>Friday, December 30, 2016
Wednesday, December 14, 2016
SABC DEATH THREAT TEXT: 'SIT & WATCH THE BLOOD FLOW'
No Fear No Favour No Death Threats..........
Former SABC editor Vuyo Mvoko says police have been alerted to death threats made to reporters after testifying at the inquiry.
Wednesday 14 December 2016 14:23 (SOUTH AFRICA).......
Former SABC editor Vuyo Mvoko says police have been alerted to death threats made to reporters after testifying at the inquiry.
Wednesday 14 December 2016 14:23 (SOUTH AFRICA).......
JOHANNESBURG/CAPE TOWN – Former South African Broadcasting Corporation (SABC) editor Vuyo Mvoko says the police have been alerted to death threats made to journalists after testifying at this week’s Parliamentary inquiry into the public broadcaster.
Mvoko testified on Monday alongside the so called SABC 8.
He revealed that the broadcaster’s money was used to build Gupta-owned TV channel, ANN7.
He says on Tuesday he received a death threat.
“Around 4pm or just before 5pm in the afternoon on Tuesday something saying; ‘Traitors. Protecting your white friends in parliament who started this, telling lies about your comrades – you are warned. We don’t kill blacks – but sit and watch the blood flow.’”
Members of Parliament (MPs) have expressed their outrage at death threats against journalists who this week testified before parliament’s inquiry.
When the hearings resumed on Wednesday, Chairperson Vincent Smith announced that he was informed of the threats late on Tuesday.
United Democratic Movement MP Nqabayomzi Kwankwa, read out to the committee the text message he said had been sent to him by one of the journalists.
MPs now want action to ensure members of the SABC 8 or other witnesses are not threatened further.
The African National Congress’s Makhosi Khoza says, “Anyone who is trying to intimidate our witnesses and people who are trying to assist this country to move forward (are) actually militating a total onslaught.”
While the Democratic Alliance’s Phumzile van Damme says, “It can’t be rocket science to find out where these threats are coming from – they can trace cellphone numbers…”
The committee chairperson did not say who among the group of journalists who gave evidence on Monday were threatened, or whether it was all four of them.
Smith says the threats are an assault against Parliament.
(Edited by Masechaba Sefularo)
EWN
JOURNALISTS WHO TESTIFIED IN SABC INQUIRY RECEIVE DEATH THREATS
The chairperson of the hearings has told MPs he was informed about the threats late on Tuesday.
CAPE TOWN - Journalists who testified before Parliament’s inquiry into the South African Broadcasting Corporation (SABC) board's fitness for office on Monday have received death threats since testifying this week.
The chairperson of the hearings, Vincent Smith, has told Members of Parliament (MPs) he was informed about the threats late on Tuesday.
He says it is an assault on Parliament.
“Parliament must with one voice condemn any effort to subvert oversight and to subvert the deepening of democracy.”
United Democratic Movement MP Nqabayomzi Kwankwa read out one of the threatening text messages and condemned the act of intimidation.
“One of the journalists shared a text message with me. I’d like to read it to this meeting and the people of South Africa. It says, ‘Traitors protecting your white friends in Parliament has started this and telling lies about your comrades. You were warned. We don’t kill blacks, but will sit and watch the blood flow.’”
Kwankwa did not reveal which of the four journalists who testified on behalf of the so called SABC 8 received the message.
MPs have strongly condemned the threats and want an update from police on their investigation into previous acts of intimidation and harassment against members of the SABC 8.
To follow day six of the SABC board inquiry, click here.
(Edited by Shimoney Regter)
EWN
COMMENTS BY SONNY
It is evident that South Africa has turned into a lawless state where friends of president Jacob Zuma will kill to protect his tarnished reputation.
IS THIS THE TRUE DEMOCRACY WE ALL FOUGHT FOR?
Friday, December 9, 2016
Legal battles involving Sharemax far from over - BUSINESS WATCH
Legal battles involving Sharemax far from over BUSINESS WATCH
/ 13 April 2011, 09:03am
The legal minefields surrounding the collapse of property syndication company Sharemax Investments are growing. Sharemax’s attorneys, Weavind & Weavind, and Capicol, the developers of the Zambezi Retail Park and The Villa, have both launched independent defamation and damages cases.
A criminal case has been lodged against Weavind & Weavind related to the alleged illegal release of Sharemax investor funds from its trust account before the transfer of properties to the syndication vehicles.
A demand for repayment has been issued to Weavind & Weavind on behalf of 11 investors in terms of a section of the Companies Act that is normally a precursor to a liquidation application.
Claims have been submitted to the fidelity fund of the Law Society of the Northern Provinces and Attorneys Insurance Indemnity Fund, both also related to the release of funds by Weavind & Weavind.
Lurking behind the scenes is the finding by an investigation conducted for the registrar of banks that Sharemax’s funding model contravened the Banks Act. Surely at some stage someone is going to be prosecuted for this contravention?
The new board of the Sharemax group of companies also plans to seek permission from the high court for an offer of compromise in terms of the Companies Act to creditors in schemes promoted and marketed by the company.
However, it has been claimed that this planned offer was seeking to legalise an illegal act and was prejudicial to the rights of “prospective investors”.
In fact, doubts have been expressed about whether the Zambezi Retail Park or The Villa schemes had any investors or shareholders because a suspensive condition had not been fulfilled: the transfer of the properties into the syndication vehicle mentioned in the prospectuses for both of these schemes.
But can such a scheme of arrangement be applicable to investors and shareholders in the company or only creditors?
In terms of a government notice on property syndications, the money deposited by prospective investors into the trust account of Weavind & Weavind must be repaid if the syndication does not proceed.
Weavind & Weavind maintains the government prohibition on the release of investor funds for a property syndication prior to the transfer of the property is not applicable to the firm and various clauses in the prospectuses made it “abundantly clear” it was not the intention that investors funds would only be paid out of trust once the property had been transferred. However, the prospectuses also specifically state that investors funds will not be released from its trust account prior to the transfer of the property.
What then gives Weavind & Weavind the right to ignore or disregard a mandatory government notice related to property syndications?
The share and debenture certificates issued by Sharemax to prospective investors also specifically state that their “investment” would be deposited into Weavind & Weavind’s trust account and “kept there until the investment amount is processed and the property is transferred”.
Finally, an arbitration last year concluded Sharemax must pay R64 million, excluding damages, to Capicol.
This amount was due for payment by no later than March 7, but the Sharemax board has admitted it is unable to pay it. Does this not mean Sharemax is insolvent?
If so, does the rescue plan being hatched by the new Sharemax board mean the company is still trading and the directors of the company could be held liable for reckless trading?
It is obvious this saga, involving about 40 000 shareholders who have invested about R4.5 billion in property syndications promoted and marketed by Sharemax, will probably take years to resolve. page 20
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Unemployment
The gain in employment that is evident from data releases in the past few quarters is welcome.
The modest uptick means there is still a long way to go before the hundreds of thousands of jobs that were lost during the recession are recovered, but it is nevertheless an encouraging start to what is hopefully a sustainable trend. Every bit of good news builds confidence.
Since the release of Statistics SA’s Quarterly Labour Force Survey, which showed the unemployment rate in the fourth quarter of last year had fallen to 24 percent from 25.3 percent, and the Quarterly Employment Statistics, which showed 101 000 jobs were created in the formal sector in the fourth quarter following the addition of 23 000 jobs in the third quarter and 46 000 in the second, other data have also reflected gains in employment.
The Adcorp employment index for March showed a 5.6 percent gain in employment, and there were gains in all sectors and occupations.
But it is disheartening that official statistics show the number of discouraged work-seekers is still rising, by 117 000 people in the fourth quarter, compared with the previous quarter, and by 440 000 compared with a year earlier.
There are now well over 2 million discouraged work-seekers, over and above the more than 4 million unemployed. The expanded unemployment rate remains devastatingly high at 35.8 percent.
After companies enhanced productivity, cut costs and right-sized to cope with the recession, they will now be cautious in expanding their staff complement.
Especially as there are perpetual concerns about the rand, new labour laws and electricity supply constraints, among other things. But even without these concerns greater mechanisation introduced during the recession may mean companies will not need significantly more staff even if the economy starts to really pick up.
This of course means that many people, especially those without skills, will remain in desperate circumstances.
Edited by Peter DeIonno. With contributions from Roy Cokayne and Samantha Enslin-Payne.
/ 13 April 2011, 09:03am
The legal minefields surrounding the collapse of property syndication company Sharemax Investments are growing. Sharemax’s attorneys, Weavind & Weavind, and Capicol, the developers of the Zambezi Retail Park and The Villa, have both launched independent defamation and damages cases.
A criminal case has been lodged against Weavind & Weavind related to the alleged illegal release of Sharemax investor funds from its trust account before the transfer of properties to the syndication vehicles.
A demand for repayment has been issued to Weavind & Weavind on behalf of 11 investors in terms of a section of the Companies Act that is normally a precursor to a liquidation application.
Claims have been submitted to the fidelity fund of the Law Society of the Northern Provinces and Attorneys Insurance Indemnity Fund, both also related to the release of funds by Weavind & Weavind.
