holders from November 1 have been suspended. This suspension should be seen in the context of the salaries of the four Nova directors.

During a recent radio interview, Nova CEO Dominique Haese denied the board was overpaid and said the directors’ salaries are far less than comparable market salaries. In a subsequent communication to debenture holders she also proclaimed that salaries have a “negligible impact on the company’s operational performance”.

She added that “if one looks at industry norms and market-related salaries, our salaries, if you do the calculation properly, is 70% of what an industry norm salary would be, taking all the risk, taking the responsibility of this group.”

Facts show the contrary.

Comparison with industry norms

There are two ways to look at executive remuneration. The first is to compare the salaries of individual directors with industry averages. The second is to compare the combined salaries of all the executive directors with the combined salaries of executive directors of peer companies.

In both cases, the Nova board compares exceptionally well to these industry norms, despite having a minuscule portfolio of assets to manage in comparison to the JSE-listed property companies. This is also despite Nova being a public company specially set up to rescue the R5 billion investments of 33 000 elderly Sharemax investors.

Comparison of individual salaries

Let's first compare the salaries of the individual directors with the averages of JSE-listed property companies.

An analysis of the directors’ remuneration in the 2015 and 2016 financial years appears below:

Remuneration of Nova directors




Cash salaries


Cash salaries

Dominique Haese

R5 276 724

R4 151 724

R4 491 527

R3 666 527

Rudi Badenhorst

R4 518 801

R3 393 801

R3 882 044

R3 057 044

Dirk Koekemoer

R4 596 630

R3 471 630

R3 879 171

R3 054 171

Connie Myburgh

R5 190 946

R4 065 946

R4 493 085

R3 668 085

R19 583 101

R15 083 101

R16 745 827

R13 445 827

Source: Nova annual financial statements

In the table below, the average salaries of various C-suite directors of JSE listed property companies are listed. These salaries were captured by Profile Media during 2015 as a joint initiative with Moneyweb to calculate the average salaries of all JSE-listed companies. The salaries shown are average cash salaries of the executive directors of property companies that were disclosed in annual reports published in 2015. The averages exclude the salaries of executives of UK listed companies. (The 2015 salaries of the Nova board are used for the comparison as they correspond with the Profile Media data).

Comparison of individual salaries with JSE listed averages

Average Salary

Cash salary

Nova directors

2015 Cash Salary

CEO, CE and Executive chairmen

R4 042 391

Haese (CEO)

R3 666 527

Myburgh (Chairman

R3 668 085

Financial director

R2 010 364


R3 057 044

Chief operating officer

R3 386 613


R3 054 171


R3 146 456

R3 361 457

This analysis shows there is a clear conflict between Haese’s statement that directors receive 70% of the “industry norm” and the actual amounts. Some of the individual directors actually earn more than their JSE counterparts. This is despite the fact that the four directors manage properties valued at only R3.8 billion, of which R1.7 billion is locked into the half-built Villa. This is minuscule compared to the assets JSE-listed property companies manage. This also begs the question as to why there are four executive directors, who offer at least 32 hours of executive management a day, to manage this small portfolio. It may be a coincidence that the four each own around 21.8% of the company and collectively hold 91% of the voting rights.

Comparison of salaries of all executive directors with industry peers.

The second relevant comparison is between the combined salaries of Nova’s executive directors and those of JSE-listed property companies. For this analysis, Nova's 2016 salaries and bonus payments are used as Profile Media’s information corresponds with Nova’s financial year. All UK-listed companies were excluded from the analysis, as well as a few local companies whose total board remuneration was less than R500 000. However, the average includes cases where individual board members did not receive any remuneration.

The Profile Media data shows that the four Nova directors’ combined salaries and bonuses of R15.1 million are extremely high. It is more than double the average of R6.1 million of the analysed companies and trumps the salaries of the executive management of blue chip companies such as Redefine, Resilient, Sirius and Arrowhead.

Company Name

Cash Salaries of Executive Directors

Stenprop Ltd.

R26 611 545

Tradehold Ltd.

R17 441 159

Nova Property Group

R15 083 101

Redefine Properties Ltd.

R14 019 000

Growthpoint Properties Ltd.

R13 102 034

Resilient REIT Ltd.

R11 119 000

Sirius Real Estate Ltd.

R11 015 179

Arrowhead Properties Ltd.

R10 473 605

Fortress Income Fund Ltd.

R9 512 000

Rockcastle Global Real Estate Company Ltd.

R9 469 262

Vukile Property Fund Ltd.

R8 700 392

Source: Profile Media (Excludes UK-listed property companies. Only 10 of 43 analysed companies are listed here.)

Impact of salaries on operational performance and ability to repay debentures

Haese also stated in the communication to debenture holders that the directors’ salaries have a “negligible impact on the company’s operational performance”.

Unfortunately, this is also not supported by facts.

A simple analysis shows that the directors’ cash salaries represented 9% and 11% of the total operating expenses in the 2015 and 2016 financial years respectively. The situation is even worse if it is compared to the company’s cash flow. Over the same periods the cash salaries represent 16% and 17% of all the cash the company received from customers, ie the tenants in the various properties.

This means that in the most recent financial year, the directors pocketed R17 of every R100 cash that was paid to the group, which has a significant impact on the company’s cash flow. In fact, the company has not delivered a cash positive operating result since inception. In the 2016 financial year the company saw an operational outflow of R26 million and since the scheme’s inception the total outflow amounts to R177 million.



Directors' cash salaries

R13 445 827

R15 083 101

Operating expenses

R147 548 533

R137 315 546




Cash received from customers

R83 663 776

R86 568 329

% salaries/total cash receipts



Inevitably, this cash flow position affects Nova’s ability to pay debenture holders. It is, however, clear that directors pay themselves first, and then debenture holders. During 2015 and 2016 the directors’ cash salaries amounted to R28.5 million, while interest payments to 31 000 debenture holders amounted to R24.6 million. The Nova board also announced last week that it would stop interest payments to debenture holders.

Response from Dominique Haese, CEO of Nova:

Dear Mr van Niekerk,

It is regrettable that our efforts in engaging Moneyweb openly, constructively and in a bona vide fashion has not been reciprocated. In response Moneyweb has chosen to publish articles without prior reference to us, and in breach of your undertaking to allow us to see and comment on the articles first, which articles twist the facts, articulate a number of inaccuracies and untruths and seek to slander and defame the Nova Group and its directorate. We are considering our position and our rights in this regard are reserved.

It has become clear to us that any information that is provided by us to Moneyweb, will be twisted and used out of context for the purpose of further negative reporting of and concerning the Nova Group and its directorate and given that no further productive purpose would be served in engaging with Moneyweb, the Nova Group has decided to break off all forms of communication with Moneyweb. We will accordingly no longer respond to questions Moneyweb pose to us, requests for commentary on proposed articles or for that matter to any articles that Moneyweb might publish, subject of course to a reservation of the right to deal with any matter Moneyweb might publish, in a court of law.

Please ensure, should you elect to publish anything further regarding the Nova Group and any of its functionaries, that you include in such publication our above position, verbatim.

Yours faithfully,

Dominique Haese

CEO Nova Property Group

It is important to note that the Nova board did not respond to several sets of questions Moneyweb sent to the board prior to the publication of the first article about the directors’ shareholding.

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Saturday, November 26, 2016

Nova bosses take pensioners’ R1bn.....Sharemax !

Nova bosses take pensioners’ R1bn
Julius Cobbett 25 Nov 2016 00:00

Nova directors Dominique Haese and Connie Myburgh (pictured).
In 2013 a pensioner committed suicide by shooting himself in the heart outside the offices of failed property scheme Sharemax, starkly illustrating the human toll Sharemax’s collapse had on some 33 000 people. Their supposed rescue came in the form of Nova Property and its plan to recover much more of their money gradually than they would see if Sharemax was simply liquidated. Nova, though, was not a paragon of transparency. For three years it fiercely fought a request for supposedly public information from specialist financial website Moneyweb. 
This week, after finally getting access to the information through a Supreme Court of Appeal order, Moneyweb published details showing how Nova directors manoeuvred themselves into a R1‑billion profit on paper, at the expense of the original Sharemax shareholders. Moneyweb and the Mail & Guardian approached former journalist Julius Cobbett, who doggedly pursued the Nova story for years for his analysis.

It was supposed to be a rescue. Instead it appears to have been a self-enrichment scheme that landed four individuals — including two who were partly responsible for the need for a rescue in the first place — some R1‑billion, at the expense of 33 000 individuals, many of them pensioners.
Such is the distasteful situation at Nova Property Group, a public company that now owns a large portfolio of commercial properties that were originally sold to investors by Sharemax, a failed property syndication promoter.
In return for supposedly coming to the rescue of the original Sharemax investors, four Nova directors — Connie Myburgh, Dominique Haese, Rudi Badenhorst and Dirk Koekemoer — paid themselves R66‑million in salaries and bonuses over the past four years.
But this pales in comparison with the potential value of shares they awarded themselves in Nova. A three-year court battle to access Nova’s shareholder register has finally revealed that these four directors own 87% of Nova in equal portions.
The latest financial statements show that Nova has a property portfolio valued at R3.9‑billion and a net asset value of R1.2‑billion. This means the four directors own shares worth, on paper, more than R1‑billion. 
Nova chief executive Haese and her codirectors paid almost nothing for this enormous stake in Nova. The shares were in effect given to them for free.

