Friday, September 23, 2016

On Wednesday September 21, Daily Maverick sent questions to the Hawks and the NPA with regard to the following cases:


On Wednesday September 21, Daily Maverick sent questions to the Hawks and the NPA with regard to the following cases:

the Denel tender fraud (R3-billion),

Prasa tender fraud (involving about R4-billion),

Mbombela stadium tender fraud (R1.2-billion),

Nelson Mandela funeral fraud (at least R5.9-million)

SAA Fraud (R246-million),

the Tannenbaum Ponzi fraud (R12.5-billion),

the Sharemax fraud (R4.5-billion),

Transnet tender fraud (R50-billion),

Eskom tender fraud (R4-billion)

SAPS 2010 accommodation case (at least R47-million),

Mpumalanga security tender (R7-billion) ,

the Durban Municipality tender fraud (R1.3-billion),

the Bossasa Correctional Services fraud (R378-million), and
the State Security slush fund (around R1-billion)

Analysis: For Hawks and NPA some crimes are more of a priority than others


Analysis: For Hawks and NPA some crimes are more of a priority than others
Photo: NPA Chief Shaun Abrahams (Left, GCIS) Hawks chief General Berning Ntlemeza (CityPress)
Call it political Tourette’s, but on the same day that ratings agency Moodys reduced the possibility of a credit downgrade for South Africa, Hawks head, Lieutenant General Mthandazo Berning Ntlemeza, used the Gupta family platforms ANN7 and The New Age to hint, yet again, that Minister of Finance Pravin Gordhan is about to be arrested. Ntlemeza said he was tired of people “making a noise” when it came to Gordhan but not about other “high-profile people” the Hawks were investigating. In that spirit Daily Maverick asked the Hawks and the NPA to provide feedback on some of the country’s biggest priority crimes. By MARIANNE THAMM.

In the space of about two days several significant inter-related dramas played out on the political football field. One was the revelation that Minister of Police Nathi Nhleko’s appointment of General Ntlemeza to head the Directorate for Priority Crimes Investigation, as it stands right now, does not pass legal muster. This all because the Minister of Police had been tardy about informing Parliament. So tardy in fact that it has taken a year and a prompting from the opposition Democratic Alliance for him to pull finger.

Those in the security cluster who currently act as President Zuma’s Praetorian Guard would have been down one very, very willing soldier. And it all comes at a most inopportune moment when two others in Zuma’s formation, NPA deputy head Nomgcobo Jiba and Specialised Commercial Crimes Unit head Lawrence Mrwebi, are sitting it out on the benches after the North Gauteng High Court ruled on September 15 that both should be struck from the Roll of Attorneys. Jiba and Mrwebi have since been suspended.

Just how willing Ntlemeza is to do the job was made clear on Wednesday when the Gupta-family-owned ANN7 broadcast a 30-minute interview with the Hawks head suggesting “the Hawks have a very comfortable case against the Finance Minister Pravin Gordhan” and that he “will not reveal any evidence regarding the case in public”.

“It is what they are saying. They don’t know what I am having and I am not obliged to tell the people of this country what I am having,” Ntlemeza told former model and Johannesburg’s 2010 Hottest-Chick-turned-journalist Abigail Geneve’ve (sic) Visagie.

During the interview several rotating banners scrolled across the screen next to a “Prime” tab including “Hawks boss: Nobody is above the law”, “Ntlemeza stares Gordhan in the eye?” (question mark courtesy of ANN7 writers), the ominous “I will never reveal my next move” and “Hawks very comfortable with the case” (in case you missed it in the intro).

The tone of the banners is clearly meant to suggest that something big is about to happen. Visagie then asked Ntlemeza her leading question “You say you are a very reasonable man, does that come into the fore when asked the question why the Minister of Finance has not been arrested as yet? A lot of people are asking what is the hold-up, why has the Minister not been arrested?”

“Why they don't ask me about other high-profile people? What is important about that question? Why that question is so important? Because if I can show you, I am having a lot of cases but people they don’t come with when are you going to arrest this person?”

At present the Hawks and the NPA are dedicating considerable resources to the “rogue unit” investigation probing various iterations of the National Research Group (NRG) set up in 2007 as well as an amount of R1.2-million with regard to a pension payout to former Deputy Commissioner Ivan Pillay.

There is heavy firepower invested in this particular case which is being handled by major hitters including Ntlemeza, head of the Hawks Crimes Against the State Unit, Brigadier Nyameka Xaba, three colonels, NDPP head Shaun Abrahams, head of the National Priority crime litigation unit Dr Torie Pretorius and his Senior Deputy Chris Macadam, as well as senior advocate Sello Maema.