Lurking behind the scenes is the finding by an investigation conducted for the registrar of banks that Sharemax’s funding model contravened the Banks Act. Surely at some stage someone is going to be prosecuted for this contravention?
The new board of the Sharemax group of companies also plans to seek permission from the high court for an offer of compromise in terms of the Companies Act to creditors in schemes promoted and marketed by the company.
However, it has been claimed that this planned offer was seeking to legalise an illegal act and was prejudicial to the rights of “prospective investors”.
In fact, doubts have been expressed about whether the Zambezi Retail Park or The Villa schemes had any investors or shareholders because a suspensive condition had not been fulfilled: the transfer of the properties into the syndication vehicle mentioned in the prospectuses for both of these schemes.
But can such a scheme of arrangement be applicable to investors and shareholders in the company or only creditors?
In terms of a government notice on property syndications, the money deposited by prospective investors into the trust account of Weavind & Weavind must be repaid if the syndication does not proceed.
Weavind & Weavind maintains the government prohibition on the release of investor funds for a property syndication prior to the transfer of the property is not applicable to the firm and various clauses in the prospectuses made it “abundantly clear” it was not the intention that investors funds would only be paid out of trust once the property had been transferred. However, the prospectuses also specifically state that investors funds will not be released from its trust account prior to the transfer of the property.
What then gives Weavind & Weavind the right to ignore or disregard a mandatory government notice related to property syndications?
The share and debenture certificates issued by Sharemax to prospective investors also specifically state that their “investment” would be deposited into Weavind & Weavind’s trust account and “kept there until the investment amount is processed and the property is transferred”.
Finally, an arbitration last year concluded Sharemax must pay R64 million, excluding damages, to Capicol.
This amount was due for payment by no later than March 7, but the Sharemax board has admitted it is unable to pay it. Does this not mean Sharemax is insolvent?
If so, does the rescue plan being hatched by the new Sharemax board mean the company is still trading and the directors of the company could be held liable for reckless trading?
It is obvious this saga, involving about 40 000 shareholders who have invested about R4.5 billion in property syndications promoted and marketed by Sharemax, will probably take years to resolve. page 20
--------------------------------------------------------------------------
Unemployment
The gain in employment that is evident from data releases in the past few quarters is welcome.
The modest uptick means there is still a long way to go before the hundreds of thousands of jobs that were lost during the recession are recovered, but it is nevertheless an encouraging start to what is hopefully a sustainable trend. Every bit of good news builds confidence.
Since the release of Statistics SA’s Quarterly Labour Force Survey, which showed the unemployment rate in the fourth quarter of last year had fallen to 24 percent from 25.3 percent, and the Quarterly Employment Statistics, which showed 101 000 jobs were created in the formal sector in the fourth quarter following the addition of 23 000 jobs in the third quarter and 46 000 in the second, other data have also reflected gains in employment.
The Adcorp employment index for March showed a 5.6 percent gain in employment, and there were gains in all sectors and occupations.
But it is disheartening that official statistics show the number of discouraged work-seekers is still rising, by 117 000 people in the fourth quarter, compared with the previous quarter, and by 440 000 compared with a year earlier.
There are now well over 2 million discouraged work-seekers, over and above the more than 4 million unemployed. The expanded unemployment rate remains devastatingly high at 35.8 percent.
After companies enhanced productivity, cut costs and right-sized to cope with the recession, they will now be cautious in expanding their staff complement.
Especially as there are perpetual concerns about the rand, new labour laws and electricity supply constraints, among other things. But even without these concerns greater mechanisation introduced during the recession may mean companies will not need significantly more staff even if the economy starts to really pick up.
This of course means that many people, especially those without skills, will remain in desperate circumstances.
Edited by Peter DeIonno. With contributions from Roy Cokayne and Samantha Enslin-Payne.
The runaway Ponzi scheme 'mastermind' hiding on the Gold Coast
The runaway Ponzi scheme 'mastermind' hiding on the Gold Coast
Why is a South African national accused of accruing billions of rand through a Ponzi scheme living in the Queensland suburb of Runaway Bay? South African-Australian journalist Larry Schlesinger examines the case.
In 1972, work begun to turn 182 hectares of tidal Gold Coast wetlands north of the Southport Broadwater Parklands into a canal-lined residential subdivision. Real estate developer Neil McCowan and advertising agent John Garnsey christened the new suburb “Runaway Bay”, promoting the area as a tranquil escape.
Take a stroll along the Runaway Bay marina today with its views of the Surfers Paradise Manhattan-esque skyline and bobbing yachts at berth and you might pass Barry Deon Tannenbaum, now a resident of the palm tree-lined suburb and the alleged operator of South Africa’s biggest Ponzi scheme.
When Tannebaum’s name last appeared in the Australian press more than three years ago he was a resident of Runaway Bay, having fled the South African Jewish enclave of St Ives in Sydney when news of the scheme broke. Wikipedia lists, as Runaway Bay’s only notable resident: “Alleged Ponzi scheme mastermind Barry Tannenbaum”.
In June 2009 The Sydney Morning Herald ran the front-page story: “Exposed: the Sydney man accused of a $1.5 billion scam“. But in the last three years, hardly a word about Tannenbaum has made it into the mainstream Australian media, despite new damning revelations in South Africa.
A failed attempt by the South African trustees of Tannenbaum’s bankrupt estate to take control of his Australian assets in the Queensland Federal Court in August last year also passed without mention, despite the judge noting that “substantial funds sourced from South Africa were transferred to Australian entities controlled by [Tannenbaum] and his wife”. These funds allegedly were stolen from hundreds of investors (some lost all their savings) and squandered by Tannebaum before he fled South Africa.
The moniker “mastermind” (which Tannenbaum denies) is given by none other than the South African Revenue Service in recently leaked documents published on finance website MoneyWeb. The documents reveal he owes nearly $80 million in taxes, interest and penalties as part of undeclared income earned when he allegedly perpetrated one of the biggest corporate frauds in South African history.
According to SARS, Tannenbaum under-declared his income between 2004 and 2009 by 444 million rand ($47 million) and now owes 747 million rand ($79 million) in tax, penalties and interest. By investigating Tannebaum’s 26 bank accounts, SARS discovered inflows of 3.91 billion rand ($415 million), of which 3.05 billion rand ($324 million) was paid out to “investors” and “agents” in the scheme. Over this five-year period Tannenbaum paid tax of just 142,000 rand ($15,000).
The money in these bank accounts is only a fraction of a purported 15 billion rand ($1.5 billion) accrued through an alleged Ponzi scheme that drew in 378 investors in the close-knit South African Jewish community by encouraging them to invest in Frankel International (of which Tannenbaum was the sole trustee), which traded under the name Eurochemicals.
Investors were enticed with offers of very high returns by allegedly forged purchase orders to supply the active ingredients for anti-retroviral drugs (used in the treatment of HIV and AIDS) to drug company Aspen Pharmacare — this in a country with one of the highest HIV infection rates in the world. One purchase order was said to be for 700 million rand ($74 million) — denied outright by Aspen.
Adding credibility to the scheme were two things: firstly, the Tannenbaums were a well-known, wealthy and respected Jewish family in South Africa; secondly, they have a deep connection to the local pharmaceutical industry — Barry Tannenbaum’s grandfather Hyme was the founder of South Africa’s largest over-the-counter pharmaceutical company, Adcock Ingram, now owned by Tiger Brands. The Tannenbaums sold their stake in the business in 1978. Frankel Chemicals was subsequently founded in 1983 as an intermediary in the supply chain of drug compounds.
Between 2004 and 2009, Barry Tannenbaum, as director of Frankel, is said to have engaged the services of a number of high-profile businessmen in South Africa as “agents” — the original investors in the scheme and at the top of the pyramid — to sell the idea to other investors that they could more than double their money by making short-term (eight to 12 weeks) advances for the purpose of enabling the purchase and importation into South Africa of pharmaceutical ingredients.
In a Ponzi scheme the early investors are paid dividends from investments made by later investors, rather than from any actual profit earned by the company. I know of friends in South Africa induced to invest who lost all their savings. The sense of Tannenbaum’s betrayal of their trust remains palpable since the story was broken by South Africa’s Financial Mail in July 2009.
The SARS investigation, which drew in all the major South African government institutions and auditors at KPMG, came to the conclusion that: “Tannenbaum was indeed the mastermind and operator of this illegal multiplication scheme.”
Following the article in the SMH and other Fairfax papers in June 2009 as well as the ABC, Tannenbaum professed his innocence, claiming in a letter to the press that “categorically” he was not “sitting with millions”. “I have not amassed some fortune that I have spirited away, and in due course an audit will bear out this statement, if people are still interested in hearing the truth,” he said before all but disappearing from the public eye. No audit has ever been carried out to clear his name.
In January 2010, the last mention of Barry Tannenbaum in the Australian press appeared when Fairfax ran a story about him fleeing St Ives for Runaway Bay. It was reported soon after an arrest warrant had been issued for Tannenbaum by the South African police. The short piece said he had fled “a stuffy little office above a strip of shops around the corner from his St Ives home” only to “pop up in the Surfers Paradise suburb of Runaway Bay”.
