Sharemax faces probe for Banks Act breach

Sharemax faces probe for Banks Act breach
June 21 2012 at 05:00am
By Roy Cokayne



THE REGISTRAR of banks has finally lodged a criminal complaint against Sharemax Investments, and the 33 property syndication companies it promoted, for alleged contraventions of the Banks Act.

About 40 000 shareholders invested R4.5 billion through Sharemax’s various property syndications.

The alleged contraventions are being investigated by the Serious Economic Offences Unit at the Directorate for Priority Crime Investigations, the Hawks.

Anyone found guilty of contraventions of the Banks Act is liable to a fine or imprisonment for a maximum period of 10 years or to both a fine and imprisonment.

Michael Blackbeard, the deputy registrar of banks at the Reserve Bank, confirmed this week that the statutory managers appointed to the Sharemax group of companies had, after being requested to do so, informed the Serious Economic Offences Unit of the SAPS that they were satisfied that Sharemax’s funding models contravened the Banks Act.

Blackbeard stressed that this was an administrative finding by the registrar’s office and “not a finding on criminality on the part of the persons involved in the scheme”.

“Criminal investigations and prosecutions are an area of responsibility of the SAPS and National Prosecuting Authority and it is for them to decide how to proceed,” he said.

Dominique Haese, the former financial director of Sharemax Investments and a director of many of the group companies, failed to comment.

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

This resulted in the office appointing statutory managers to the Sharemax group of companies and its various property syndications in September 2010 to manage the repayment of funds illegally obtained from the public.

Business Report asked Blackbeard last year why criminal charges for contraventions of the Banks Act had not yet been lodged against Sharemax.

He said the main concern of the office was for the various Sharemax-related companies to resolve their concerns and to give effect to the office’s directive to repay investors’ funds.

He said the office’s mandate was very limited and focused on contraventions of the Banks Act but it would “in due course” instruct the managers to lay a charge with the SAPS.

Blackbeard added that the office was aware the SAPS was already investigating some of the “members” who had been involved in Sharemax schemes and it would provide the necessary assistance to the police and prosecuting authorities.

He previously confirmed that the registrar’s office had been challenged by Sharemax’s lawyers, which culminated in legal arguments relating to the proper interpretation of certain legal prescriptions.

Sharemax ceased making monthly payments to investors at the end of August 2010 when new investor funds dried up.

While under statutory management, the directors of Sharemax proposed a scheme of arrangement and offer of compromise to investors.

These schemes were sanctioned by the North Gauteng High Court in January, leading to the lifting of the statutory management directive.

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Property Syndication
Author: Julius Cobbett|25 January 2012 16:50

Third party was behind secret Sharemax settlement

A mystery buyer paved the way for court to sanction rescue scheme.
JOHANNESBURG - A mystery “investor” has paved the way for a court to sanction the Sharemax rescue scheme. The scheme, designed to save Sharemax-promoted syndication companies from liquidation, was sanctioned by the North Gauteng High Court on Friday.

It is also expected to be a formality for the Reserve Bank to withdraw its directives to repay investors. The Reserve Bank-appointed inspectors are also expected to be relieved of their duties at the various syndication schemes.

Last year Moneyweb reported that the Sharemax rescue had hit a speed bump. Clients of attorney Chris de Beer asked the court to delay sanction of the rescue scheme. This delay was granted. De Beer argued that proper process had not been followed, and that the rescue plan seeks to legalise an illegal scheme. The directors of the syndication companies were not impressed. They issued this media release at the time.

This year it was revealed that investors opposing the rescue, including De Beer’s clients, had received a secret settlement.

It has been speculated that this settlement may have been paid from investors’ funds. However, a source close to the rescue has confirmed that the settlement was made by a third party.

This means that the objecting parties sold their Sharemax investments to a third party for an undisclosed sum.

The identity of the mystery buyer will be open to some speculation. A cynic might believe it is a person or entity with strong vested interests in the rescue plan’s success.

In theory, the identity of the buyer ought to be public information. The syndication schemes are public companies, which opens their share transfer registers to public scrutiny. However, the directors of the Sharemax syndication schemes are not known for their disclosure. Moneyweb has previously been refused unrestricted access to financial statements. The directors also went to great lengths to keep the finer details of the rescue scheme out of the public eye.

Prior to publication a copy of this article was sent to Dominique Haese, director of the Sharemax syndication companies. We received this response:

Mr Cobbett,

Your email’s of 11h38 and 14h03 refer.

All the 311 Schemes of Arrangement have been sanctioned by Court and the relevant Court Orders have been registered.

I am unfortunately in no position to comment on the content of the rest of your emails and/or the “draft article”.

In not dealing with your “draft article”, please do not assume anything as to the correctness or not of anything stated or to be stated in such “draft article” or any subsequent actual article/publication of anything emanating from yourself.

All the rights of the Sharemax Syndication Companies, as re-structures, both prior to and post re-structuring, are reserved.

All press releases are and will be exactly that, press releases, and will be provided to the press in the normal course.

Regards

Dominique Haese

Managing Director

Frontier Asset Management (Pty) Ltd