To add insult to injury, two of the Nova directors who have benefited in this way were intimately involved with Sharemax before it imploded. Haese in particular played a pivotal role at Sharemax; she was appointed a director there in late 2006, was its financial director and, later, acting managing director until it entered business rescue. Koekemoer was Sharemax’s director of property management. He was appointed a director in November 2008.
When I petitioned Nova to view its shareholder registers back in 2013, I expected to discover self-enrichment. What I did not expect was the scale. Nor did I expect a three-year legal battle that led all the way to the Constitutional Court, before access to the registers was finally ordered.
While Moneyweb ran up legal bills to gain access to information that by law any member of the public may request for any reason, Nova’s directors paid the legal fees to defend that request out of company coffers, from money that should by rights have gone to repaying Sharemax investors.
For her part, Haese denies ever keeping the shareholder details secret — except from Moneyweb, which she accuses of having an underhand agenda.
That claim is remarkable, considering how surprised just about everybody was when the details emerged this week, including the likes of economist Dawie Roodt, who was involved in the Sharemax rescue before he fell out with Haese and Myburgh.
Haese also makes much of the fact that R167‑million has been paid to debenture holders — R86.6‑million in the form of interest and R80‑million in return of capital. But this is just a small fraction of Nova’s outstanding debt to these former Sharemax investors, which totals R2.5‑billion. If Nova continues to return capital at the same rate it has done in the past four years, it would take 125 years to repay its debt.
Foxes gain control of hen house
When Sharemax collapsed, investors were faced with the prospect of having their companies liquidated. They were prepared to vote in favour of just about any other alternative. Brokers also had a strong incentive to advise clients to vote in favour of a rescue scheme — any rescue scheme. To liquidate would be to accept that the investment they had recommended was a failure.
Myburgh and his codirectors took full advantage of this situation, knowing that a vote against such a proposal would be unlikely.
Myburgh crafted the scheme at considerable expense (in just one week he billed 102 hours at R3 000 an hour). It gave investors two options: accept shares in Nova, or debentures issued by a Nova subsidiary. Unsurprisingly, most investors chose the seemingly less risky debentures, which offered the prospect of some income and an enforceable claim against Nova.
Only about 2 000 of the 33 000 investors elected to receive shares. In the process, they surrendered Sharemax-promoted debentures worth R94.7‑million — which means they “paid” about 98c a share.
Another 2.2‑billion “B” shares were issued for free to the seven founding shareholders, which includes the four Nova directors. This was done in accordance with a single paragraph tucked away below a formula in appendix ARR8 of Myburgh’s 250-page rescue scheme document.
The paragraph states that the founding shareholders would receive all the Nova shares that were available to the 31 000 investors who decided not to exercise the option to swap their debentures for shares.
Since only 2 000 investors chose the share option and received 4.3% of Nova’s shares, the founding shareholders pocketed the balance of 95.7% without paying a cent.
Investors screwed, twice
Sharemax was started in 1999 by Willie Botha, a businessperson with a shady past involvement in the failed Oude Molen property syndication scheme. Sharemax sold its first property to investors for R9.7‑million. Over the next decade it would sell properties of ever-increasing value. It collapsed while raising funds for The Villa, an enormous, incomplete shopping centre east of Pretoria that had an estimated syndication value of R3.5‑billion. In total, investors poured R4.6‑billion into Sharemax-promoted syndications.
The concept of selling portions of properties to investors is a simple one. It ought to be a relatively low-risk investment. It is a concept that underpins some of the largest JSE-listed property companies such as Growthpoint, Redefine and Hyprop.
But right from the beginning there were warning signs that Sharemax’s business model was neither low risk nor investor friendly.
The scheme caught the eye of South Africa’s most celebrated financial journalist, Deon Basson. Basson, six-time Sanlam Financial Journalist of the Year, published many articles that were critical of Sharemax. For his efforts, he was sued in his personal capacity by Sharemax for alleged defamation. The case never reached court; Basson died of a heart attack on September 13 2008. He was 53.
It may be a stretch to blame Basson’s untimely death on the actions of Sharemax’s directors. But they certainly made his life miserable in its final years.
Basson had two main concerns about Sharemax’s investment model. First, the costs were unusually high. For every R100 invested in any Sharemax-promoted scheme, a minimum of R15 went to costs and commissions. The lion’s share of these exorbitant costs went to financial advisers — salespeople who were either too unqualified or greedy (or both) to dismiss the investment as inappropriate for their clients.
Basson’s second concern was more serious. Unlike conventional property investments, the Sharemax-promoted syndications didn’t simply pay net rental income to investors. It seduced them with an income that was higher than the rental the underlying property was able to produce. Just how Sharemax offered this tantalising return remains a secret.
But the most obvious answer is that money from investors in newer, ever-larger syndications was used to subsidise investors in older ones. Such a structure would be a classic Ponzi scheme — an opinion held by Financial Advisory and Intermediary Services (Fais) ombud Noluntu Bam, who has ordered several Sharemax brokers to refund their clients.
In any event, the entire Sharemax structure collapsed, beginning with the drying up of cash at its Villa development in September 2010.
The investors’ pain was felt as soon as Sharemax-promoted syndications stopped paying unsustainable high income that had been promised to investors. At least one of the 31 000 investors paid the ultimate price. In 2013, Villa investor Bohuslav Kautsky (67) committed suicide outside Sharemax’s offices in Waterkloof Heights, Pretoria. Kautsky’s daughter told Moneyweb that he wanted the directors to know the devastation they had caused.
What happens now?
Many investors have asked what happens now. It is encouraging that Nova’s auditors, BDO, have announced an “extensive investigation” into Nova’s affairs. Despite this, I expect the Sharemax saga to end in the same way as countless other dubious schemes have: with investors losing everything and zero serious consequences for the perpetrators.
Consider the words of Bam, who wrote in a 2013 determination against a Sharemax broker: “Let us look at the damning facts; in recent times South Africans have lost billions to failed investment schemes. In the Leaderguard scandal, involving forex investments, a staggering amount of about R380‑million was lost. In the Blue Zone property syndication, investors lost R450‑million … [and] an amount of about R300‑million was lost in the Blue Pointer scheme, and so the list continues. Incidentally, none of the perpetrators have been prosecuted, notwithstanding that this office reported some of these cases to the national director of public prosecutions.”
Nova declines to respond
Nova Property Group declined to answer specific questions or comment on this article more broadly. Instead it sent the letter below, which is reproduced in full. In the radio interview she refers to below, Dominique Haese said the Nova directors had acted legally, and that their potential profit from the company’s structure is “fully justified”.
“Dear Mr Cobbett
Your draft article contains numerous untruths, inaccuracies and negative innuendoes and goes no further than rehashing Moneyweb’s incorrect reporting, already responded to by the Nova Group on RSG Radio on November 21 at 6pm (refer to transcript available on Moneyweb’s website) and in the question-and-answer documents exchanged between Moneyweb and the Nova Group, which answers provided (prior to Moneyweb’s publication) the correct information to Moneyweb, only to be reported on incorrectly and out of context by Moneyweb (refer to all three sets of Q&A documentation attached to the Moneyweb articles on Moneyweb’s website).
Responding, effectively to Moneyweb, through you, is simply not the correct forum. Consequently we have no further comment to your email or draft article.
Please ensure, should you elect to publish anything, that you include in such publication our above response, verbatim.
Kind regards
Dominique Haese
CEO: Nova Property Group”

pension fraudNovaMoneyweb

Wednesday, November 23, 2016

IPID to charge acting police commissioner

IPID to charge acting police commissioner

Angelique Serrao and Pieter-Louis Myburgh

© Gallo Images / Beeld / Deaan Vivier

Acting National Police Commissioner; Lieutenant General Khomotso Phahlane speaks during a media briefing about the SAPS and Agri SA partnership to curb farm killings on…
UPDATE: IPID issues warning against Phahlane
Johannesburg – Acting police commissioner General Khomotso Phahlane is expected to make a warning statement on Wednesday, in relation to a charge of defeating the ends of justice after being summoned by police watchdog IPID.
Following Jackie Selebi, Bheki Cele, and Riah Phiyega, Phahlane is the fourth consecutive top cop to be implicated in wrongdoing during their term of office.
News24 has reliably learnt that the charge relates to an Independent Police Investigative Directorate probe into an upmarket house Phahlane had built in the exclusive Sable Hills Waterfront Estate, north of Pretoria.
It is understood that IPID has been interviewing witnesses to gather information on how Phahlane, a career policeman, had managed to afford the construction of a residence said to be worth about R8 million.
The charge of defeating the ends of justice relates to Phahlane’s alleged contact with witnesses after he learnt that IPID was probing his property, say sources close to the investigation.

