Monday, November 21, 2016

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The South African Revenue Service (Sars) has withdrawn an application for the liquidation of the property syndication scheme Sharemax Investments after the parties settled a longstanding tax dispute, the Nova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

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