As an Australian resident since mid-2007, Tannenbaum has received the full legal protection of the Australian judiciary system. In August last year, the Queensland division of the Federal Court declined an application by the South African trustees of Tannenbaum’s bankrupt estate to administer and realise any assets he had accrued in Australia. The ruling was made on the basis that South Africa was not the “centre of the debtor’s main interests”, as he had “severed all ties” with the country of his birth.
The Australian court documents confirm what is known in the SARS investigation — that Tannenbaum raised $390 million between 2004 and 2009. Of this vast sum, just 0.05% was on-loaned by Tannenbaum for the purpose of purchasing pharmaceutical ingredients. According to the court documents, 44.8 million rand ($4.78 million) was used by Tannenbaum for personal transactions, “with a substantial portion being spent on gambling”.
He transferred US$31.7 million into an account held by Bartan Group Pty Ltd (Bartan — shortening of “Barry + Tannenbaum”), an Australian incorporated company, with an ANZ bank account, now in liquidation. Of this money, US$14 million was transferred into other entities controlled by Tannenbaum or to persons associated with him. The sole shareholder of Bartan is another Australian incorporated company, Bardeb Nominees Pty Ltd, with shares held solely by Tannenbaum and his wife, Deborah. Bartan was wound up by an order of the Supreme Court of New South Wales on March 9, 2010.
The Federal Court court documents note that a report issued about Bartan’s affairs in April 2010 was “noteworthy for its paucity of information concerning the affairs of that company” but does include assets of $586,523 (made up of $150 in cash with the balance being investments in two other entities) and contingent assets of some $21 million.
During the court case, Tannenbaum claimed he had assets of less than $8000 and just $1700 in the bank while his liabilities where $90,000 on his credit card, an $85,000 loan from “friends” and a $185,000 vehicle finance lease. Judge Logan remarked:
“It may very well be that his decision to quit South Africa was inherently bound up with a desire not in the future to be dealt with under the law of that country in respect of his involvement in the scheme described and a related desire to enjoy the benefits of proceeds repatriated to Australia. It is not necessary in this proceeding conclusively to determine whether or not or to what extent he has enjoyed the proceeds but there is no doubt on the evidence that substantial funds sourced from South Africa were transferred to Australian entities controlled by he and his wife.”
Tannenbaum declined to reveal his Queensland address, claiming he did not have a permanent home, directing the court to a Sydney solicitor. According to SARS, the money Tannenbaum earned was paid into various companies of which Tannenbaum was either a director or member — nine registered in South Africa and five in Australia, including the Bartan Group and Frankel International.
*This article was first published at Larry Schlesinger’s blog Freshly Worded
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Why is a South African national accused of accruing billions of rand through a Ponzi scheme living in the Queensland suburb of Runaway Bay? South African-Australian journalist Larry Schlesinger examines the case.
In 1972, work begun to turn 182 hectares of tidal Gold Coast wetlands north of the Southport Broadwater Parklands into a canal-lined residential subdivision. Real estate developer Neil McCowan and advertising agent John Garnsey christened the new suburb “Runaway Bay”, promoting the area as a tranquil escape.
Take a stroll along the Runaway Bay marina today with its views of the Surfers Paradise Manhattan-esque skyline and bobbing yachts at berth and you might pass Barry Deon Tannenbaum, now a resident of the palm tree-lined suburb and the alleged operator of South Africa’s biggest Ponzi scheme.
When Tannebaum’s name last appeared in the Australian press more than three years ago he was a resident of Runaway Bay, having fled the South African Jewish enclave of St Ives in Sydney when news of the scheme broke. Wikipedia lists, as Runaway Bay’s only notable resident: “Alleged Ponzi scheme mastermind Barry Tannenbaum”.
In June 2009 The Sydney Morning Herald ran the front-page story: “Exposed: the Sydney man accused of a $1.5 billion scam“. But in the last three years, hardly a word about Tannenbaum has made it into the mainstream Australian media, despite new damning revelations in South Africa.
A failed attempt by the South African trustees of Tannenbaum’s bankrupt estate to take control of his Australian assets in the Queensland Federal Court in August last year also passed without mention, despite the judge noting that “substantial funds sourced from South Africa were transferred to Australian entities controlled by [Tannenbaum] and his wife”. These funds allegedly were stolen from hundreds of investors (some lost all their savings) and squandered by Tannebaum before he fled South Africa.
The moniker “mastermind” (which Tannenbaum denies) is given by none other than the South African Revenue Service in recently leaked documents published on finance website MoneyWeb. The documents reveal he owes nearly $80 million in taxes, interest and penalties as part of undeclared income earned when he allegedly perpetrated one of the biggest corporate frauds in South African history.
According to SARS, Tannenbaum under-declared his income between 2004 and 2009 by 444 million rand ($47 million) and now owes 747 million rand ($79 million) in tax, penalties and interest. By investigating Tannebaum’s 26 bank accounts, SARS discovered inflows of 3.91 billion rand ($415 million), of which 3.05 billion rand ($324 million) was paid out to “investors” and “agents” in the scheme. Over this five-year period Tannenbaum paid tax of just 142,000 rand ($15,000).
The money in these bank accounts is only a fraction of a purported 15 billion rand ($1.5 billion) accrued through an alleged Ponzi scheme that drew in 378 investors in the close-knit South African Jewish community by encouraging them to invest in Frankel International (of which Tannenbaum was the sole trustee), which traded under the name Eurochemicals.
Investors were enticed with offers of very high returns by allegedly forged purchase orders to supply the active ingredients for anti-retroviral drugs (used in the treatment of HIV and AIDS) to drug company Aspen Pharmacare — this in a country with one of the highest HIV infection rates in the world. One purchase order was said to be for 700 million rand ($74 million) — denied outright by Aspen.
Adding credibility to the scheme were two things: firstly, the Tannenbaums were a well-known, wealthy and respected Jewish family in South Africa; secondly, they have a deep connection to the local pharmaceutical industry — Barry Tannenbaum’s grandfather Hyme was the founder of South Africa’s largest over-the-counter pharmaceutical company, Adcock Ingram, now owned by Tiger Brands. The Tannenbaums sold their stake in the business in 1978. Frankel Chemicals was subsequently founded in 1983 as an intermediary in the supply chain of drug compounds.
Between 2004 and 2009, Barry Tannenbaum, as director of Frankel, is said to have engaged the services of a number of high-profile businessmen in South Africa as “agents” — the original investors in the scheme and at the top of the pyramid — to sell the idea to other investors that they could more than double their money by making short-term (eight to 12 weeks) advances for the purpose of enabling the purchase and importation into South Africa of pharmaceutical ingredients.
In a Ponzi scheme the early investors are paid dividends from investments made by later investors, rather than from any actual profit earned by the company. I know of friends in South Africa induced to invest who lost all their savings. The sense of Tannenbaum’s betrayal of their trust remains palpable since the story was broken by South Africa’s Financial Mail in July 2009.
The SARS investigation, which drew in all the major South African government institutions and auditors at KPMG, came to the conclusion that: “Tannenbaum was indeed the mastermind and operator of this illegal multiplication scheme.”
Following the article in the SMH and other Fairfax papers in June 2009 as well as the ABC, Tannenbaum professed his innocence, claiming in a letter to the press that “categorically” he was not “sitting with millions”. “I have not amassed some fortune that I have spirited away, and in due course an audit will bear out this statement, if people are still interested in hearing the truth,” he said before all but disappearing from the public eye. No audit has ever been carried out to clear his name.
In January 2010, the last mention of Barry Tannenbaum in the Australian press appeared when Fairfax ran a story about him fleeing St Ives for Runaway Bay. It was reported soon after an arrest warrant had been issued for Tannenbaum by the South African police. The short piece said he had fled “a stuffy little office above a strip of shops around the corner from his St Ives home” only to “pop up in the Surfers Paradise suburb of Runaway Bay”.
As an Australian resident since mid-2007, Tannenbaum has received the full legal protection of the Australian judiciary system. In August last year, the Queensland division of the Federal Court declined an application by the South African trustees of Tannenbaum’s bankrupt estate to administer and realise any assets he had accrued in Australia. The ruling was made on the basis that South Africa was not the “centre of the debtor’s main interests”, as he had “severed all ties” with the country of his birth.
The Australian court documents confirm what is known in the SARS investigation — that Tannenbaum raised $390 million between 2004 and 2009. Of this vast sum, just 0.05% was on-loaned by Tannenbaum for the purpose of purchasing pharmaceutical ingredients. According to the court documents, 44.8 million rand ($4.78 million) was used by Tannenbaum for personal transactions, “with a substantial portion being spent on gambling”.