Cash payments
The IPID investigators are also probing alleged cash payments to a contractor totalling R700 000. The money was allegedly stuffed into plastic shopping bags and transported in the boot of a car.
It is understood that Phahlane will make the warning statement at IPID’s offices in Pretoria on Wednesday.
The original docket against the acting police commissioner was opened by forensic investigator Paul O’Sullivan in January this year. O’Sullivan alleged that the bond Phahlane registered for the property is valued considerably lower than the value of the house, which Phahlane built in 2011 and 2012.
According to O'Sullivan, the massive townhouse covers 803 square metres of under-roof space. The cost of building the house is estimated to have been between R4.7m and R5.8m, said the forensic investigator.
“The bond would have yielded cash of about R1.58m. Phahlane would have to explain the source of funds of about R4.7m,” O’Sullivan said.
In March, O’Sullivan distributed an e-mail among a number senior police officers – including Phahlane – that included details about Phahlane’s property.
“Stop me if you can,” O’Sullivan had dared the officers before quizzing Phahlane on the origins of the money for his house.
“Phahlane, I wanted to ask you, where the money came from to build this mansion in Sable Hills Waterfront Estate? I’ve got a copy of the title deeds, and bond details. As I see it, you had spare cash of between R3m and R5m. Did you win the lottery?” O’Sullivan said in the e-mail.
Less than a month later, at the start of April, O’Sullivan was arrested by the Hawks at OR Tambo International Airport after he boarded a flight bound for London. He was charged with contravening Section 26B of the Citizenship Act. In the subsequent trial in the Kempton Park Magistrate’s Court, O’Sullivan’s lawyers mentioned the e-mail as a possible reason for his arrest.
News24 has also seen a copy of an SMS which had allegedly been sent to one of the IPID investigators and O’Sullivan, which contains threats against those involved in the probe.
“This is a warning to u. we r aware that u workin fo a big foreign spy paul salivan who is funded by his masters. . . u must stop now. we know where u stay and ur family. U must either choose to die with him,” reads the SMS.
Phahlane did not answer his phone or react to a text message from News24.
Brigadier Mashadi Selepe, Phahlane's spokesperson, said the department respects the mandate of IPID to investigate any member of the South African Police Service irrespective of who they are.
"The Acting National Commissioner welcomes any investigation on any allegations and matter against him conducted within the confines of the law to enable the testing of any such allegations. It is unfortunate that such investigations and/ or allegations if any are conducted through the media with the sole aim of causing harm and damage to the reputation and integrity of the Acting National Commissioner," Selepe said.


amaBhungane: SAPS suspends colonel who blew the whistle on acting commissioner Phahlane

AMABHUNGANE South Africa 15 Apr 2016 02:48 (South Africa)

Photo: Acting national police commissioner General Khomotso Phahlane (Netwerk24)

The South African Police Service has suspended a senior whistle-blower who conducted a single-minded crusade for acting national police commissioner General Khomotso Phahlane to be probed for corruption. Colonel Sandragasen Moonsamy, the head of East London’s local criminal records centre, was formally suspended on Tuesday. By SALLY EVANS for AMABHUNGANE.

The SAPS refused to provide clarity on the circumstances. But before his suspension this week, Moonsamy made a sworn statement in support of a criminal docket opened by forensic investigator Paul O’Sullivan against Phahlane in February.

Moonsamy’s statement is contained in a docket lodged with the Independent Police Investigative Directorate.

O’Sullivan first sent an electronic copy of his allegations to Ipid’s executive head, Israel Kgamanyane on February 25. He also copied three police generals on the email.

The following day he delivered a lever-arch file to Ipid’s office, which contained his and Moonsamy’s statements plus several annexures.

In his statement, O’Sullivan accuses Phahlane of “corruption, money laundering and/or racketeering”.

Moonsamy’s allegations of impropriety against Phahlane include claims linked to a 2011 chemical supply tender for the police forensic division, which Phahlane headed before his appointment as acting national commissioner in October last year.

Moonsamy states that since informing former police commissioner Riah Phiyega of his concerns in 2014, his allegations have not been tested and Phahlane has not been held accountable.

“In view of the fact that the massive abuse of public funds runs into excess of R50-million, I request a thorough police investigation into the supply of chemicals, the procurement process, the disposal of [expired] chemicals and Phahlane’s role in protecting the supplier,” he says.

“Whilst I do expect to be victimised for opening this docket, I request that no stone be left unturned in finding the truth.”

Moonsamy received the notice of intention to suspend on April 4, the same day that O’Sullivan appeared in court on immigration-related charges.

AmaBhungane was unable to reach Moonsamy on his cellphone and his office said he was on leave.

But a police source with knowledge of the matter said Moonsamy faces charges for engaging the media and an “insolent” request to Parliament’s police portfolio committee in December to investigate Phahlane.

In his statement, O’Sullivan explains that Moonsamy made contact with him last year after becoming “disillusioned with what he saw going on in the police and in particular the conduct of Phahlane”.

“It was clear that Moonsamy had exhausted all of the lines of communication to raise the complaint in terms of the Protected Disclosures Act and … I agreed to help him, but requested a lot more information. He then made a U-turn and said that he was now about to get some feedback.”

When other allegations apparently implicated Phahlane, O’Sullivan in turn reached out to Moonsamy.

Sources close to the police investigation of O’Sullivan believe his two-year crusade against powerful police figures including Phahlane, the head of detectives Vinesh Moonoo and Hawks boss Berning Ntlemeza, prompted his arrest.

O’Sullivan has publicly accused the three generals of fraud, corruption and money laundering. He was arrested on April 1 on minor immigration-related charges while aboard a plane bound for the United Kingdom.

Before his arrest O’Sullivan had sent an email to Phahlane, Moonoo, Kgamanyane and several other senior officials informing them of a press briefing he intended staging in London. His email said:

“I shall be calling a full-blown media conference in Whitehall, London, the purpose of which will be to tell the world that SA has been taken over by a corrupt regime of Zupta-led criminals and that the world must now boycott SA in every way possible, just like they did during Apartheid, until the people run the country again.”

“Zupta” is a reference to the alleged relationship between president Jacob Zuma and the controversial and influential Gupta family. O’Sullivan continued:

“I shall be departing here on 2016-04-01. Be like the apartheid government and stop me from leaving, thereby giving a global voice to my campaign, to stop the corruption that is tearing this country apart.”

In the same email, which was blind-copied to several media outlets, O’Sullivan claimed to have “just come from a top-secret meeting” during which “an amount of R20-million” was pledged, “to be used to stop the Zupta crooks (including the infiltrated and criminalised South African Airways/National Prosecuting Authority/Hawks SA Police Service) in their tracks.”

Some close to the investigation believe it is these words that may have sparked the treason charge police apparently want to to bring against O’Sullivan.

Moonsamy’s suspension may also be part of a wider attempt to stifle allegations against top cops. In December he asked Parliament’s police portfolio committee to carry out a “comprehensive investigation” of Phahlane. Somewhat prophetically, he said:

“If what I am saying is untrue, then I am willing to put my career of almost 30 years to an end.”

This is not the first time a police whistleblower connected with O’Sullivan has made damning allegations against a senior officer. In an affidavit reported last year January by amaBhungane, Lieutenant Boitumelo Ramahlaha made damning allegations against current Hawks boss Berning Ntlemeza, his former boss in Limpopo.

Ramahlaha accused Ntlemeza of protecting a former Polokwane police captain between 2012 and 2014, allegedly because he was the boyfriend of Ntlemeza’s daughter.

When he read that Ntlemeza had been appointed acting head of the Hawks, Ramahlaha, like Moonsamy, reached out to O’Sullivan for help. (O’Sullivan’s public profile grew after he successfully exposed former police commissioner Jackie Selebi of corruption.)

Ten days before Ntlemeza’s December 2014 appointment, Ramahlaha sent an information note to police minister Nathi Nhleko titled “Complaint against unprofessional conduct Major General Ntlemeza SAPS: Limpopo”. At the time, Hawks spokesperson Brigadier Hangwani Mulaudzi told amaBhungane:

“We believe the affidavit is meant for jumbling up, cheap propaganda, blackmail [and] making confusion, and it is contentless.”

Responding to amaBhungane’s questions about Moonsamy’s suspension this week, Mulaudzi said: “We truly do not find a reason why we should dignify the questions related to the report and your sources with a response.”

In a follow-up response on Friday, Mulaudzi said:

“Colonel Moonsamy has been one of your sources. You therefore cannot make it the department’s problem if you are unable to locate him. You never obtained permission from the department to liaise with him and thus it cannot be our issue if he is not available to feed you with what you have in common.

“Matters relating to suspensions of any employee cannot be peddled through the media; such remains an employer and employee relationship-related issues.”