We took up Lieutenant-General Ntlemeza’s challenge and asked the Hawks and the NPA about the status of a few high priority crimes in South Africa, what had become of them and when we could expect arrests.

On Wednesday September 21, Daily Maverick sent questions to the Hawks and the NPA with regard to the following cases:

the Denel tender fraud (R3-billion),
Prasa tender fraud (involving about R4-billion),
Mbombela stadium tender fraud (R1.2-billion),
Nelson Mandela funeral fraud (at least R5.9-million)
SAA Fraud (R246-million),
the Tannenbaum Ponzi fraud (R12.5-billion),
the Sharemax fraud (R4.5-billion),
Transnet tender fraud (R50-billion),
Eskom tender fraud (R4-billion)
SAPS 2010 accommodation case (at least R47-million),
Mpumalanga security tender (R7-billion) ,
the Durban Municipality tender fraud (R1.3-billion),
the Bossasa Correctional Services fraud (R378-million), and
the State Security slush fund (around R1-billion).
We would add it all up but the office calculator can’t deal with all the noughts. Suffice to say it would amount to way, way more than the tertiary education increases in South Africa.

At the time of writing neither the Hawks nor the NPA had responded to our questions. We do understand, they are preoccupied with the greatest priority of all, Pravin Gordhan.

Another priority crime against the state really worth investigating is the revelation that Lonmin’s key negotiator during the 2010 platinum belt strikes was Barnard Mokwena, a State Security Agent. And then there’s the evidence that a bogus union was set up under President Jacob Zuma’s instruction to diminish and counter the influence of AMCU. In this case the President himself could be said to have abused state resources to undermine a legitimate trade union.

Nothing appears to have come of any of these cases.

Meanwhile, over on Fin 24 journalist Matthew le Cordeur revealed on Wednesday that international public relations and reputation management firm, Bell Pottinger, which represents the Gupta-owned Oakbay Investments, knew about Minister of Mineral Resources Mosebenzi Zwane’s call for a judicial inquiry into South Africa’s banks at least seven weeks before the minister announced these on September 2.

Talk about an inside track.

Ntlemeza’s appearance on ANN7, accompanied by a front page story in the New Age titled “Intelligence shake-up looms”, extensively quoting Ntlemeza, had all the makings of a staged PR event (although clearly not a professionally produced one) and a rather clumsy attempt at mopping up after Minister of Police Nathi Nhleko’s embarrassing misunderstanding of his office's duties and obligations. That, as well as creating the notion of potential threat.

All this in the same week that ratings agency Moodys announced that there is a reasonable chance South Africa would avoid a devastating downgrade in November.

Meanwhile, President Zuma, who appears to be stalling on signing the Financial Intelligence Centre (FIC) Amendment Bill, has been warned by the Council for the Advancement of the Constitution (CASAC) that he is in danger of breaching the country’s Constitution. The bill was passed by Parliament in May last year.

The President has stalled on signing the bill because of a constitutional objection lodged by the Progressive Professionals Forum, established by former government spokesperson Mzwanele Manyi.

It was the FIC, a banking regulator and supervisory body, that picked up the alleged suspicious transactions and the movement of money through the personal accounts of SARS No 2 Jonas Makwakwa and his partner Kelly-Ann Elskie. SARS Commissioner Tom Moyane has blamed the FIC for his failing to act on the information on Makwakwa, which he was given in May.

Former Minister of Finance Trevor Manuel has said that President Jacob Zuma would be violating his oath of office in failing to sign off the bill. That too might rank as a crime against the state, come to think of it. DM

Photo: NPA Chief Shaun Abrahams (Left, GCIS) Hawks chief General Berning Ntlemeza (CityPress)


How Ponzi Schemes Work- --- Ponzi Schemes vs. Pyramid Schemes

How Ponzi Schemes Work
by Josh Clark & Jane McGrath Money | Scams
Ponzi Schemes vs. Pyramid Schemes

­Many people associate Ponzi schemes with pyramid schemes. While they do share some similarities, they're not exactly the same. If you think about the organization and methodology behind a Ponzi scheme, it certainly has a triangular structure. The schemer sits at the top, above continually increasing rungs of investors. However, there are fundamental differences between how classic pyramid schemes are carried out and how Ponzi schemes are executed.