He transferred US$31.7 million into an account held by Bartan Group Pty Ltd (Bartan — shortening of “Barry + Tannenbaum”), an Australian incorporated company, with an ANZ bank account, now in liquidation. Of this money, US$14 million was transferred into other entities controlled by Tannenbaum or to persons associated with him. The sole shareholder of Bartan is another Australian incorporated company, Bardeb Nominees Pty Ltd, with shares held solely by Tannenbaum and his wife, Deborah. Bartan was wound up by an order of the Supreme Court of New South Wales on March 9, 2010.
The Federal Court court documents note that a report issued about Bartan’s affairs in April 2010 was “noteworthy for its paucity of information concerning the affairs of that company” but does include assets of $586,523 (made up of $150 in cash with the balance being investments in two other entities) and contingent assets of some $21 million.
During the court case, Tannenbaum claimed he had assets of less than $8000 and just $1700 in the bank while his liabilities where $90,000 on his credit card, an $85,000 loan from “friends” and a $185,000 vehicle finance lease. Judge Logan remarked:
“It may very well be that his decision to quit South Africa was inherently bound up with a desire not in the future to be dealt with under the law of that country in respect of his involvement in the scheme described and a related desire to enjoy the benefits of proceeds repatriated to Australia. It is not necessary in this proceeding conclusively to determine whether or not or to what extent he has enjoyed the proceeds but there is no doubt on the evidence that substantial funds sourced from South Africa were transferred to Australian entities controlled by he and his wife.”
Tannenbaum declined to reveal his Queensland address, claiming he did not have a permanent home, directing the court to a Sydney solicitor. According to SARS, the money Tannenbaum earned was paid into various companies of which Tannenbaum was either a director or member — nine registered in South Africa and five in Australia, including the Bartan Group and Frankel International.
*This article was first published at Larry Schlesinger’s blog Freshly Worded
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Thursday, December 8, 2016
Ronald and Darren Bobroff finally disbarred- Law society of Northern Province !
Whisteblower finds peace.
Tony Beamish / 8 December 2016 18:40
Earlier this week the names of Ronald and Darren Bobroff were finally struck from the Roll of Attorneys by a full bench of the High Court in Pretoria.
It follows a five-year protracted legal battle instigated by road accident victim Matthew Graham and his wife Jennifer. Matthew had been severely injured in a road accident and Jennifer had approached Ronald Bobroff & Partners to prosecute Matthew’s claim against the Road Accident Fund (RAF). He alleged that the Bobroffs had shortchanged him.
The Bobroffs are currently fugitives from the South African criminal justice system having bolted for Australia in March 2016 days before they had agreed to hand themselves over to the Hawks in order to be arrested and bailed.
A brief background
The Contingency Fees Act came into operation in April 1999. Its intention was to do away with a common law prohibition against contingency fee litigation and make justice accessible to those that could not afford it. It did not contemplate litigation against the RAF in respect of road accident claims. Furthermore, its stringent provisions made its impermissible for attorneys to enter contingency fee agreements with clients who wish to prosecute a claim against the RAF.
Ronald Bobroff, at the time, sat on the council of the Law Society of the Northern Provinces (LSNP) and was later its President. It was during his tenure that the LSNP Council decided to allow its members to act outside of the law and sign up RAF claimants using what was called a Common Law Contingency Fee Agreement (CLCFA).
These agreements were in vogue with a coterie in the attorneys’ profession until 2014 when the Constitutional Court declared that its use had always been illegal. At the time, LSNP vice president CP Fourie, when announcing the decision to permit use of the illegal agreement stated: “A step forward? For sure!” In striking down these agreements the Constitutional Court emphasised that “the right of access to justice is that of the legal practitioners’ clients, not the rights of the legal practitioners themselves”.
See Bobroff’s contingency regime unlawful
Opposed every step of the way
After the Grahams launched their case against RBP and the Bobroffs, it was acrimoniously litigated every step of the way to the Constitutional Court. Every level of the South African judiciary found against the Bobroffs. They never won a single skirmish. Along the way Judge Elias Matojane convicted them of contempt of court. (The fine remains unpaid.)
See Ronald and Darren Bobroff found guilty of contempt of court
Judge John Murphy criticised the Bobroffs: “I agree with counsel for the Grahams that on the probabilities this application was resorted to as a calculated decision by the Bobroffs to delay the disciplinary and investigative process. Sight must not be lost of the prior litigation involving the respondents and the fact that they are officers of this court. As attorneys, they should be playing open cards with the court and the Law Society.”
See Bobroffs’ delaying tactics draw judicial censure
Forensic audit report
Late in 2015 the Bobroffs finally conceded that inspectors from the LSNP could undertake an inspection of RBP’s books and records. By February 2015 the LSNP inspectors filed their damming report at court. It found that the Bobroffs:
employed various tactics to unlawfully reduce [their] income tax and VAT liabilities.
failed to ensure that trust monies were kept separate from other monies.
failed to ensure that, when making a transfer from their trust banking account to their business banking account, that the amount transferred was identifiable and did not exceed the amount due to the firm.
failed to ensure that withdrawals from their trust banking account were made only to or for or on behalf of trust creditors of the firm or as transfers to their business bank account in respect of fees or disbursements due to the firm.
failed to pay amounts due to clients within a reasonable time.
failed to pay the reasonable fees and disbursements of other practitioners, medical practitioners and other experts within a reasonable time.
made themselves guilty of unprofessional, dishonourable or unworthy conduct by overreaching clients.
failed to retain their accounting records for a period of five years.
The most devastating finding was that the Bobroffs’ trust account had “lost its identity”. They had mixed their clients funds with their own.
The Bobroffs refused to challenge these allegations. Late last month they sought to oppose their striking off hearing saying that they had appointed a forensic accountant to review the very documents that they had handed over to the LSNP inspectors and that this accountant would only be able to commence her inspection in June 2017.
Striking off hearing
Pretoria Judges Natu Ranchod and Nicoline Janse van Nieuwenhuizen presided. The Bobroffs’ counsel took a technical point: his clients did not have proper service of the LSNP striking off application and that the matter should be postponed until it was formally served. Ronald Bobroff had stated in an affidavit that he had attempted unsuccessfully since May of this year to find an attorney to represent them in the striking off. Judge Van Nieuwenhuizen pointed out that it was inconceivable that anyone would seek to appoint an attorney to oppose a matter for which he did not have any knowledge. Counsel packed his bags and left, and the merits of the striking off were unopposed.
The remaining director of RBP, Stephen Bezuidenhout, was not struck off and remains as the sole director of RBP.
The Judges will hand down written reasons for the striking off next year.
Comment
Attorney Anthony Millar, who has represented fourteen clients against the Bobroffs, welcomed the judgment: “Finally the public are protected from the predations of the father and son duo”.
The Grahams’ attorney, George van Niekerk told Moneyweb: “I am pleased we have reached this milestone. The next step is to make sure that Ronald and Darren Bobroff are brought to justice in South Africa, and to ensure redress for the victims of their practice.”
Cora van der Merwe, who blew the whistle on the Bobroffs, was in court when the order was handed down. She told Moneyweb: “I didn’t feel anything. I was not glad. I was not sad. When I walked out of the court building I felt that I now had peace because justice was well and truly served.”
The Bobroffs did not respond to numerous requests for comment.
In an urgent application filed yesterday the Bobroffs stated that they would be appealing the order striking their names of the Roll of Attorneys.
Read this application.
Home In depth Investigations
Wednesday, December 7, 2016
The truth behind my Sharemax divorce - Dawie Roodt
The truth behind my Sharemax divorce - Dawie Roodt
Relations with directors and lawyer Connie Myburgh became " progressively intolerable".
Dear Mr Cobbett
I refer to your article of March 1st on Moneyweb; “Was Dawie Roodt fired from Sharemax?
It is indeed unfortunate that I am in effect forced to react to allegations made against me in this way. I would also appreciate it if you could carry this reply on your website. Based on your article Mr Myburgh and Ms Haese either said or implied that I was dismissed from the boards of companies related to Sharemax. This is incorrect, the correct facts and version of events are provided below. Please note that I have documentary proof of all the facts that I list hereunder.
As you know I was appointed as an independent director to the Sharemax syndicated and other related companies during 2010 primarily to assist in the restructuring of the Sharemax group of companies. Over the months I became uncomfortable with the manner in which certain issues within the group of companies were handled and early July last year I wrote an email to Judge Hartzenberg, the Chairman, wherein I listed some of my concerns. The very next day, before a scheduled board meeting, the other directors asked to see me.
At this meeting I was presented with two documents. On the one document I tendered my resignation and on the other I was “dismissed”. The “dismissal” document was signed by Dominique Haese, Dirk Koekemoer (both executive directors) and Rudi Badenhorst (a non-executive independent director). Judge Hartzenberg did not sign this document. I was given a choice to sign either of these two documents, which I refused to do. I then left the meeting and told the other directors that I will revert back to them once I have decided what to do.
It is important to note that Mr Koekemoer and Ms Haese did not have the power to dismiss me since they were not directors of the holding company, which had the right to appoint directors. Furthermore, the letter of my “dismissal” was signed by only one director which was entitled thereto, Mr Badenhorst, while the other director, Judge Hartzenberg, did not sign the document. And lastly, no due process in terms of the law was followed before I was “dismissed”; informing me of complaints against me, providing me with an opportunity to react thereto etc.