This is not the first time Moonsamy has been under fire over his pursuit of allegations against Phahlane. In December 2014 the police’s criminal record and crime scene management division head, Major General Vincent Khunou, sent a warning about him to the heads of all criminal record centres and local criminal records centres. He wrote:

“It has come to the attention of this office that the Commander of the Local Criminal Record Centre: East London has embarked on a process to source official information and records from members and LCRC offices in pursuance of his own personal agenda/mission without following due processes and complying with the relevant prescripts.

“The desperation and witch-hunt evidence by the individual simultaneously taking up the roles of a whistle blower, complainant, investigating officer, auditor, representative of others and presiding officer cannot be tolerated. This unwanted behaviour, which is destructive and unprofessional will be dealt with …”

“Failure to comply with this instruction will result in disciplinary steps against the member and the commander of the respective LCRC office,” Khunou threatened. DM

Photo: Acting national police commissioner General Khomotso Phahlane (Netwerk24)

This story was produced [provided] by:

Sharemax: director unhappy over cold shoulder

Independent directors Hartzenberg and Maartens are not directors of new company.
Julius Cobbett  /  29 March 2012 12:22

JOHANNESBURG – The Sharemax rescue scheme has resulted in directors Dominique Haese and Dirk Koekemoer strengthening their control of investors’ assets.
This is because two independent directors of the syndication companies, former judge Willie Hartzenberg and Sharemax investor Koos Maartens have not been appointed directors of the new company formed as part of the Sharemax rescue scheme.
The new public company, Nova Property Group Holdings, owns the entire Sharemax property portfolio. Company records show that it has just three directors: Haese, Koekemoer and accountant Rudi Badenhorst.
Two of these directors, Haese and Koekemoer, were involved with the old Sharemax structure. Thus, the Nova board is dominated by directors who are arguably responsible for getting Sharemax investors into the pickle they currently find themselves in.
Elderly Sharemax investor Koos Maartens was appointed to the boards of the various Sharemax boards after the resignation of economist Dawie Roodt.
Maartens tells Moneyweb that he was asked by Haese whether he wished to continue his involvement with Sharemax as a director of Nova. He expressed his wish to do so.
However, Maartens says that he has not received any invitations to attend board meetings.
Maartens says his efforts to get an explanation for this apparent “freezing out” have been unsuccessful.
It seems reasonable for Sharemax investors to ask why they lack representation on the Nova board.
Haese has been involved with Sharemax for several years. Haese was Sharemax’s financial director before being promoted to managing director in October 2010 after the resignation of founder Willie Botha. Haese’s father-in-law, Waldemar Gustav Haese, has performed a highly controversial valuation on Flora Centre. The Flora Centre’s auditors, ACT Audit Solutions, have accused WG Haese of lacking independence.
Furthermore, the independence of Nova’s third director, accountant Rudi Badenhorst, has been questioned. Badenhorst has long shared his business premises with Sharemax Investments. He was also one of the directors to bill investors hundreds of thousands of rand for consulting fees as part of the rescue process. (See: Sharemax: Big bucks for syndication directors.)
At last count Badenhorst had earned R600 000 for consulting services billed at R1 500 an hour. A further amount of R500 000 had been budgeted for his services.
In contrast, Badenhorst’s co-independent directors, Hartzenberg and Maartens were paid considerably less for their efforts. Hartzenberg stands to make R240 000. For Maartens an amount of R76 000 was budgeted.
Maartens’s predecessor, economist Dawie Roodt, did not receive any payment for his services as an independent director.
Judge Hartzenberg does not share Maartens’s concerns about the composition of the Nova board.
Hartzenberg says he would not wish to serve as a director of Nova, even if asked, because it would take up too much of his time.
Hartzenberg says he is confident that the board is in competent hands.
“I have no problem with Dirk and Dominique,” says Hartzenberg. “I can tell you, if there’s someone who knows what’s going on it’s Dominique. I am impressed with that woman and I’ve worked with many people in my time. I’m not scared that she’d be pulling wool over the eyes of investors.”
Hartzenberg also had a good word for corporate lawyer Connie Myburgh, who has been the architect of the Sharemax rescue scheme. “If it was not for Connie Myburgh, the whole thing would have been liquidated.”
Hartzenberg says that the press “has a warped idea” of what happened with Sharemax. “The press gave the impression that there was fraud and that sort of thing, which there was not.”
At the time of writing Haese had not responded to e-mailed and telephonic requests for comment.

Home    South Africa    Special investigations

'I don’t think it’s really fair to be requested to adhere to King III' - Nova CEO ( Formerly SHAREMAX)

Wednesday, 23 November 2016

'I don’t think it’s really fair to be requested to adhere to King III' - Nova CEO

Ryk van Niekerk

RYK VAN NIEKERK: The four directors of the Nova Property Group, the rescue vehicle of the failed Sharemax property syndication scheme, managed to acquire 87.1% of the issued shares and 91% of the voting rights of the company.

This may be why the directors aggressively fought Moneyweb’s legal efforts to access the group’s shareholder registers for more than three years, after former Moneyweb journalist Julius Cobbett applied for access in terms of Section 26 of the Companies Act.

After three years the Supreme Court of Appeal found that the directors have no choice but to open their registers, and the Constitutional Court denied them leave to appeal against this judgment.

The directors recently gave Moneyweb access to the registers and it revealed that the Nova directors Connie Myburgh (chairman), Dominique Haese (CEO), Rudi Badenhorst (financial director) and Dirk Koekemoer (operations director) have an absolute equity and voting control of the company.

See the shareholder structure

On the line is Dominique Haese. She is the CEO of Nova. Dominique, is it not a conflict of interest for the four Nova directors - the only directors on the board - to own 87.1% of the shares and 91% of the voting rights?

DOMINIQUE HAESE: Good evening, Ryk, and thank you for the opportunity. It is definitely not a conflict, it is in accordance with the scheme of arrangement, it was disclosed like that in the scheme of arrangement. The scheme gave the three directors at the time, who were Dirk Koekemoer, Rudi Badenhorst and myself, the right to nominate the seven people who would ultimately hold the balance of the shares, not so elected by the converting debenture holders, whatever that balance might have been, if there was to be a balance. Nobody would have anticipated who would have converted and how many or how little would have converted. In our instance the conversion process was even extended by four months to give people additional time to consider such a conversion because ultimately it would be better for the Nova Group to eliminate the liability that comes with the debenture holder.

RYK VAN NIEKERK: The allocation of the B shares were never disclosed, you refer to the A shares that were disclosed in the scheme of arrangement document but the 2.2 billion B shares that were available to debenture holders but were not taken up by the debenture holders were issued to the directors and the other founding shareholders. Why was that never disclosed?

DOMINIQUE HAESE: It was, in fact, disclosed, it was disclosed already in the scheme documentation as an annexure to the documentation, with reference to the annexure explaining exactly the conversion process, the effect thereof should you decide to convert or not, and also what happened to the leftover shares not taken up by converting debenture holders. So it was at all times explained, it was discussed even at the roadshows before the scheme conversion process took place. So I’m not quite sure where one could say that everything was under wraps or that it’s…

RYK VAN NIEKERK: Well, it’s quite simple because 2.2 billion shares were issued to the founding shareholders, 87.1% were issued to the directors. That percentage and the shareholding was supposed to have been disclosed in terms of the Companies Act and it wasn’t done. Have you ever disclosed that the directors collectively own 87.1% of the shares?

DOMINIQUE HAESE: We have discussed it at AGMs because shareholders, who attend our AGMs, obviously ask the questions and they’ve been informed of this. We don’t need to disclose issues of shareholding in annual financial statements in any year unless there was an issue. There has been no issue of any shares to any director or related company since 2013 after the election process.

RYK VAN NIEKERK: But Nova Property Group is a public company, it represents the investments that 33 000 investors made in the old Sharemax scheme, it amounts to about R5 billion, don’t you think it’s good corporate governance to disclose who actually owned the shares of the company that manages the assets, the buildings, which their initial investments financed?

DOMINIQUE HAESE: Ryk, we do disclose it, we disclose it to relevant stakeholders at relevant times. The fact that we didn’t disclose it to Moneyweb is a separate argument. But all our stakeholders, including financiers and banking institutions, know exactly who the shareholders are. There’s nothing sinister about it, there is nobody who is negatively impacted by the fact that the non-converted debentures are held in a nominee company for an investor or an equity partner or funder to come in to possibly fund the group at a later stage, take up the shares and help pay the debenture holders, which is the primary goal of this scheme of arrangement.

RYK VAN NIEKERK: Let’s talk about the payment to debenture holders. Since there are only four members on the board, they own 91% of the voting rights, the salaries they have approved to pay themselves amounts to a lot more than what is paid out in interest to 31% debenture holders. For example, in the 2015 and 2016 financial years the four directors paid themselves R16.7 million and R19.6 million. In the same period the board paid interest to debenture holders of R10.5 million and R14.1 million. Is that not a serious result of the dominant shareholding of the directors?