The essential difference between a pyramid scheme and a Ponzi scheme is that a Ponzi schemer will only ask you to invest in something. You won't be asked to take any more action than handing over money. He or she will claim to take care of the rest and give you your returns later. The Ponzi schemer is the mastermind behind the whole system and is always shuffling money from one place to another.

On the other hand, a pyramid schemer will offer you an opportunity to make the money yourself. It requires more work, though: You have to buy the right to start a franchise and start recruiting more people like yourself. The recruits will often pay the recruiter a cut of their profits. You can read How Pyramid Schemes Work to understand more about that process.

The difference may seem slight, but one point to keep in mind is that unlike pyramid schemes, Ponzi schemes are always illegal [source: Walsh]. Some legitimate businesses, such as Mary Kay and The Pampered Chef, have been built around the pyramid idea. But the nature of a Ponzi scheme necessarily relies on securities fraud. It involves deceit to convince someone to invest money that won't actually be invested.

Nevertheless, some people continue to use the terms interchangeably, and many texts classify Ponzi schemes as a type of pyramid scheme. And, of course, when you're the victim of one, the difference probably seems insignificant.

Next, we'll take a look at some other real-life Ponzi schemers.
Lucky Victims

Some victims make out pretty well in a Ponzi scheme. Although later investors certainly lose money, the early investors can come out ahead. Their testimonials are exactly what help perpetuate the scheme. Some unscrupulous characters invest with the full knowledge that they're funding a Ponzi scheme -- they cross their fingers that they aren't in the bottom rung. Of course, any money they make is at the expense of other investors. Legal questions abound as to whether these lucky initial investors should be forced to help recoup losses for later investors [source: Berenson].

How to spot dodgy money schemes

How to spot dodgy money schemes
September 2016 06:00 Lameez Omarjee

Kalyani Pillay, CEO of South African Banking Risk Information Centre. (Picture supplied).

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Johannesburg – Promoters offering high returns over short periods of time are most likely to be peddling a money scheme, said Kalyani Pillay, CEO of South African Banking Risk Information Centre (Sabric).

These schemes are becoming prevalent among South African consumers. The South African Reserve Bank (SARB) has recently launched a campaign to raise awareness on such schemes. In an interview with Fin24, Pillay explained that it was important to raise awareness of these schemes among consumers so that they can avoid them.

“It is impossible to guarantee high returns for any portfolio, returns depend on various factors,” said Pillay.

READ: Sarb warns South Africans of scams

Pillay highlighted that Ponzi schemes and pyramid schemes are still among the most popular methods used by tricksters to get vulnerable consumers to part with their hard-earned money, in some cases this could be life-long savings.

Both schemes pay yields to investors who joined the scheme at an early stage, using money paid by investors who joined the scheme at a later stage. When there are more existing investors than new investors, the scheme often collapses and the money is lost.

In a Ponzi scheme, a promoter offers higher returns than one would normally expect from a traditional, registered, authentic investment portfolio, she said. “It is not possible to get such high returns over a short period of time.” Returns are guaranteed, which is not possible because all investments carry a degree of risk.

In the beginning, returns are paid out to encourage people to invest more. Promoters are usually quite secretive about the actual business model. Eventually the promoter becomes unavailable and returns dry up and the scheme collapses.

Similar to Ponzi schemes, pyramid schemes rely on more people to join the scheme to keep them going. Returns are expected to increase as one recruits more people into the scheme. Each member collects commission for bringing in more people to the scheme.

A fee or initial investment is required for an investor to participate in the scheme. The contributions made by newer investors are used to pay members who joined the scheme earlier.

Eventually, there are more people in the existing pyramid than new people joining the scheme and there is not enough money to pay out returns. The scheme then collapses.

Some of these schemes are pitched as stokvels. Some have a virtual aspect, and use bitcoins to sidestep banks. Promotors often approach people through SMSs, or arrange meetings such as cocktail events to convince people to join a scheme, explained Pillay.

ALSO READ: Mathematical proof Ponzi, pyramid schemes will fail

Banks normally detect schemes and inform clients to make them aware of schemes, said Pillay. However if South Africans become aware of a scheme they should report it to the police, which will carry out further investigations.

Before joining a scheme or participating in an investment programme, investors should look up the organisation or promoter ensure that they are registered with the Financial Services Board (FSB). This ensures there is oversight and recourse for the investor.