After this episode I decided to tender my resignation which I did a few days later. Clearly the allegations by Mr Myburgh and allegedly by Ms Haese are incorrect.
I can, however, confirm that I was asked about my resignation by a caller during a radio interview with Magnus Heystek, as you indicated in your article. Just as we were leaving the studio Mr Myburgh called me and threatened to tell Magnus that I was “fired”. I then told Mr Myburgh to tell Mr Heystek himself since he was standing next to me and I then handed my phone to Mr Heystek.
I have not been fired from the Sharemax related companies as alleged. I resigned after relations between me and some of the board members and the lawyer, Mr Myburgh, became progressively intolerable.
Best regards
Dawie Roodt
Chief Economist/Director
Response by the Sharemax board.
Dear Mr. Cobbett,
We note that Mr. Roodt insisted that his communication of 6 March 2012 be published, presumably by yourselves. This position taken by Mr Roodt is noted.
The board reiterates its stance that it keeps information that is confidential, for whatever reason, exactly as such, namely confidential, including Mr Roodt’s relationship with the historical Sharemax Group.
We will not be communicating with Mr Roodt through the media, save to likewise request that this response is published, verbatim, in context and without any alterations, be it as to content and composition.
Contrary to your apparent view, we do not believe that this matter has any relevance whatsoever, and we will not entertain any further communication in this regard.
The board reserves all its rights.
Regards
Dominique Haese
Managing & Financial Director
Frontier Asset Management (Pty) Ltd
Relations with directors and lawyer Connie Myburgh became " progressively intolerable".
Dear Mr Cobbett
I refer to your article of March 1st on Moneyweb; “Was Dawie Roodt fired from Sharemax?
It is indeed unfortunate that I am in effect forced to react to allegations made against me in this way. I would also appreciate it if you could carry this reply on your website. Based on your article Mr Myburgh and Ms Haese either said or implied that I was dismissed from the boards of companies related to Sharemax. This is incorrect, the correct facts and version of events are provided below. Please note that I have documentary proof of all the facts that I list hereunder.
As you know I was appointed as an independent director to the Sharemax syndicated and other related companies during 2010 primarily to assist in the restructuring of the Sharemax group of companies. Over the months I became uncomfortable with the manner in which certain issues within the group of companies were handled and early July last year I wrote an email to Judge Hartzenberg, the Chairman, wherein I listed some of my concerns. The very next day, before a scheduled board meeting, the other directors asked to see me.
At this meeting I was presented with two documents. On the one document I tendered my resignation and on the other I was “dismissed”. The “dismissal” document was signed by Dominique Haese, Dirk Koekemoer (both executive directors) and Rudi Badenhorst (a non-executive independent director). Judge Hartzenberg did not sign this document. I was given a choice to sign either of these two documents, which I refused to do. I then left the meeting and told the other directors that I will revert back to them once I have decided what to do.
It is important to note that Mr Koekemoer and Ms Haese did not have the power to dismiss me since they were not directors of the holding company, which had the right to appoint directors. Furthermore, the letter of my “dismissal” was signed by only one director which was entitled thereto, Mr Badenhorst, while the other director, Judge Hartzenberg, did not sign the document. And lastly, no due process in terms of the law was followed before I was “dismissed”; informing me of complaints against me, providing me with an opportunity to react thereto etc.
After this episode I decided to tender my resignation which I did a few days later. Clearly the allegations by Mr Myburgh and allegedly by Ms Haese are incorrect.
I can, however, confirm that I was asked about my resignation by a caller during a radio interview with Magnus Heystek, as you indicated in your article. Just as we were leaving the studio Mr Myburgh called me and threatened to tell Magnus that I was “fired”. I then told Mr Myburgh to tell Mr Heystek himself since he was standing next to me and I then handed my phone to Mr Heystek.
I have not been fired from the Sharemax related companies as alleged. I resigned after relations between me and some of the board members and the lawyer, Mr Myburgh, became progressively intolerable.
Best regards
Dawie Roodt
Chief Economist/Director
Response by the Sharemax board.
Dear Mr. Cobbett,
We note that Mr. Roodt insisted that his communication of 6 March 2012 be published, presumably by yourselves. This position taken by Mr Roodt is noted.
The board reiterates its stance that it keeps information that is confidential, for whatever reason, exactly as such, namely confidential, including Mr Roodt’s relationship with the historical Sharemax Group.
We will not be communicating with Mr Roodt through the media, save to likewise request that this response is published, verbatim, in context and without any alterations, be it as to content and composition.
Contrary to your apparent view, we do not believe that this matter has any relevance whatsoever, and we will not entertain any further communication in this regard.
The board reserves all its rights.
Regards
Dominique Haese
Managing & Financial Director
Frontier Asset Management (Pty) Ltd
Tuesday, December 6, 2016
Porritt trial: Milne investment results ‘possibly once-off’
Porritt trial: Milne investment results ‘possibly once-off’
Would shake up ’emotional’ unit trust industry, consultant warned.
Antoinette Slabbert / 7 December 2016 00:01
Jack Milne
A single good investment result cannot be taken as the norm. The Advertising Standards Authority of South Africa (ASA) was warned of this in 2000, with a consultant weighing in on complaints that the failed Progressive Systems College Guaranteed Growth (PSCGG) could be misrepresenting the facts.
In the ongoing criminal trial of Tigon kingpins Gary Porritt and Sue Bennett, it emerged that there had been complaints by the Life Offices’ Association and the Association of Unit Trusts that PSCGG’s advertisement was misleading.
This was according to testimony from state witness Jack Milne, who testified about a report to a directorate of the ASA by consultant Louis Botes.
PSCGG was an investment fund underwritten by Tigon, a listed financial services company of which Porritt was CEO. Bennett was a director of PSCGG and the State alleges that the two acted with a common purpose.
Porritt and Bennett are facing more than 3 000 charges – including racketeering, and contraventions of the Income Tax Act, Companies Act and Stock Exchanges Control Act – relating to the collapse of PSCGG.
Milne, former MD of PSCGG, is the first witness. He testified on Monday about proceedings before the ASA. PSCGG encouraged investors to put their money into the fund, rather than in unit trusts, based on Milne’s spectacular results in an earlier investment competition run by well-known financial expert Magnus Heystek. Milne won the competition, as his stock portfolio far outperformed other participants who invested in unit trusts.
A copy of the advertisement and a series of documents relating to the disputes were handed in as evidence. This is the advertisement:
A directorate of the ASA initially found the advertisement to be misleading. Bennett drafted correspondence, with input from Porritt and Milne, in which almost every aspect of the ASA’s ruling was questioned. This included the opinion of Botes. No further detail about Botes was given.
Botes advised the directorate: “The share market performances claimed by Milne is possible. My only concern is that it would have been easy for a shrewd and wealthy businessman to start 20 different R100-per-month portfolios and choose the best one for marketing and advertising purposes.”
Botes nevertheless said Milne’s claim is “a wake-up call to the huge unit trust industry” and a stern warning to “that financial journalist that uses the media as their platform to promote their own opinions”, that such opinions can also be used to someone else’s benefit, whether they like it or not.
He then concluded: “Mr Milne has done his homework and if he stands his ground he is going to shake up an industry (and the media) that is for some reason far too emotional about this whole issue.”
When the matter was taken on appeal, Milne objected to former JSE CEO Russell Loubser’s presence on the appeals panel. He said both Bennet and Loubser was biased against them in separate, independent dealings they had had with him prior to the existence of PSCGG. In his case, he said, the bias was against him personally. He said Loubser’s alleged bias affected both of them negatively and stated that in the case of Bennett and Tigon it resulted in what he called the “unlawful suspension of Tigon (from trading on the JSE)”.
Milne appealed to Loubser to recuse himself from the appeals panel.
It is not clear from the testimony in court whether Loubser did indeed do so, but the appeal succeeded and the earlier ruling against PSCGG was overturned.
Earlier on Monday, Porritt complained to Judge Brian Spilg that he battled to keep up with taking notes during the trial.
Both accused are unrepresented. Court proceedings have slowed to a snail’s pace to accommodate his slow writing in an effort to ensure a fair trial. Porritt on Monday stated that he reviewed his notes from the first week of the trial, and noted its inadequacy, as he was denied enough time to make proper notes. Porritt said he “tried to sort it out” by himself, but despite his best efforts to keep up, about 30% of the proceedings are lost on him.
This comes against the background of about a delay of about 14 years. The trial only started in September this year, after the accused brought several applications in an apparent effort to delay matters. In one of the matters the Supreme Court of Appeal found that “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”.
Spilg said the court “cannot go any slower” and pointed out that Porritt takes up to five minutes to write down a straightforward question. He said if needs be, he could instruct Porritt’s attorney Frank Cohen to review Porritt’s notes and assist him. He said Cohen has a responsibility as an officer of the court and a trustee of one of the trusts related to Porritt.
Spilg left it to Porritt to indicate if he needed such assistance.