DOMINIQUE HAESE: Not at all. Ryk, your figures are unfortunately incorrect, even after we have sent you numerous communications over the last couple of weeks since we engaged with you. The directors have not paid themselves the quantum of R66.2 million that you that you allude in your report. In fact, we paid ourselves a lot less, the quantum is around R51 million and it includes bonuses accrual. We won’t be paying ourselves exuberant amounts of money because simply the scheme won’t allow for it.

RYK VAN NIEKERK: But those numbers were disclosed in the annual financial statements.

DOMINIQUE HAESE: Yes but your figure includes an accrual, so it wasn’t paid out physically, also we paid debenture holders far more than the R86.6 million that you referred to. We, in fact, paid them R167 million. Your reference to R86.6 million is merely the interest that we’ve paid investors or the returns that we’ve paid them. While we’ve paid capital, which is the ultimate goal of the scheme, to people 100 cents in the rand, which would be another R80 million. So if one looks at industry norms and market-related salaries, our salaries, if you do the calculation properly, is 70% of what an industry norm salary would be, taking all the risk, taking the responsibility of this group.

RYK VAN NIEKERK: But you not only earn these massive salaries – and I dispute the fact that they are market-related – but you also earn 87% of the issued shares. If the company would go into liquidation tomorrow, according to your latest financial statements that ended in February this year, there would be a net asset value of R1.2 billion and that would give the four directors a claim on the net asset value of close to R280 million each.

DOMINIQUE HAESE: Ryk, if one assumes that you could presently turn the assets into cash disclosed valuations on the assets in terms of best estimate use, if we can achieve that then we did a great job. Should there be any such cash left then it is fully justified I think.

RYK VAN NIEKERK: Just lastly, Dominique, does the Nova board run the company according to the King III guidelines?

DOMINIQUE HAESE: We try our absolute best to do it in terms of everything that’s going on. Remember, this is governed by a scheme of arrangement, a court order, so it makes it difficult. We are aware of certain things, which in terms of the King of a listed public company we try to adhere to but won’t be able to. It is a very high-risk job with a lot of negative publicity, nobody will take all these obligations, risks and signing suretyship and be a non-executive director involved, it simply isn’t that simple to find people who would want to serve on the board. So we are tasked with this job, from the beginning in 2010 when we put this together, to avoid liquidation and we sit with it and we have to see it through. I am comfortable that we are doing a very good job applying King in whichever format we can, as an unlisted company, to procure value to the group, which we’ve done since 2012 when the value of the accumulated profit was zero, we’ve increased in 2016 to R1.1 billion. We’ve increased the share value for these converted shareholders by 50%. So I think we’ve done a very good job and we’ve paid people R167 million over the last four years. I don’t think it’s really fair to be requested to adhere to King, it’s simply not possible under a restructured scheme of arrangement of this nature.

RYK VAN NIEKERK: But surely you can comply to the disclosure of the directors’ shareholding in the company in the financial statements in public, the composition of the audit committee, which is not compliant to the , not only the King Code of Governance but also the Companies Act, and why there is not a representative of the 31 000 debenture holders on the Nova board, it is simple governance, which does not seem to be done according to good accepted guidelines.

DOMINIQUE HAESE: Ryk, we are still taking legal advice in terms of the Companies Act disclosure back in 2012. If it is an oversight and should have been disclosed then, there were only eight shareholders in 2012, namely the seven of us plus Nova nominees. It is definitely not a concern to us, we adhere to corporate governance, the Companies Act on many, many levels, in fact, on all levels. I have no concern that we are not doing the best for the ultimate benefit of repaying these people.

RYK VAN NIEKERK: Why is there not a representative of the 31 000 debenture holders on the Nova board?

DOMINIQUE HAESE: That would be in direct conflict of what King actually prescribed.


DOMINIQUE HAESE: Because there’s an interest, you’d have to get a completely non-connected, non-involved person. So it can’t be a debenture holder or a shareholder, it has to be somebody completely independent. We have approached people in the past, over the last year, to serve on the audit committee and the remuneration committee but there’s nobody who wants to do that. The risk is too high, the reputational risk, the signing of suretyship, the continuous bombardment of press, negative press. People don’t want that, so nobody will serve on the board.

RYK VAN NIEKERK: Thank you, Dominique. That was Dominique Haese, she is the chief executive of Nova Property Holdings.

Monday, November 21, 2016

Sharemax ‘nothing but a Ponzi scheme’BUSINESS NEWS / 1 February 2013, 08:00am

Sharemax ‘nothing but a Ponzi scheme’BUSINESS NEWS / 1 February 2013, 08:00am
Roy Cokayne

160910 THE Villa Mall:Capicol, which have ties with property syndication company Sharemax, admits a lot of investors and shareholders in Zambezi Mall and The Villa stand to lose a lot of money and its proposal offered them a solution.photo by Simphiwe Mbokazi
Zambezi Retail Park, the property syndication scheme promoted and marketed by Sharemax Investments, was “nothing more than a Ponzi scheme”, with investors being paid interest out of their own funds.

This was the conclusion of Noluntu Bam, the ombud for financial advisory and intermediary services (Fais), in a determination released yesterday in response to a complaint by an investor in the scheme.

Business Report reported in October last year that the Hawks were investigating allegations that Sharemax committed fraud and were probing whether it operated a pyramid or Ponzi scheme.

Bam said an investigation by her office had “pierced the corporate veil” of how Sharemax operated.

This followed a complaint lodged by Gerbrecht Siegrist, a pensioner from Tigerpoort in Pretoria, who invested R580 000 in Zambezi Retail Park but is now destitute and “survives on the charity of her children”.

Bam ordered Siegrist’s financial adviser, Cornelius Johannes Botha, trading as CJ Botha Finansiële Dienste, Sharemax Investments, FSP Network, Sharemax and USSA director Gert Goosen, and Sharemax directors Willem Botha, Dominique Haese and Andre Brand to jointly pay Siegrist R580 000.

She said the directors of FSP Network and Sharemax must be held “personally liable” for Siegrist’s loss and could not “hide behind the corporate veil”.

“The directors of Sharemax and FSP Network were aware of the fact that the scheme was both illegal and not commercially viable and yet they recklessly took investors’ funds.”

FSP Network, trading as Unlisted Securities South Africa (USSA), was set up to market Sharemax products through a network of brokers and was responsible for the conduct of their representatives, who almost without fail “targeted pensioners”.

Goosen, apart from being a director of Sharemax and Zambezi, was also a director and the compliance officer of FSP.

Bam said FSP Network was nothing more than an “extension of Sharemax”.

Bam’s office recommended the Law Society investigate the trust account of Sharemax’s attorneys Weavind & Weavind to establish how and under what circumstances investors’ funds were paid out.

“We believe that it would be prudent to keep the fidelity fund informed. It is clear the attorneys did not comply with the Attorneys Act and the Law Society guidelines. Nor did the attorneys comply with investor protection provisions of the Government Gazette,” she said.

This is a reference to a government notice on property syndications gazetted in 2006 that made it illegal to release investor funds prior to the transfer of the properties into the syndication vehicle.

The Law Society of the Northern Provinces, after a disciplinary hearing in August 2011, dismissed a complaint on the release of funds from Weavind & Weavind’s trust account.

Bam said ACT Audit Solutions, the appointed auditor of Zambezi Holdings, must have known that investors’ funds were being transferred out of trust. “If this was an irregular transaction, then the auditor was under a duty to report the matter to the… regulators.”

Bam said the audit firm, which had since changed its name to Advoca Auditing, and its attorneys failed to respond to her letter seeking an explanation of their handling of the Sharemax account.

“This aspect… will be reported to the Independent Regulatory Board for Auditors for further investigation.”

About 40 000 people invested a total of about R4.5 billion in the various schemes promoted and marketed by Sharemax.

The registrar of banks decided in 2010 that Sharemax’s funding model contravened the Banks Act.

Sharemax defaulted on its monthly payments to investors in August 2010 when the registrar’s decision became public knowledge, resulting in new investments drying up.

The registrar only reported the alleged contravention of the Banks Act to the Hawks in March last year.