Read Fin24's top stories trending on Twitter:

The Villa Shopping Centre promoted by SHAREMAX- Ownership of multimillion rand Pretoria shopping malls disputed

The Villa Shopping Centre promoted by SHAREMAX-... Ownership of multimillion rand Pretoria shopping malls disputed

Ownership of multimillion rand Pretoria shopping malls disputed

JOHANNESBURG - A dispute is raging over the ownership of two of Pretoria’s largest shopping malls. The malls in question are Zambezi and The Villa, which were promoted by Sharemax. Public investors poured a total of R2.3bn into the two projects – R756m into Zambezi and R1,590m into The Villa.

These investors now hold debentures and shares issued by Nova Property Group.

Last year, Nova subsidiary, Villa Retail, took ownership of 30% of The Villa. The remaining 70% is held by Capicol 1, the mall’s developer.

But the 30% apportioned to investors could be in danger, if Capicol director Paul Kyriacou is to be believed.

Kyriacou explains that when he originally negotiated the sale of The Villa, he was granted an option to buy the mall after it had been transferred to Villa Retail. The price would be determined by the mall’s income.

Kyriacou told Moneyweb last week that this option remains valid. Furthermore, because the selling price is based on income, and the mall is not earning any, Kyriacou claims he is entitled to buy Villa Retail’s 30% share for nothing. He has notified the company’s directors of his intention to exercise the option.

However, Nova director Dominique Haese has hit back at Kyriacou’s claims. Haese says that Kyriacou’s statements regarding any option are “incorrect, sensationalist and devoid of any basis, be it in law or in fact”.

Haese claims that Villa Retail is entitled to receive transfer of an additional 50% of The Villa, and that no money is owed to Capicol 1.

The Zambezi Mall is subject to a similar dispute. Last year, half of the mall was transferred to its designated owner, Zambezi Retail, with Capicol retaining the other half.

Haese says that Zambezi Retail does not owe any money to Capicol, and that it is entitled to the remaining 50% of Zambezi.

But this version differs strongly with Kyriacou’s.

Kyriacou claims Capicol was owed tens of millions of rand for the remaining half, which has not been paid. Kyriacou says he has now “cancelled” the sale agreement.

Kyriacou expects both The Villa and Zambezi disputes to go to arbitration.

Words fly over Zambezi vacancies

Today there are virtually no tenants at the Zambezi Mall. Departing tenants include: Checkers, Standard Bank, Maxi’s, Pep Stores, Vodacom, Chicken Licken, Cubana, Rhapsodys, Land Rover and King Pie.

Both Capicol, and the mall’s manager, Frontier Asset Management, which Haese and her co-directors own, blame the other for this sorry state of affairs.

Kyriacou claims that when Capicol handed over management of Zambezi to Frontier, it was 80% occupied.

“How can you chase away a tenant like Checkers?” asks Kyriacou.

But Haese responds that at the relevant takeover date, “vast areas (in excess of 60%) of the Zambezi Mall had been ‘let’ to Capicol Group/Kyricaou related/controlled lessees at, to say the least, questionable and economically unviable rentals, as historically arranged by Mr Kyriacou for his own benefit”.

Haese continues: “Shortly after takeover, Mr Kyriacou abandoned all of these businesses as part of a clear strategy to diminish the value of the Zambezi Mall, under circumstances where he was effectively, historically, both lessor and lessee.”

Haese says that Capicol failed to keep promises made to Checkers, which included the completion of the access roads, and the building of an access ramp.

Source: Moneyweb -

Tags: sharemax zambezi mall the villa the villa mall nova property group villa retail capicol 1 Dominique Haese Paul Kyriacou

Ex-Sharemax investors should ask: What is this all about?

Is there more at play than a fight between Moneyweb and Nova?

12 December 2014 00:42

Investors in the historic Sharemax investment scheme may want to find out for themselves who owns the companies that own and manage the original Sharemax properties.

Moneyweb’s efforts over the past 16 months to get clarity on the ownership structures were delayed again when the North Gauteng High Court (NGHC) granted Nova Properties, Frontier Asset Management & Investments and Centro Property Group leave to appeal a recent interlocutory ruling at the end of November.

This means that before our main case for access to the share registers can be heard, we first have to argue a technical point at the Supreme Court of Appeal (SCA) in Bloemfontein.

Only when this point is decided, sometime next year, will Moneyweb be able to continue with the main case for access in the NGHC. This could mean another 18-month delay.

The process started back in July 2013 when Moneyweb journalist Julius Cobbett applied to access the shareholder registers of these companies in terms of Section 26(2) of the Companies Act. This provision in the Act, in theory at least, is aimed at making it easy for any member of the public to inspect the shareholder register of any company.