The case continues on Wednesday and Porritt and Bennett’s bail was extended accordingly.
---------------------------------------------------------------------------------
Tigon boss lives in fear
2002-04-25 21:50
Maarten Mittner
Johannesburg - Tigon CEO Gary Porritt is the victim of Mafia-like tactics by certain businessmen and is living in fear of an attack on his life, top Tigon executives said on Thursday.
These allegations are being made after Finance Week and Finansies & Tegniek in their latest editions published information from alleged tape-recorded conversations between Porritt and Johannesburg auditor Gary Ramsay. They allegedly planned to manipulate Tigon's share price in 1999.
The latest allegations are contained in a letter from Tigon financial director Sue Bennett to the Internet news service Moneyweb.
Bennett says in her letter there is good reason to believe the tape-recorded conversations are falsified. It is also illegal to listen in on telephone conversations. Gavin Varejes and Tony Strike, the owners of Europoint, and its brand name, Bestyet, which was taken over by Tigon, are being accused of being behind the smear campaign.
Tigon is involved in a court case against Varejes and Strike in which allegations of fraud to the value of R210 million by, among other things, the illegal sale of Tigon shares are being made. The court case will be heard in the Johannesburg High Court on May 8.
Porritt was not available for comment on Thursday. Sake has been told he is being protected by armed guards. A spokesperson from Tigon'ss head office in Pietermaritzburg was not prepared to comment. All enquiries are being handled by Trish Stewart PR Partners in Johannesburg, she said.
Stewart said on Thursday afternoon that Porritt will not respond to the reports in Finance Week and Finansies & Tegniek, unless the authorities institute an inquiry and he is approached. Bennett's letter to Moneyweb is a one-off occurrence and was based on the accusations made against Porritt in the radio programme.
Bennett said further that Porritt was the victim of underhand activities against himself and his family. This includes the planting of cocaine in his house and the harassment of his 26-year-old daughter by Nigerian individuals who tried to drug the night watchman guarding her.
Varejes and Strike are apparently good friends of Andrew Phillips, the former owner of the Ranch escort agency in Sandton, and tried in the past to get Porritt involved in the Rand in order to blackmail him. Varejes was known for his parties at the Ranch and is always accompanied by bodyguards, it is alleged.
Varejes and Strike sold Europoint to Tigon for R20 million in 1998. A further 20 million Tigon shares were sold illegally for R50 million and this is currently being used to bribe people into not giving evidence against them in the court case. R300 000 was allegedly paid to individuals by Varejes and Strike to make an attempt on Porritt's life, according to the allegations.
Porritt denies the allegation that he was involved in the manipulation of Tigon's shares on January 28, 1999, as stated in the tape recording in the Finance Week and Finansies & Tegniek articles.
The average closing price for Tigon's shares in December 1998 was R2, while the volume of shares traded on the last day of January was 3 700. As Tigon has 111 million issued shares, this was not enough to push the price up.
Tigon's share price weakened by 20c (9.09%) to 200c on Thursday. It reached a high of 620c during the past year.
Would shake up ’emotional’ unit trust industry, consultant warned.
Antoinette Slabbert / 7 December 2016 00:01
Jack Milne
A single good investment result cannot be taken as the norm. The Advertising Standards Authority of South Africa (ASA) was warned of this in 2000, with a consultant weighing in on complaints that the failed Progressive Systems College Guaranteed Growth (PSCGG) could be misrepresenting the facts.
In the ongoing criminal trial of Tigon kingpins Gary Porritt and Sue Bennett, it emerged that there had been complaints by the Life Offices’ Association and the Association of Unit Trusts that PSCGG’s advertisement was misleading.
This was according to testimony from state witness Jack Milne, who testified about a report to a directorate of the ASA by consultant Louis Botes.
PSCGG was an investment fund underwritten by Tigon, a listed financial services company of which Porritt was CEO. Bennett was a director of PSCGG and the State alleges that the two acted with a common purpose.
Porritt and Bennett are facing more than 3 000 charges – including racketeering, and contraventions of the Income Tax Act, Companies Act and Stock Exchanges Control Act – relating to the collapse of PSCGG.
Milne, former MD of PSCGG, is the first witness. He testified on Monday about proceedings before the ASA. PSCGG encouraged investors to put their money into the fund, rather than in unit trusts, based on Milne’s spectacular results in an earlier investment competition run by well-known financial expert Magnus Heystek. Milne won the competition, as his stock portfolio far outperformed other participants who invested in unit trusts.
A copy of the advertisement and a series of documents relating to the disputes were handed in as evidence. This is the advertisement:
A directorate of the ASA initially found the advertisement to be misleading. Bennett drafted correspondence, with input from Porritt and Milne, in which almost every aspect of the ASA’s ruling was questioned. This included the opinion of Botes. No further detail about Botes was given.
Botes advised the directorate: “The share market performances claimed by Milne is possible. My only concern is that it would have been easy for a shrewd and wealthy businessman to start 20 different R100-per-month portfolios and choose the best one for marketing and advertising purposes.”
Botes nevertheless said Milne’s claim is “a wake-up call to the huge unit trust industry” and a stern warning to “that financial journalist that uses the media as their platform to promote their own opinions”, that such opinions can also be used to someone else’s benefit, whether they like it or not.
He then concluded: “Mr Milne has done his homework and if he stands his ground he is going to shake up an industry (and the media) that is for some reason far too emotional about this whole issue.”
When the matter was taken on appeal, Milne objected to former JSE CEO Russell Loubser’s presence on the appeals panel. He said both Bennet and Loubser was biased against them in separate, independent dealings they had had with him prior to the existence of PSCGG. In his case, he said, the bias was against him personally. He said Loubser’s alleged bias affected both of them negatively and stated that in the case of Bennett and Tigon it resulted in what he called the “unlawful suspension of Tigon (from trading on the JSE)”.
Milne appealed to Loubser to recuse himself from the appeals panel.
It is not clear from the testimony in court whether Loubser did indeed do so, but the appeal succeeded and the earlier ruling against PSCGG was overturned.
Earlier on Monday, Porritt complained to Judge Brian Spilg that he battled to keep up with taking notes during the trial.
Both accused are unrepresented. Court proceedings have slowed to a snail’s pace to accommodate his slow writing in an effort to ensure a fair trial. Porritt on Monday stated that he reviewed his notes from the first week of the trial, and noted its inadequacy, as he was denied enough time to make proper notes. Porritt said he “tried to sort it out” by himself, but despite his best efforts to keep up, about 30% of the proceedings are lost on him.
This comes against the background of about a delay of about 14 years. The trial only started in September this year, after the accused brought several applications in an apparent effort to delay matters. In one of the matters the Supreme Court of Appeal found that “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”.
Spilg said the court “cannot go any slower” and pointed out that Porritt takes up to five minutes to write down a straightforward question. He said if needs be, he could instruct Porritt’s attorney Frank Cohen to review Porritt’s notes and assist him. He said Cohen has a responsibility as an officer of the court and a trustee of one of the trusts related to Porritt.
Spilg left it to Porritt to indicate if he needed such assistance.
The case continues on Wednesday and Porritt and Bennett’s bail was extended accordingly.
---------------------------------------------------------------------------------
Tigon boss lives in fear
2002-04-25 21:50
Maarten Mittner
Johannesburg - Tigon CEO Gary Porritt is the victim of Mafia-like tactics by certain businessmen and is living in fear of an attack on his life, top Tigon executives said on Thursday.
These allegations are being made after Finance Week and Finansies & Tegniek in their latest editions published information from alleged tape-recorded conversations between Porritt and Johannesburg auditor Gary Ramsay. They allegedly planned to manipulate Tigon's share price in 1999.
The latest allegations are contained in a letter from Tigon financial director Sue Bennett to the Internet news service Moneyweb.
Bennett says in her letter there is good reason to believe the tape-recorded conversations are falsified. It is also illegal to listen in on telephone conversations. Gavin Varejes and Tony Strike, the owners of Europoint, and its brand name, Bestyet, which was taken over by Tigon, are being accused of being behind the smear campaign.
Tigon is involved in a court case against Varejes and Strike in which allegations of fraud to the value of R210 million by, among other things, the illegal sale of Tigon shares are being made. The court case will be heard in the Johannesburg High Court on May 8.
Porritt was not available for comment on Thursday. Sake has been told he is being protected by armed guards. A spokesperson from Tigon'ss head office in Pietermaritzburg was not prepared to comment. All enquiries are being handled by Trish Stewart PR Partners in Johannesburg, she said.
Stewart said on Thursday afternoon that Porritt will not respond to the reports in Finance Week and Finansies & Tegniek, unless the authorities institute an inquiry and he is approached. Bennett's letter to Moneyweb is a one-off occurrence and was based on the accusations made against Porritt in the radio programme.
Bennett said further that Porritt was the victim of underhand activities against himself and his family. This includes the planting of cocaine in his house and the harassment of his 26-year-old daughter by Nigerian individuals who tried to drug the night watchman guarding her.