Sharemax -Investigations Sars withdraws Sharemax liquidation application

Sars withdraws Sharemax liquidation application
Follows settlement of tax dispute – Nova communiqué.
Ryk van Niekerk  /  12 May 2015 00:50

The South African Revenue Service (Sars) has withdrawn an application for the liquidation of the property syndication scheme Sharemax Investments after the parties settled a longstanding tax dispute, the Nova Property Group announced in a recent communiqué sent to stakeholders.
Read the Nova communiqué here.
The Nova board said that the settlement was reached late last year without disclosing the final settlement amount. The board did however describe the liquidation application as “ill conceived and nothing more than an attempt to coerce Sharemax Investments to yield to Sars’s premature demands”.
Sars filed the liquidation application in June last year and alleged in court papers that the Sharemax directors “abused” the Siegrist Determination not to pay outstanding taxes of R15.7 million and to delay the publishing of a business rescue plan for the company.
The Sharemax directors never submitted answering documents to refute the allegations Sars made in the application, but did state that the Sars application was defective.
Siegrist Determination
The Siegrist Determination was the controversial Fais Ombud determination that not only held Graham Siegrist’s financial advisor liable for the losses he suffered by investing in Sharemax losses, but also the individual Sharemax directors.
The Sharemax directors successfully appealed against this ruling.
In the 15-page communiqué the Nova board devotes nearly four pages to explain the ruling and its implications, and to highlight the apparent incorrect reporting on the ruling by “the Press”. Nova does not name any publication for this incorrect reporting.
The board explains in great detail that the appeal board set aside the determinations in its totality. “There are accordingly, no legal valid findings, either that the Sharemax Property Syndication schemes constituted a “Ponzi” scheme nor that Sharemax or its directors were engaged in any “fraudulent” conduct,” the communiqué reads.
It also adds that the directors are “considering their positions in relation to potential claims for damages against the FAIS Ombud for her conduct”.
Dominique Haese, Nova’s CEO, and one of the respondents cited by Sars in its application, did not respond to requests for an interview on Sunday and Monday. She also did not respond to emailed questions.
The Nova board also goes into great detail about its endeavours with the Press Ombud regarding media coverage of Sars’ initial liquidation application.
Haese laid complaints against various publications, including Moneyweb, for “factually incorrect and defamatory” reporting on the case. The communiqué actually names the journalists, which includes this author.
The Ombud never heard the complaints, as they were not laid within the prescribed window period for such complaints. Nova did appeal this decision, but Judge Bernard Ngoepe, chairman of the Appeal Panel, also dismissed this appeal.
The Nova board also said it has or will submit new complaints at the Press Ombud for articles that have subsequently been published in the media.
Property upgrades
The communiqué also highlights that Nova has not been able to secure additional funding from commercial banks to finance the upgrade of several properties under its management since it blamed negative reporting by the media for Absa and Grindrod Bank withdrawing funding lines last year.
The Nova board cites this as one of several reasons why it will retain any excess net cash flow in the foreseeable future to act as a buffer against poor economic conditions and to finance upgrades at various of its underlying properties.
In stark contrast to the detailed information about the the Sharemax directors’ successful appeal and the steps the Nova board is taking against media publications, the communiqué is devoid of any detailed information about the current financial health of the Nova and its underlying properties.
The communiqué only contain brief status updates about the various property developments under management.
Regarding the Tshwane China Shopping Mall, the previous Zambezi Mall, the board says marketing and a new access road from the Zambezi road has “hugely” increased traffic to the centre. The upgrade of the Moloto road will however have a negative impact on traffic when it commences.
The board also states that the legal dispute with Capicol is ongoing.
There is also very little information about progress at the Villa development in Pretoria East. The communiqué does state however that the legal dispute with Capicol is still ongoing, and that the board is actively looking for a solution that will see a resumption of construction and the ultimate completion of the centre.
* Moneyweb is currently involved in a legal battle with Nova to access the shareholder registers of several companies related to the property syndication scheme. These companies are Nova Property Group, Frontier Asset Management and Investments and Centro Property Group.
The case is heading to the Supreme Court of Appeal in Bloemfontein after Nova successfully appealed against an interlocutory ruling last year.
A date for the appeal hearing has not been set

The luxurious lives of Sharemax bosses

The luxurious lives of Sharemax bosses
Nov 13 2011 11:03 Jaques Pauw

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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 

Sharemax-Investigations Part 2: Shareholder structure hides how directors’ acquired 87.1% of Nova share

Part 2: Shareholder structure hides how directors’ acquired 87.1% of Nova shares
Directors strip 2 000 shareholders of voting rights as it “is impossible for a company to have thousands of people that make decisions”.
Ryk van Niekerk  /  21 November 2016 00:07

The complicated shareholding structure of the Nova Property Group was finally revealed when the Nova board opened the shareholder registers of various companies in the group to Moneyweb, after a judgement in the Supreme Court of Appeal in Moneyweb’s favour.
These documents show how the four directors of the company, who are four of the seven founding shareholders, have managed to acquire 87.1% of the Nova shares, while around 2 000 ex Sharemax investors – who chose to receive shares and not debentures – own 4.3%. The balance of 8.6% is owned by the three other founding shareholders who are former and current Nova managers.
­­Founding shareholders
Class A
Class B**
Class D
Shareholding in Nova
Connie Myburgh*
510 712 950

Dominique Haese*
510 712 950

Dirk Koekemoer*
510 712 950

Rudi Badenhorst*
506 233 012

Matthew Osterloh
67 199 072

Nel van Zyl
67 199 072

Corrie van Rooyen
67 199 072

2 000 Investors
99 923 617
2 239 969 079
99 923 617
Total shareholding

Payment for shares
R94 939 589

Voting rights

*Directors of the company
** The 2 239 969 979 Class B shares are registered in the name of Nova Nominees. The seven founding shareholders own 100% of Nova Nominees. The number of shares listed per director was calculated via the individual directors’ shareholding in Nova Nominees.
The ordinary shares consist of four classes: A, B, C and D. The seven founder shareholders were issued class A and B voting shares, while the Sharemax investors received class D non-voting shares. No class C shares have been issued.
Selection of founding shareholders
These seven founding shareholders were nominated by three directors of Nova Property Group Holdings when it became clear that Nova would be the central company to the scheme of arrangement.
These directors were Dominique Haese, Dirk Koekemoer and Rudi Badenhorst.
In response to Moneyweb questions, Haese said the founding shareholders were chosen on the basis that they would constitute the core senior management of the newly-restructured Nova Group post the sanctioning of the schemes and would be responsible for running the company in order to repay debenture holders.
Class A shares
The shareholding structure is complicated and consists of various share classes, ranging from A to D. All shares are ordinary shares.
The first shares to be issued were 70 class A shares that were issued to the founding shareholders. They were issued for R1 each –  these were the only shares the founding shareholders actually paid for, amounting to R10 each for each founding shareholder.
Myburgh said during the meeting with Moneyweb that the issue of class A shares to Haese, Badenhorst and Koekemoer was disclosed in the scheme documents, as they were directors. It was indeed disclosed that they owned 43.2% of the company, based on the calculation that the three directors own 30 of the 70 issued shares. (This calculation is actually 42.9% but be that as it may)
Moneyweb has in the past referred to this 43.2% as the directors’ total shareholding in Nova, and it was one of the reasons former Moneyweb journalist Julius Cobbett applied to access the shareholder registers, to find out who owned the balance. The reality was that the directors owned 87.1%, with other senior managers owning a further 8.6%.
The Nova board has never offered to correct this factual error, despite numerous opportunities to do so.
Class B shares
The issuing of the class B shares to the founding shareholders is more complicated. The shares were issued in accordance with a single paragraph contained in an appendix to the scheme of arrangement documents. This paragraph appears below the formula that calculates the number of shares that would be issued to debenture holders who elected the option to swop their debentures for shares.
The paragraph states that the seven founding shareholders would receive all the shares that were available to those of the 33 000 investors who decided not to exercise the option to swop their debentures for shares.
In this process, a total of 2.2 billion B shares or 95.7% of Nova was issued to the founding shareholders for free.
Myburgh and Haese respond
During the meeting with Moneyweb, Myburgh justified this provision, saying the B shares were issued to the seven individuals, as “they were the individuals who were steering the ship”.
Haese said in response to written questions that Nova has the obligation to pay debenture holders. “The liabilities to debenture holders created by the schemes were equivalent to the value of the assets as per the schemes, held by the Nova Group at the time of the sanctioning of the schemes and consequently the shares had no inherent value. Given that the equity account of the Nova Group was zero at the date of the sanctioning of the schemes and before the commencement of the implementation of the schemes, the shares had no value and could not be allotted at a price, and therefore nothing was paid.”
Haese also said these B shares held by Nova Nominees could in future be “utilised in the process of procuring funding” for the ultimate repayment of debentures.
However, the 2 000 minority shareholders had to surrender debentures worth R94.9 million to receive their 97 million D shares. This means the investors ‘paid’ or surrendered value amounting to 98c per share.
Haese also emphasised that the paragraph in the appendix was contained in the scheme documents and that investors must have been aware of its implication when they signed the document. “It follows… that no scheme shareholder (ultimate electing debenture holder), could not have known that shares available following non-elections, would be issued to the holders of the initial 70 founder shareholders ordinary shares in Public Newco (Nova Holdings).”
Voting rights
What was not in the scheme documents was that investors would receive shares that were stripped of voting rights. This was an unilateral decision by the board members when they issued non-voting D shares to 2 000 investors. The B shares issued to the founding shareholders had full voting rights.
During the meeting with Moneyweb, Haese said the reason the shareholders did not have voting rights was “because it is impossible for a company to have thousands of people that make decisions”.
In a subsequent communication, Haese said “at the time of the preparation of the scheme documentation and in terms of the old Companies Act, the concept of shares with voting rights as distinct from shares without voting rights did not exist, and therefore no explanation (in the scheme documents) was given.”
She added that with the new Companies Act, which allows the issuing of non-voting shares, the board decided that the “best and most practical manner would be to issue different share classes, particularly having regard to the implications of the implementation of Appendix ARR8 (the conversion formula)”.
The new Companies Act was promulgated in April 2009 and has been effective from May 1 2011. The scheme was sanctioned in December 2011.