Access denied

The three companies vociferously denied Cobbett and Moneyweb access. The directors of the companies justified their refusal by stating that Moneyweb and Cobbett were waging a vendetta against the directors and entities and that Moneyweb and Cobbett would use the information in the shareholder registers to further defame and vilify the parties, particularly the directors.

Moneyweb has always denied that such a vendetta exists.

What is this case all about?

This may be an opportune time for investors to take a step back and ask: What is this case all about? Is it about Moneyweb desperately trying to get its hands on the shareholder registers of the companies and then to sensationally report on their contents? Or are the directors fighting to keep the registers secret from everyone, including investors?

Is this case merely a clash between Moneyweb and individual directors of Nova or is there something else at play?

Why are the ownership structures important?

Moneyweb believes it is critical that the shareholder structure of these companies is made public, as this information is key to investors’ interests.

Nova is the company that owns all the various properties that used to belong to Sharemax investors. With the announcement of the scheme of arrangement in 2011, the executive directors of the erstwhile Sharemax group, Dominique Haese, Rudi Badenhorst and Dirk Koekemoer held 43.2% of Nova’s issued shares.

Moneyweb wants to see whether this shareholding has changed since 2011 and who owns the balance of the issued shares. Moneyweb also wants to know what Haese, Badenhorst and Koekemoer paid for their shares to acquire such a large slice of a company with assets exceeding R2 billion.

The ownership structure of Frontier and Centro is also important. Frontier provides a range of administrative services to Nova and Centro manages the property portfolio on behalf of Nova.

Walk through the front door

The ironic reality is that although Moneyweb may wait three years to get a final answer from the courts, an investor may access the shareholder registers on any weekday morning.

Investors can do this through the Companies Act. According to Section 26 (1) of the Act any “person who holds or has a beneficial interest in any securities issued by a profit company” may inspect the securities register. This obviously refers to investors.

Section 26(2) is applicable when a person does not have such a “beneficial interest”, such as Moneyweb and any other non-investor. In this case the person has the right to gain access if he or she pays a prescribed fee, currently set at R100.

The Act allows for two ways to access the security registers. The first is for access at the company’s registered address. In theory, anyone can walk through the company’s front door, approach reception and ask to see the particular document.

The second way is to complete the particular form – the company then has 14 days to make the shareholder register available to the applicant. It was this method that Cobbett used.

The Act also clearly states that access cannot be denied, and that if any reasonable request is denied, it constitutes an offence.

For ease of reference, here are the registered addresses of the three companies:

Nova Property: 105 Club Avenue, Waterkloof Heights, Pretoria. (It is the same building as the old Sharemax head office)

Frontier Asset Management: 341, 24th Avenue, Villiera, Pretoria; and

Centro Property: Shop 10, Waterkloof Shopping Centre, corner Garsfontein Road and January Masilela Drive, Waterkloof Glen, Pretoria.

I believe it is critical that the information as to who constitutes the majority shareholders is placed in the public domain. This is the reason why Moneyweb has spent a significant amount of money in legal fees to access these shareholder registers. But we will only be able to publish the shareholder registers when the protracted legal wrangle is over – and this may take a few more years.

But curious investors have unique rights, and they cannot be accused, as we are, of waging a vendetta. I am sure several shareholders would want to take a peek at the shareholder registers to see what the fuss is all about.


Sharemax ‘nothing but a Ponzi scheme’

Business News / 1 February 2013, 08:00am
Roy Cokayne

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.
The Villa mall by developer |Capicol was promoted by Sharemax, along with Zambezi Retail Park, which the financial |services ombud says is 'nothing more than a Ponzi scheme'. Photo: Simphiwe Mbokazi. Credit: Independent Newspapers

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 FinansiĆ«le 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.

Who are Tigon’s Porritt and Bennett

Who are Tigon’s Porritt and Bennett
September 16, 2016.

During the first week of their long-awaited criminal trial last week Tigon kingpins Gary Porritt and Sue Bennett presented a curious picture.

The two face more than 3 000 counts of fraud, racketeering, and contraventions of the Income Tax Act, Companies Act and Stock Exchange Control Act.

The are unrepresented in the South Gauteng High Court after judge Brian Spilg refused to grant the postponement they requested until March next year, when they said their legal team would be available.