Varejes and Strike are apparently good friends of Andrew Phillips, the former owner of the Ranch escort agency in Sandton, and tried in the past to get Porritt involved in the Rand in order to blackmail him. Varejes was known for his parties at the Ranch and is always accompanied by bodyguards, it is alleged.
Varejes and Strike sold Europoint to Tigon for R20 million in 1998. A further 20 million Tigon shares were sold illegally for R50 million and this is currently being used to bribe people into not giving evidence against them in the court case. R300 000 was allegedly paid to individuals by Varejes and Strike to make an attempt on Porritt's life, according to the allegations.
Porritt denies the allegation that he was involved in the manipulation of Tigon's shares on January 28, 1999, as stated in the tape recording in the Finance Week and Finansies & Tegniek articles.
The average closing price for Tigon's shares in December 1998 was R2, while the volume of shares traded on the last day of January was 3 700. As Tigon has 111 million issued shares, this was not enough to push the price up.
Tigon's share price weakened by 20c (9.09%) to 200c on Thursday. It reached a high of 620c during the past year.
Georgiou attempts to ‘hijack’ Highveld Syndication class action
Georgiou attempts to ‘hijack’ Highveld Syndication class action
HSAG claims property magnate ‘paid off’ applicants so that they would withdraw class action application.
Ryk van Niekerk / 6 December 2016 21:27
Nic Georgiou
In a most bizarre turn of events the Highveld Syndication Action Group (HSAG) has accused property magnate Nic Georgiou of attempting to “hijack” an immanent class action suit against him by “buying off” the six applicants in the case.
These six individuals were representatives of the 7 000 HSAG investors and their applications to institute a class action against Georgiou and the application to rescind the Orthotouch scheme of arrangement was funded by the financial contributions of their fellow HSAG members.
The HSAG claims in court papers that Georgiou approached the six individuals and paid them money to settle their claims against him and Orthotouch. The six then proceeded in terms of the transaction to secretly appointed new attorneys and applied to the Johannesburg High Court to withdraw their original application.
If this withdrawal application succeeds, it will mean the end of the class action as the HSAG would not be able to bring a new application as the prescribed time period to bring such an application has lapsed.
From the court papers it is not apparent how much Georgiou paid the six applicants.
HSAG response
In a strongly worded affidavit Jacques Theron, the HSAG’s attorney of record, says this happened behind the HSAG and legal team’s back and is a “deliberate stratagem” of Georgiou to “thwart the class action”.
“The attempted withdrawal of the application and the aim to sabotage the class action is not only an offence against the basic principles and very purpose of a class action, but also against the legal provisions, as set out in Section 38(c) of the Constitution of South Africa.”
Theron emphasises that the six individuals were chosen to merely represent disgruntled investors who wanted to have the controversial Orthotouch scheme of arrangement in 2014 rescinded and to institute a class action against Georgiou. They were carefully chosen to represent the other investors and their legal fees were paid by financial contributions of the 7 000 HSAG members.
He adds that the six did not know each other and that it is “not a coincidence” that they went to the same attorney to file their notice of withdrawal applications.
Theron also claims that Georgiou admitted to the HSAG steering committee that he settled the claims of the six applicants during a meeting in Mossel Bay, but that he only became aware of what was going on when the notice of withdrawal was served.
Moneyweb offered Georgiou an opportunity to respond to the allegations, but he had not replied by the time of publishing.
Georgiou to repay Highveld Syndication 21 and 22 investors
The latest revelations come after the Supreme Court of Appeal (SCA) last week denied Georgiou leave to appeal against a previous judgement that ordered him to repay investors of the Highveld Syndication 21 and 22 companies.
These investors signed different contracts with Georgiou which contained a buyback clause which was not honoured. Georgiou will now have to repay around R30 million to 46 investors and open the door for the other investors in these schemes to institute similar claims.
Not the first time
This is not the first time Georgiou approached key individuals and investors that form part of the HSAG. Earlier this year it became apparent that Elna Visagie and Herman Lombaard, previously two of the most active campaigners of the class action and members of the HSAG, were approached by Georgiou and accepted employment at Orthotouch. They are apparently earning salaries as high as R100 000 a month.
HSAG claims property magnate ‘paid off’ applicants so that they would withdraw class action application.
Ryk van Niekerk / 6 December 2016 21:27
Nic Georgiou
In a most bizarre turn of events the Highveld Syndication Action Group (HSAG) has accused property magnate Nic Georgiou of attempting to “hijack” an immanent class action suit against him by “buying off” the six applicants in the case.
These six individuals were representatives of the 7 000 HSAG investors and their applications to institute a class action against Georgiou and the application to rescind the Orthotouch scheme of arrangement was funded by the financial contributions of their fellow HSAG members.
The HSAG claims in court papers that Georgiou approached the six individuals and paid them money to settle their claims against him and Orthotouch. The six then proceeded in terms of the transaction to secretly appointed new attorneys and applied to the Johannesburg High Court to withdraw their original application.
If this withdrawal application succeeds, it will mean the end of the class action as the HSAG would not be able to bring a new application as the prescribed time period to bring such an application has lapsed.
From the court papers it is not apparent how much Georgiou paid the six applicants.
HSAG response
In a strongly worded affidavit Jacques Theron, the HSAG’s attorney of record, says this happened behind the HSAG and legal team’s back and is a “deliberate stratagem” of Georgiou to “thwart the class action”.
“The attempted withdrawal of the application and the aim to sabotage the class action is not only an offence against the basic principles and very purpose of a class action, but also against the legal provisions, as set out in Section 38(c) of the Constitution of South Africa.”
Theron emphasises that the six individuals were chosen to merely represent disgruntled investors who wanted to have the controversial Orthotouch scheme of arrangement in 2014 rescinded and to institute a class action against Georgiou. They were carefully chosen to represent the other investors and their legal fees were paid by financial contributions of the 7 000 HSAG members.
He adds that the six did not know each other and that it is “not a coincidence” that they went to the same attorney to file their notice of withdrawal applications.
Theron also claims that Georgiou admitted to the HSAG steering committee that he settled the claims of the six applicants during a meeting in Mossel Bay, but that he only became aware of what was going on when the notice of withdrawal was served.
Moneyweb offered Georgiou an opportunity to respond to the allegations, but he had not replied by the time of publishing.
Georgiou to repay Highveld Syndication 21 and 22 investors
The latest revelations come after the Supreme Court of Appeal (SCA) last week denied Georgiou leave to appeal against a previous judgement that ordered him to repay investors of the Highveld Syndication 21 and 22 companies.
These investors signed different contracts with Georgiou which contained a buyback clause which was not honoured. Georgiou will now have to repay around R30 million to 46 investors and open the door for the other investors in these schemes to institute similar claims.
Not the first time
This is not the first time Georgiou approached key individuals and investors that form part of the HSAG. Earlier this year it became apparent that Elna Visagie and Herman Lombaard, previously two of the most active campaigners of the class action and members of the HSAG, were approached by Georgiou and accepted employment at Orthotouch. They are apparently earning salaries as high as R100 000 a month.
Sunday, December 4, 2016
IRS Forensic Investigations- Sharemax Saga Continues
IRS Forensic Investigations
10 June 2015 ·
Sharemax Saga Continues........
SHAREMAX : RULING BY THE PRESS OMBUDSMAN
http://presscouncil.org.za/…/nova-property-group-vs-busines…
Nova Property Group vs. Business Report
Ruling by the Press Ombudsman
8 June 2015
This ruling is based on the written submissions of Ms Dominique Haese, CEO of Nova Property Group and those of Roy Cokayne on behalf of Business Report.
Complaint
Nova Property Group (NPG) is complaining about an article in Business Report of 14 April 2015, headlined Sharemax ex-directors win appeal – Order to repay two investors set aside.
NPG complains that the following sentences were incorrect, defamatory, baseless and unnecessarily harmful to its reputation:
· “Sharemax’s collapse in 2010 was precipitated by the findings of a registrar of banks investigation, that Sharemax’s funding model contravened the Bank Act, becoming public knowledge. This led to new investments drying up and it being unable to make monthly payments to investors”; and
· “The registrar of bank laid criminal charges against Sharemax for alleged contraventions of the Banks Act in March 2012.”
Standing
There is a dispute, though, over the question of whether NPG has the standing to lodge a complaint over the article – an issue with which I need to deal first.
On 5 June 2015 I ruled that NPG was not a third party complainant due to its direct and manifold links to the other affected parties (NPG vs. Personal Finance) and therefore had the standing to complain on its own behalf.
This time, though, NPG was not mentioned in the article.
This prompts me to state (this time) that the complainant’s arguments are rather confusing – in a letter to Sharemax investors, dated 6 August 2013, Haese stated: “Of further importance is the fact that Sharemax Investments ceased its activities relating to the erstwhile ‘Sharemax Group’ during or about July 2010 and never had, does not have and never will have anything to do with the Nova Group…In particular, the shareholding in Sharemax Investments is not owned by the Nova Group or any individual associated with the Nova Group and never will be. Similarly, Sharemax Investments have no Page 7 shareholding in and does not own any assets of the erstwhile ‘Sharemax Group’ and Sharemax Investments has no shareholding in and does not own any assets of the Nova Group, and never will.”