Key documents:
Here are the actual shareholder registers.

Sensitive information, such as ID numbers, has been removed. The list of holders of minority D shares is not published, as their identities are irrelevant in the context of the Nova shareholding.
Shareholder register of the Nova Property Group
Shareholder register of Nova Nominees
Shareholder register of Frontier Asset Management
Shareholder register of Centro
Here are the full questions and answers as per correspondence between Moneyweb and the Nova board.
Questions and answers 1
Questions and answers 2
Questions and answers 3

Part 1: ‘Corporate capture’ of Sharemax rescue vehicle How four Nova directors snatched 87.1% and kept it under wraps for five years.

Part 1: ‘Corporate capture’ of Sharemax rescue vehicle How four Nova directors snatched 87.1% and kept it under wraps for five years.
Ryk van Niekerk / 21 November 2016 00:04

The directors of the Nova Property Group, once portrayed as white knights riding to the rescue of 33 000 former investors in the failed Sharemax investment scheme, appear to have pulled off one of South Africa’s greatest-ever corporate captures.

The four directors managed to seize absolute control of the company, which according to the 2016 financial statements has a net asset value of R1.2 billion, for the princely sum of R40.

The directors have managed to keep this from public view since 2011, possibly even in contravention of the shareholding disclosure provision in the Companies Act.

This may be why the directors aggressively fought Moneyweb’s legal efforts to access the group’s shareholder registers for more than three years, after former Moneyweb journalist Julius Cobbett applied for access in terms of Section 26 of the Companies Act.

The directors claimed in their defences that Moneyweb was waging a vendetta against the group and they had a constitutional right to privacy. These defences were rejected when the Supreme Court of Appeal found that the directors have no choice but to open their registers, and the Constitutional Court denied them leave to appeal against this judgment.

Open shareholder registers

The directors recently gave Moneyweb access to the registers and it revealed that the Nova directors Connie Myburgh (chairman), Dominique Haese (CEO), Rudi Badenhorst (financial director) and Dirk Koekemoer (operations director) own a collective equity stake of 87.1% in Nova. These directors, who are the only directors on the Nova board, also have 91% of the voting rights. Three other existing and former senior Nova managers own another 8.6%. They are Nel van Zyl, Matthew Osterloh and Corrie van Rooyen. These seven “founding shareholders” only paid R10 each for their shares, meaning that four directors only paid R40.

The remaining 4.3% of the shares belong to around 2 000 former Sharemax investors who, at the inception of the scheme, elected to receive Nova shares in lieu of their debentures. This means they paid somewhat more than the founding shareholders. They ‘paid’ R94.9 million for their collective 4.3% interest as debentures to the value of this amount were cancelled. (See the shareholder structure)


BDO announces “extensive investigation” into Nova affairs

During the course of the investigation Moneyweb sent through a range of questions to Nova’s auditor, BDO. BDO has been Nova’s auditor since inception and most critically provided a fair and reasonable report when the scheme was proposed and implemented in 2012.

On Friday BDO responded by issuing a holding statement on Nova and announced an “extensive investigation” into the accounts of Nova “covering the period of the last five years”.


But let’s go back six years to show how the directors managed to pocket the dominant shareholding for a mere R40. This whole saga began in 2010, when the controversial Sharemax investment scheme imploded. At the time it was the biggest-ever collapse of a property syndication scheme in South Africa, in which 33 000 investors invested an estimated R5 billion.

The collapse left these investors, mostly elderly people who invested their life savings in the various Sharemax schemes, in dire straits as they not only lost their monthly income, but also faced the possibility of losing their investments.

They were left with two options. The first was the liquidation of the underlying property assets which, according to some estimates at the time, would have yielded around 10c on the rand.

Enter Connie Myburgh

The second option – the one that was eventually approved by investors and sanctioned by the North Gauteng High Court – was a proposed section 311 scheme of arrangement. This option proposed that all the historic Sharemax properties be consolidated in one company (Nova) and that the investors would be allocated debentures in Nova based on their initial Sharemax investments. Nova would then manage the properties and use the profits to repay the debenture holders over a period of a decade or more.

This scheme was the brainchild of Connie Myburgh, a well-known corporate lawyer and registered business rescue practitioner. At the time, the scheme was pitched aggressively to investors as the only viable option to ‘save’ their investments as liquidation would have led to massive capital destruction.

Unfortunately, it does not seem that Myburgh is the white knight he was portrayed as. Apart from being royally rewarded for penning the plan, he also became the chairman of the Nova board (which earned R17.3 million in salaries and bonuses over the past four years) and acquired a beneficial equity stake of 21.8% in the rescue vehicle he designed. He therefore has a claim of nearly R280 million on the revalued net asset value of the company as of February 29 2016, if the director valuations of Nova’s properties can be relied upon. Each of his three fellow directors have also benefitted by similar amounts. This is in comparison to the 2 000 investors who own shares who all together can lay claims to the net asset value to the value of only R53.2 million, or an average of R 26 600 each.

Issuing of shares and voting rights

But how exactly did the seven founding shareholders get these shares?

It is all in the fine print, or rather one paragraph in an appendix, of Myburgh’s original scheme of arrangement document. When the scheme was implemented in 2012, the investors received Nova debentures in exchange for their Sharemax investments. They then had an option to either hang onto their debentures and be entitled to regular interest payments, or an option to swop their debentures for shares, which would not receive regular interest payments.

Only around 2 000 of the 33 000 investors elected this share conversion option and they received 97 million Nova D shares. The number of shares issued to them was determined by a formula that appeared in an appendix (Appendix ARR8) contained in Myburgh’s scheme of arrangement document.

In the process, these investors surrendered debentures worth R94.7 million – which means that they ‘paid’ around 98c a share.

But these 97 million shares were not the only shares that were issued.

2.2 billion free shares for directors

Another 2.2 billion B shares were issued for free to the seven founding shareholders. This was done in accordance with a single paragraph that appeared below the formula in Appendix ARR8. This paragraph stated that the founding shareholders would receive all the Nova shares that were available to the 31 000 investors who decided not to exercise the option to swop their debentures for shares.

Since only 2 000 investors elected the share option and received 4.3% of the shares, the founding shareholders, including the author of the scheme, pocketed the balance of 95.7% without paying a cent.

The paragraph not only states that the founding shareholders will receive the shares not taken up by debenture holders, it also justifies this allocation. It states that founding shareholders “will have the responsibility to procure funding and other actions required (sic)” to repay debenture holders.”

This was echoed by Myburgh during the meeting with Moneyweb, when the shareholder registers were revealed. He said the shares were issued to the seven individuals, as “they were the individuals who were steering the ship”.

Voting rights

The four directors not only received 87.1% of the shares. They also unilaterally stripped the class D shares issued to the 2 000 investors of all voting rights, while retaining the voting rights of the class B shares that were issued to themselves and the other founding shareholders.

This means that the 2 000 investors have no voting rights in the company, and that the four directors hold 91% of the voting rights.

Read a more detailed analysis of the voting rights here.

Closely guarded secret

This shareholding structure has apparently remained a well-kept secret since the inception of the scheme. It was not even disclosed in Nova’s financial statements despite a clear provision in the Companies Act that states that the shareholding of individual directors in a public company must be disclosed.

In response to a question regarding this apparent oversight, Haese denied that the directors’ shareholding had to be disclosed. “Firstly, No Class B shares were ever issued to any individual director of Nova Holdings and, as already explained to you on a number of occasions, all Class B shares were issued to a private company, Nova Nominees Proprietary Limited. Contrary to your views as expressed above, by virtue of the aforegoing, it was not required to make any disclosure as contemplated by section 30(4)(d) in the 2012 Annual Financial Statements. (sic)”

However, while it is correct that Nova Nominees is the nominee owner of the 2.2 billion B shares and the seven founding shareholders in turn own 100% of Nova Nominees, Haese confirmed in a subsequent email that the seven founding shareholders are the beneficial owners of the B shares, and not Nova Nominees.

In response to a question as to whether the shareholding has ever been disclosed to debenture holders or other Nova stakeholders through any other platforms, Haese said: “We reiterate that disclosures were made in the scheme documentation. In addition, disclosures have been made, as and when required, to relevant Nova stakeholders.”

The only disclosure that was made about the Nova shareholding in the scheme documents, is the issuing of the 70 A shares to the seven founding shareholders.

Totally in the dark

Despite Haese’s notion that the shareholding was selectively disclosed, it seems very few people knew about it. Not even the well-known and respected economist Dawie Roodt – a former director of a number of the historic Sharemax syndication companies, and who played a key role in the implementation of the scheme of arrangement as he was the official spokesperson of the board – had any inkling of that the scheme of arrangement would allocate shares to the founding shareholders.

