Tuesday, April 2, 2013

No clarity yet on ombud’s rulings in Sharemax cases

No clarity yet on ombud’s rulings in Sharemax cases

Roy Cokayne
The office of the ombud for financial advisory and intermediary services (Fais) has dragged its feet in providing an explanation for its different treatment of the directors of Sharemax Investments in two recent determinations on complaints lodged against financial advisers.
A determination on January 29 held financial adviser Cornelius Johannes Botha, trading as CJ Botha Finansiele Dienste; Sharemax Investments; FSP Network; Sharemax and Unlisted Securities South Africa (USSA) director Gert Goosen; and Sharemax directors Willem Botha, Dominique Haese and Andre Brand to be jointly and severally liable to repay a R580 000 investment in Zambezi Retail Park made by pensioner Gerbrecht Siegrist.
In a determination on February 19, the Fais ombud found only financial adviser Clyde Dawes Langley and Levator Wealth, the firm for which he worked, liable to pay R740 000 each to pensioner Jurie Wessels and his wife, Jillian, for advising them to invest in The Villa.
Both Zambezi Retail Park and The Villa were promoted and marketed by Sharemax.
Nivedna Rajmohan, a spokeswoman for the ombud, said in response to a Business Report request for clarification that only Langley and Levator Wealth were held liable to repay the Wessels couple because Langley was an independent financial service provider and FSP Network/USSA had not provided financial services to the couple.
Despite several follow-up queries, Rajmohan has failed to clarify why Sharemax’s directors were not held liable to repay the couple. She also failed to respond to a March 11 query on whether the Sharemax directors have lodged an appeal on the Siegrist determination.
Internet news service Moneyweb, quoting an unnamed source at the office of the Fais ombud, reported on March 12 that the directors of Sharemax had applied for leave to appeal that determination.
Fais ombud Noluntu Bam had said in this determination that Zambezi Retail Park was “nothing more than a Ponzi scheme” with investors paid interest out of their own funds.
Business Report reported last October that the Hawks were investigating allegations that Sharemax had committed fraud and 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 and the directors of FSP Network and Sharemax must be held “personally liable” for Siegrist’s loss.
“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 USSA, was set up to market Sharemax products through 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, and FSP Network was nothing more than an “extension of Sharemax”, she said.
About 40 000 people invested about R4.5 billion in various Sharemax schemes.
The registrar of banks decided in 2010 that Sharemax’s funding model contravened the Banks Act. Sharemax defaulted when the registrar’s decision became public knowledge, resulting in new investments into its schemes drying up.

1 comment:

  1. 2010 ... now 2014 and we still see no criminal action taken. did the SA Reservebank follow the correct legal procedures to stop this scheme ? It seems like another broederbond corrupt story that will not have a fair outcome for the investors in the end , if there is an end !