Porritt appeared somewhat confused during the first week of trial, painstakingly making notes, putting up his hand regularly to indicate to prosecutor adv. Etienne Coetzee and Jack Milne who was first on the witness stand, to slow down as he was battling to keep up. At times this almost brought the trial to a halt.

Bennett, sitting to Porritt’s right, created an impression of quiet competence. She was making notes on her laptop, seemed to assist Porritt from time to time, was clearly quick to understand issues and expressed her self efficiently.

The two seemed to be operating as a team. They arrived together, left together and spent lunch together. A photographer remarked that Porritt seemed to be hiding behind Bennett as the lens focused on the pair. Bennett was also the one who tried her luck on Friday morning by informally requesting another postponement. Judge Spilg told her to bring a formal application, which might still follow.
© Moneyweb

But who are these two people who have avoided trial for a decade and are accused of pulling an unprecedented scam involving two listed companies.

Porritt’s spell

Milne, who earlier pleaded guilty and served eleven months of an effective sentence of five years for the same events that Porritt and Bennett have been called to account for, said during his testimony that he fell “under Mr. Porritt’s spell” after interviewing the then Tigon MD for a column he wrote for Business Report in 1999.

He described Porritt’s “amazing track record”, having grown Tigon’s headline earnings per share by 149% per annum compound over the previous three years. Tigon’s market capitalisation of R3 billion at that stage was clearly impressive.

From Milne’s testimony it was however clear that institutional investors were weary of Tigon, a financial services company.

Dubious reputation

Milne admitted that: “I was aware that he had a dubious reputation in the financial community”. Milne asked Porritt about it at the time and Porritt explained that this was as a result of Nedbank unexpectedly withdrawing the overdraft facility they allowed him in his farming enterprises and then mismanaging the collection of his harvests, Milne told the court.

Seemingly Milne was satisfied with the explanation at the time, and introduced him to the board of Progressive Systems College (PSC) of which Milne was MD. Tigon later bought 70% of the PSG group and used it as a vehicle for what the state alleges were his fraudulent activities.

Was Porritt therefore a poor farmer out of luck who got up and reinvented himself?

In need of Legal Aid

Fast forward to a in 2010. The Legal Aid Board appealed against a High Court judgement in terms of which it was obliged to provide legal aid to Porritt and Bennett at the state’s expense.

The SCA sets out an intricate web of trusts linked to either Porritt or Bennett or in some cases to both and holding significant assets. It is one of these trusts that Porritt said loaned him the R800 000 bail to keep him out of jail. Bennett paid R100 000 bail, and the proceeds of a bond over a property valued at more than R5 million in Knysna, that she also lives in. The property belongs to a company of which she is the only director.

Both claimed to be indigent – to qualify for legal aid one’s income should be less than R2 000 per month – but refused to give detail about their financial affairs.

The Legal Aid Board argued that they “deliberately structured their affairs in such a way as to facilitate the disposal or concealment of their assets”. The SCA found that they were “deliberately evasive and cagey”.

Experienced litigants

Porritt, who now seems bewildered by the court process, and Bennett are experienced litigants. Apart from the fact that the pair was not found to be poor and in need of legal aid, they have spent R23 million (paid by one of the trusts) in the previous six years avoiding trial, the SCA found. According to the SCA “they intend to employ every stratagem available to them in order to delay the commencement and thereafter continuation of the trial for as long as they possibly can”.

It would have cost them less to just face the charges.

The trusts, most of which were founded as early as 1993, own several farms in the Southern Drakensberg. The Snowdon Farm Trust, which pays for Porritt’s cell phone as he provides “advisory services” to it, was earlier involved in a dispute with neighbouring farmers after it tried to drive 1 500 cattle over their land. It was according to also planning to build a luxury ski resort on its land.

Panama leaks

In April this year on new light shed on Porritt’s operations after the so-called Panama Leaks. M&G wrote: “The leak bolsters the state’s contention that Porritt masterminded an enormous financial racket. It shows that between 1986 until his arrest in 2002, Porritt used the Panama-based law firm Mossack Fonseca to incorporate shell companies on his behalf in jurisdictions that offer a high degree of corporate anonymity. There is no evidence that Bennett had any dealings with Mossack Fonseca.”

It describes Mossack Fonseca’s role as follows: “Mossack Fonseca helps clients shield their identities by providing nominee directors whose names appear on all official documents, as well as secretarial services for interactions with third parties.”

During the first week of the trial Porritt was much more in the spotlight than Bennett. In documents before the court Bennett was described as a founder director of Progressive Systems College Guaranteed Growth Fund (PSCGG), the investment fund at the heart of the scandal and one of the founders of Tigon. She is described as a commodity trader with experience in logistics, treasury and legal functions.