“Under no circumstance would I have allowed a director to become a shareholder in Nova. It is a gross conflict of interest,” Roodt said.

He added that there was no mention of this structure in the scheme of arrangement. “The directors did not have a claim against the companies that would have justified a shareholding. How could they have received shares?”

Appendix ARR8

But there was such a provision. Only one. It was the single paragraph hidden away in the aforementioned appendix.

Though only 193 words, this paragraph is probably the most important in the 250 or so pages of the scheme and other explanatory documents. Despite its importance, there is not a single reference or explanation to this paragraph in any of the scheme documents.

There were numerous references to the debenture/share conversion formula that appears above the paragraph, but not a word on the implications of the paragraph below it.

One of the questions Moneyweb asked BDO was whether their fair and reasonable statement regarding the scheme included the effects this paragraph had on the total ownership structure of the company.

formula-for-exchange Appendix ARR8

Debenture holders at the mercy of directors

All of this means that the 31 000 Nova debenture holders are totally at the mercy of the four directors. It seems clear that the board, under the chairmanship of Myburgh, have put their own interest ahead of the interests of 31 000 debenture holders.

One example is the directors’ remuneration. Since the inception of the scheme in 2012, the four directors have paid themselves R66.2 million in salaries and bonuses. During the same period, the board approved interest payments to the 31 000 debenture holders of R86.6 million.

Director salaries and bonuses






Dirk Koekemoer

R73 500

R3 027 576

R3 873 734

R3 879 171

R4 596 630

Rudi Badenhorst

R54 000

R3 001 956

R3 877 210

R3 882 044

R4 518 801

Dominique Haese

R111 000

R3 628 486

R4 660 178

R4 491 527

R5 276 724

Connie Myburgh


R2 965 868

R4 652 285

R4 493 085

R5 190 946

R238 500

R12 623 886

R17 063 407

R16 745 827

R19 583 101

Payments to debenture holders






Capital payments


R31 165 739


R35 670 247

Interest payments

R3 557 033

R39 738 278

R18 712 788

R10 496 891

R14 107 744

% yield on debenture fair value






More startling is that total interest payments made to debenture holders in the 2015 and 2016 financial years amounted to R10.5 million and R14.1 million respectively. This is less than the R16.7 million and R19.6 million the directors paid themselves.

Much more to follow.

Illphil 9 hours ago
Well done Ryk and MW team!!!

Not only did you make legal history, you have unearthed dynamite

I am comforted by the Auditors now waking up – hope IRBA and the other regulatory bodies take a very close look at hoe the audit reports were compiled.

Knowing some of the persons mentioned, i expect there will be more to come.

This story has legs – as they say in journalism – run it – it contains the stuff for a good book

Bylo Selhi 9 hours ago
Well done Moneyweb. Hope these slimy criminals pay the price one day for all the devastation they caused in the lives of so many pensioners.

Dude 9 hours ago
This makes “State of Capture” look like amateur hour!

Congrats on this investigation; this information is dynamite!

HS 8 hours ago
Im normally not prone to foul language. All I can think to say at this point is: “what an arrogant bunch of C&$ts; as….les, etc etc

Well done Ryk and team. Great journalism!!!

Commentor 7 hours ago
Di nokwane tse. Great work Ryk and your team. Now to see some justice

Blunderor 6 hours ago
A good friend remarked recently: it was so cold in London, he saw an attorney with his hand in his own pockets.

Dan 5 hours ago
Well done Moneyweb… well done. I am told that this must surely overshadow the worst dishonest malpractice in the history of this country….far in excess of what our leaders are acused of?

TheInvestorLife 4 hours ago
Well done MW team, the faster we rid the rotten apples from the bunch, the better for our country!

roix 4 hours ago
Absolutely disgusting. Myburgh, Haese, Koekemoer, Badenhorst, van Zyle, Osterloh, van Rooyen. I hope you are reading this in cold sweats. May your families shame you.

financial virgin 51 mins ago
Not only is that sentence re: the Formula for Exchange probably the longest sentence I’ve ever read, but also the most unintelligible piece of drivel as well….

1 Chasing performance can destroy returns Chasing performance can destroy returns 2 Who says Trump is good for business? Who says Trump is good for business? 3 Don’t wait for a beautiful leader, South Africa Don’t wait for a beautiful leader, South Africa
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Thursday, November 3, 2016

Gordhan is not St Pravin - He is an ANC Minister

Gordhan is not St Pravin
Douglas Gibson |
01 November 2016
Douglas Gibson says the finance minister bears co-responsibility with the rest of the cabinet for the mess made by the Zuma administration

Pravin Gordhan had massive support in his fight against the abuse of power by those who were prosecuting him on what appeared to be trumped up charges. He was completely vindicated when the pathetic case against him was withdrawn.

In parliament before delivering his medium Term Budget speech, he received a standing ovation from both government and opposition. Unusual in a parliament that seems generally to have forgotten how to conduct a reasonable and respectful discourse; heady stuff indeed for a politician who has been in the cabinet throughout the term of office of President Zuma.

And that is the point: Minister Gordhan is not a saint. He is not St Pravin. He is an ANC minister who bears co-responsibility with all other ministers for the mess made by the Zuma administration since 2009.

Wikipedia tells us that Cabinet collective responsibility, or collective ministerial responsibility, is a constitutional convention in governments using the Westminster System. Members of the cabinet must publicly support all governmental decisions made in Cabinet, even if they do not privately agree with them.

This support includes voting for the government in the legislature. A member of the cabinet wishing to differ in the open must resign from the cabinet. Minister Gordhan remained in the cabinet, not differing on all these important issues, together with some colleagues who are now finding their voices, from 2009 onwards.

Some of the biggest scandals such as Nkandla, Bashir, Gupta, SAA, Prasa, Eskom and many, many more – it often seems like one a day – took place during this period. Ministers knew or must have known what was going on but they chose to remain quiet and remained in office.

When I returned to South Africa from a diplomatic posting in Bangkok early in 2012, the Rand was valued at R7.69 to the US dollar. It is now standing at R13.69 to the dollar. On the same date in 2012, one Euro was worth R9.96. It is now worth around R14.00. This is a measure of what our economy is worth and how our money has lost value. The whole government with its failed economic policies must bear the blame.

Standards have slipped somewhat and the expectations of people have fallen so much that Minister Gordhan received many nods of approval and plaudits for his recent Medium Term Budget Speech (MTBPS), despite some obvious shortcomings. The MTBPS is simply a policy statement, not a presentation of a complicated figures- based budget. It could have gone so much further.

In his original budget speech earlier this year, the minister committed us all to moving the economy in the direction of hope, confidence and a better future. Shadow Minister of Finance David Maynier noted that despite calling for “decisive action” in that speech, “the minister did not announce any concrete progress on providing policy certainty or implementing structural reforms necessary to boost economic growth and create jobs in South Africa.”

Of course, the minister knows what should be done and what could be done. He just cannot do it within the confines of the ANC. That is Gordhan’s dilemma and South Africa’s dilemma while ANC rules. That party (fond of describing itself as a “movement”) is at war with itself and the results are policy immobility, hesitation, and economic deterioration.

The MTBPS did not provide a blueprint for decisive action aimed at growth and at the alleviation of the plight of the 8.9 million people who are unemployed. In the end, the medium-term budget policy statement was a major blow for the 8.9 million people who do not have jobs, or have given up looking for jobs, and do not have hope in South Africa.

What is so badly needed is not happening. We need a new path and new initiatives around economic growth and job creation. The Minister failed to use his powers, if he still has them, to introduce a range of policy initiatives, aimed at addressing our unemployment crisis.

Before the speech, Opposition Leader Mmusi Maimane called on the minister to be bold, suggesting he could announce an extended and modified Employment Tax Incentive (ETI) that would see many more young people find work. He could announce more direct funding for start-ups and entrepreneurs to become job creators in the private sector.

He could announce a plan to stop the nuclear deal, saving the fiscus hundreds of billions. He could announce public-private partnerships with several State-Owned Enterprises, ensuring that our SOEs become competitive and profitable, and that more money is freed up to channel into job creation. None of this was in the speech.

Maimane emphasised that the DA was against the frivolous and trumped up criminal charges against Minister Gordhan and would be joining the march– along with civil society and many other organizations – in solidarity with him when he appeared in court.

He said, however, that the DA was also against another formulaic and predictable MTBPS that would– as in the past – do nothing to change our economic outlook, and hand a hammer blow to the 8.9 million South Africans without a job. He challenged the minister to break ranks with the tried and failed economic policies of the Zuma government and plan a new way forward.

Minister Gordhan did not accept this challenge.

The 101 ANC glitterati who have now emerged to support Pravin Gordhan must not stop here. If the ANC is to be saved, it needs to save the unemployed. If it cannot or will not, it will be pushed aside for others to attempt the task.

A former Opposition chief Whip and former ambassador to Thailand, Douglas Gibson is now a keynote speaker and writer. Follow him on Twitter@dhmgibson

This article first appeared in The Star