Common purpose

The state contends that she and Porritt acted with a common purpose.

In 2010 the SCA said the following about the criminal trial that has just started “The criminal trial, if and when it eventually starts, is likely to be a complex one. The indictment runs to over 1 400 pages. In excess of 3000 witnesses are expected to testify. It is anticipated that approximately one million pages of documentary material will have to be read in preparation for trial. All told the trial is expected to last in the region of three years.”

It is a mammoth task, but when it is eventually concluded there should be no doubt who Porritt and Bennett really are

Still no Porritt trial 12 years on
Crime & Courts / 18 November 2014, 10:25am
Tony Carnie

Durban - Nearly 12 years after being arrested on more than 3 000 counts of fraud, racketeering and other offences, former Maritzburg College head boy Gary Porritt is no closer to entering the dock - despite a Supreme Court order that he face his long-delayed criminal trial.

The Pietermaritzburg businessman and farmer, and co-accused business partner Susan Bennett have spent more than R23 million in legal costs to avoid trial in connection with the so-called Tigon/PSC investment scandal.
Nearly 12 years after being arrested, former Maritzburg College head boy Gary Porritt is no closer to entering the dock. Photo: Simphiwe Mbokazi. Credit: THE MERCURY

Late last month, the Supreme Court of Appeal dismissed their latest application, seeking to fire the “biased” State prosecution team.

The court ruled that Porritt and Bennett return to the high court to stand trial - but now their legal team has confirmed they will apply for leave to appeal to the Constitutional Court, which is unlikely to hear an appeal until next year.

Porritt was arrested in December 2002, followed by Bennett in March 2003, to face 3 160 charges under the Companies Act, Stock Exchange Control Act and Income Tax Act, as well as fraud and racketeering.

In 2005 police raided Porritt-associated offices and seized nearly 400 000 documents.

Porritt challenged the legality of these seizures and demanded that the documents be returned. Although some were returned later, this legal battle dragged on for two years.

In mid-2007 Porritt and Bennett pleaded poverty and applied for legal aid. Although Judge Geraldine Borchers remarked that neither was indigent, she ordered the Legal Aid Board to supply each with a private advocate and attorney to ensure a fair trial.

The Legal Aid Board appealed to the Supreme Court, arguing that the pair had deliberately structured their affairs in a web to hide their true financial assets.

Judge Visvanathan Ponnan and four fellow Supreme Court judges took a dim view of Porritt’s and Bennett’s poverty plea.

Judge Ponnan recognised that the criminal trial, “if and when it eventually starts”, was likely to be complex and could last three years because it involved at least 3 000 witnesses and thousands of documents.

The judge observed that they would not have needed legal aid if they had made “more pragmatic” use of funds at the outset.

A year later, the trial stalled again, when Judge Borchers recused herself on the basis that she had been in regular contact with Porritt and Bennett for more than five years and had formed “certain impressions” that were unfavourable.

A new judge, Lucy Mailula, was appointed and the trial was scheduled for March 2012, but, just as it was about to start, Porritt’s team, including top advocate Kemp J Kemp, demanded the removal of specialist State advocates Jan Ferreira and Etienne Coetzee.

Judge Mailula granted that wish in November 2012 because Porritt and Bennett perceived them to be biased.

Earlier this year, the battle moved back to the Supreme Court of Appeal after Judge Mailula’s ruling was challenged by the national director of public prosecutions, Sars and other State parties.

In a judgment late last month, Judge Zukisa Tshiqi ordered the immediate reinstatement of trial advocates Coetzee and Ferreira and dismissed assertions that Porritt and Bennett would not get a fair trial if they perceived the prosecutors to be biased.

“There is a fundamental difference between the role and function of a prosecutor, as opposed to those of a magistrate or judge,” said Judge Tshiqi.

In an adversarial criminal justice system, it was inevitable that the prosecutors would be partisan and could be expected to carry out their duties “vigorously and zealously”.

Judge Tshiqi ordered that Porritt and Bennett return to the high court in Joburg to face trial.

Porritt’s attorney, Frank Cohen, confirmed that he was preparing papers for leave to appeal to the Concourt.

“We and our clients are of the respectful view that Judge Tshiqi erred and that her judgment is wrong on the law,” he said.

The Mercury

Porritt may walk free in fraud trial

Crime & Courts / 30 September 2013, 11:34am
Tony Carnie

Durban - More than a decade after being arrested for at least 3 000 cases of fraud, racketeering and other financial offences, KwaZulu-Natal farmer and businessman Gary Porritt has yet to stand trial for his alleged role in one of the country’s biggest investment scandals.

And, if things go his way, the former Maritzburg College head boy could be acquitted of his alleged crimes, in the Tigon/PSC scandal, in which thousands of pensioners and unit trust investors lost at least R160 million.
Eleven years after being arrested for 3 160 cases of fraud and racketeering, KZN businessman Gary Porritt has yet to stand trial. Photo: Simphiwe Mbokazi. Credit: The Mercury

Porritt was arrested in December 2002, along with his business associate, Sue Bennett, on the instructions of advocate Glynnis Breytenbach of the National Prosecuting Authority.

Police investigators later seized almost 400 000 documents from one of Porritt’s farms in the Swartberg area and from offices in Pietermaritzburg and Joburg.

They were to stand trial in the Johannesburg High Court for 3 160 counts of fraud and contraventions of the Income Tax Act, Companies Act, Stock Exchanges Control Act, Exchange Control Regulations and the Prevention of Organised Crime Act.

But, by 2010, Supreme Court Judge V Ponnan lamented that the case had been plagued by delays and it had become plain that Porritt and Bennett had employed “every legal stratagem available to them” to delay the trial.

Noting that at least R23m had been spent on “preliminary legal skirmishes”, Judge Ponnan observed that the criminal trial was likely to be complex “if and when it eventually starts”.

“The indictment runs to more than 1 400 pages. In excess of 3 000 witnesses are expected to testify. It is anticipated that approximately 1 million pages of documentary material will have to be read in preparation for the trial. All told, the trial is expected to last in the region of three years,” he said.

The criminal trial was delayed again when Judge Geraldine Borchers (who was set to preside over the trial) recused herself in September 2011, after too much “intimate contact” with the pair.

“For five and a half years they have been appearing before me five or six times a year. I have had far more intimate contact with the accused than in other criminal trials… I have formed certain impressions which are unfavourable to some of the parties,” she said.

More recently, Porritt’s and Bennett’s legal team scored another victory from Judge Lucy Mailula, who took the case over from Judge Borchers.

In a judgment last year, Judge Mailula ruled in favour of Porritt and Bennett after they launched an application to recuse trial prosecutors Etienne Coetzee and Jan Ferreira.

Their legal team argued the two prosecutors had no legal title to prosecute and were perceived to be biased.

Coetzee had failed to take a prosecutorial oath, he “lacked independence”, was not “impartial” and had been engaged in “obstructive conduct”.

Ferreira, it was argued, had been actively involved in previous civil litigation against the pair and his conduct created a “perception of bias/partiality”. Coetzee and Ferreira opposed the application.

Judge Mailula finally granted the application for the recusal of both prosecutors, not because of any proven impropriety on their part, but on the basis of “the perception of lack of impartiality” by Porritt and Bennett.

However, she refused to grant the pair an acquittal.

In her view, the State was at liberty to appoint new prosecutors to start afresh.

Now it has emerged that Porritt’s team, headed by advocate Kemp J Kemp, was recently granted leave to appeal against Judge Mailula’s ruling on acquittal, while the NPA was also granted leave to appeal against the recusal of the prosecutors.

Responding to e-mail queries this month from a Durban investor who allegedly lost R80 000 in the Tigon/PSC Guaranteed Growth Fund scandal, NPA spokesman Medupe Simasiku confirmed that the NPA had challenged the recusal of the prosecutors.

Porritt’s team had also challenged Judge Mailula’s ruling not to acquit him and Bennett. Both challenges had now been referred to the Supreme Court of Appeal for a final ruling.

In his e-mail dated September 12, Simasiku commented that even if Porritt and Bennett were granted an acquittal on a point of law, the NPA was still at liberty to begin a fresh prosecution, with fresh prosecutors.

Porritt, for his part, has yet to give his side in open court.

However, in a letter to The Mercury last year, an attorney associated with some of the numerous Porritt family trusts insinuated that the police investigation into Porritt might have been influenced by a relationship between former police commissioner Jackie Selebi and a person who was involved in a commercial dispute with Porritt’s Tigon group.

“Porritt and Bennett have always professed their innocence of any wrongdoing but due to the machinations of the State they have yet to plead to the charges,” wrote attorney Frank Cohen in his capacity representing the trustees of the Snowdon Farm Trust.

The Mercury