Even should this be technically correct, it is not consistent with the thrust of Haese’s arguments in her complaint. Nevertheless, I (again) rule that Nova does have the standing to complain (as argued above).
The text
The article, written by Cokayne, said that Sharemax Investments and four of its ex-directors have successfully appealed against two determinations by the Financial Advisory and Intermediary Services (FAIS) Ombud, which held the company and directors jointly liable for reimbursing two people who had invested in a scheme promoted and marketed by Sharemax.
Analysis
The first sentence: “Sharemax’s collapse in 2010 was precipitated by the findings of a registrar of banks investigation, that Sharemax’s funding model contravened the Bank Act, becoming public knowledge. This led to new investments drying up and it being unable to make monthly payments to investors.”
In later correspondence, Haese says there has never been a legal finding of any kind that such a Banks Act contravention has ever occurred.
She also:
· requests proof from Business Report that the matter has led to new investments drying up and it (Sharemax) being unable to make monthly payments to investors. “Monthly returns continued to be paid to investor[s] pre and post the 311 Scheme sanctioning”; and
· denies that Sharemax has ever collapsed. “[Instead], Sharemax Investments, as promoter, ceased its business operations.”
Cokayne refers me to correspondence on 7 October 2010 by the Deputy Registrar of Banks, advocate Michael Blackbeard, who stated: “I hereby confirm that as a result of an investigation by the duly appointed inspectors this Office was satisfied that the funding models of Sharemax and 33 property syndication companies were in contravention of the Banks Act, which included the Zambezi and the Villa.”
He says during the scheme of arrangement application process, he posed further questions to Blackbeard. One of these questions, in November 2011, related to Sharemax property syndication schemes being pyramid schemes. In response, Blackbeard explained that it was the funding model that was illegal and that a finding had not been made that it was a pyramid scheme.
On 14 February 2012, Blackbeard responds to Cokayne, stating, “This Office has requested the managers to inform SAPS that we were satisfied that the funding models were in contravention of the Banks Act.”
He concludes that these statements justified his reporting, as it was based on the information provided to him by the Statutory Regulator.
My considerations
The issues, as raised by Haese, are whether:
· there is a legal finding of any kind that a Banks Act contravention has ever occurred;
· there is proof that the matter has led to new investments drying up and it (Sharemax) being unable to make monthly payments to investors; and
· Sharemax has collapsed.
Legal finding
Haese’s argument (that there has never been a legal finding that such a Banks Act contravention has ever occurred) is irrelevant – the sentence in dispute does not say that. It mentions the findings of a Registrar of Banks investigation (which is not in dispute).
Proof
Haese asks Business Report to provide proof that new investments were drying up – while she herself provides adequate proof to this effect. She says in her complaint: “The damage continuously being caused by [Business Report’s] incorrect and misleading reporting, has far reaching negative effects on the Nova Property Group.”
That alone, to my mind, justifies this aspect of the reportage.
I have asked Cokayne to substantiate the second part of this matter, namely that Sharemax was unable to make monthly payments to investors.
His attorney (Jacques Louw) responds as follows:
“The…statement is based partly on…Cokayne’s personal understanding of the background facts, partly on various previous articles written by financial journalists who have drawn the same conclusion, but also on…Haese’s own statements under oath in the application to place Sharemax under business rescue. In this regard, on 30 November 2011, Ms Haese said the following under oath in court proceedings:
“[Sharemax] has since been placed under Directive on 15 September 2010, been unable to raise finance for its ongoing business requirements, including service of claims of all of its known creditors.” (sic) [The investors in Sharemax were debenture creditors of the company.]
“Accordingly…Haese has under oath made substantially the same statement Mr Cokayne has mentioned in his article.”
Cokayne adds:
“Even before the Reserve Bank notice, [I] started receiving complaints from investors in Sharemax who did not receive payments on their debentures.
“In early September 2010, [I] asked the FAIS Ombud’s deputy if the latter’s office had received any complaints regarding non-payment of ‘dividends’. In a letter on 8 September 2010, the deputy FAIS Ombud confirmed the complaints. [I] wrote an article about these non-payments on 10 September 2010.
“The Registrar of Banks issued its directive on 15 September 2010 and appointed statutory managers to Sharemax on 16 September 2010. As stated by Haese in her affidavit for the business rescue application, this led to the drying up of investments and an inability to pay investors (creditors). However, the 15 September 2010 directive was the culmination of investigation by the Registrar of Banks following complaints received by the Registrar and investments (funding) were already reducing at that stage.
“I attach a copy of email correspondence between the FAIS Ombud and [me] in early September 2010 as well as [my] article of 10 September 2010, where he mentioned the non-payment to investors.”
This provides enough evidence for me to decide that the reportage on this issue was reasonable and fair.
Collapsed
Haese says Sharemax has merely ceased its business operations; Cokayne calls it a collapse.
The difference appears to be little more than semantic, as it depends on the perspective from which one looks at the matter. The end result is the same.
The second sentence: “The registrar of bank laid criminal charges against Sharemax for alleged contraventions of the Banks Act in March 2012.”
Haese writes in later correspondence, “Firstly, this never happened. Secondly, how could criminal charges be laid on anything that is ‘alleged’.”
She states “for the record” that the opinion of the Registrar of Banks that there was a contravention of the Banks Act was taken on review by the Sharemax group of companies. It was then mutually agreed not to go to court, pending the restructuring of the syndication. “[B]y agreement, the Section 311 Scheme of Arrangement was proposed and sanctioned. There was thus NEVER a legal finding of any kind, that such a Bank Act contravention had ever occurred.”
Cokayne says that, on 14 June 2012, Blackbeard wrote to him stating, “The two appointed inspectors/managers (Jaco Spies & Neels Alant) met with Col Makhubele on 9 March 2012 and reported the matter to him…”
On 9 October 2012 he asked the DPCI: Communication of the SAPS the following question: “I understand that the Hawks are investigating the allegations of fraud against Sharemax Investments and whether it operated a pyramid or Ponzi scheme. Can you confirm?” The SAPS formally responded by saying, “Yes. We can confirm an investigation is currently under way.”
Cokayne concludes that the statement in question was based on official communication to him and was “thus justified and factually correct”.
On 11 November 2011 Blackbeard wrote to Cokayne, saying: “The report…concludes that the funding model…does not comply with the rule[s] and regulations – and hence that is in contravention of the Banks Act, ie illegal deposit taking from members of the public as a regular feature of the business by a company [that] is not registered as a bank.”
On 7 October 2010, Blackbeard informed Cokayne as follows: “Illegal deposit-taking is a criminal offence in terms of the Bank Act”.
My considerations
The reportage was clearly based on (overwhelmingly credible) information, as cited above, and the reportage was therefore justified.
Finding
Cokayne has provided me with all the correspondence to which he referred. I am satisfied that he based the disputed statements on reliable evidence and that his reportage was justified. The complaint is dismissed.
Appeal
Our Complaints Procedures lay down that within seven working days of receipt of this decision, either party may apply for leave to appeal to the Chairperson of the SA Press Appeals Panel, Judge Bernard Ngoepe, fully setting out the grounds of appeal. He can be contacted at Khanyim@ombudsman.org.za.
Johan Retief
Press Ombudsman
2 Likes
10 June 2015 ·
Sharemax Saga Continues........
SHAREMAX : RULING BY THE PRESS OMBUDSMAN
http://presscouncil.org.za/…/nova-property-group-vs-busines…
Nova Property Group vs. Business Report
Ruling by the Press Ombudsman
8 June 2015
This ruling is based on the written submissions of Ms Dominique Haese, CEO of Nova Property Group and those of Roy Cokayne on behalf of Business Report.
Complaint
Nova Property Group (NPG) is complaining about an article in Business Report of 14 April 2015, headlined Sharemax ex-directors win appeal – Order to repay two investors set aside.
NPG complains that the following sentences were incorrect, defamatory, baseless and unnecessarily harmful to its reputation:
· “Sharemax’s collapse in 2010 was precipitated by the findings of a registrar of banks investigation, that Sharemax’s funding model contravened the Bank Act, becoming public knowledge. This led to new investments drying up and it being unable to make monthly payments to investors”; and
· “The registrar of bank laid criminal charges against Sharemax for alleged contraventions of the Banks Act in March 2012.”
Standing
There is a dispute, though, over the question of whether NPG has the standing to lodge a complaint over the article – an issue with which I need to deal first.
On 5 June 2015 I ruled that NPG was not a third party complainant due to its direct and manifold links to the other affected parties (NPG vs. Personal Finance) and therefore had the standing to complain on its own behalf.
This time, though, NPG was not mentioned in the article.
This prompts me to state (this time) that the complainant’s arguments are rather confusing – in a letter to Sharemax investors, dated 6 August 2013, Haese stated: “Of further importance is the fact that Sharemax Investments ceased its activities relating to the erstwhile ‘Sharemax Group’ during or about July 2010 and never had, does not have and never will have anything to do with the Nova Group…In particular, the shareholding in Sharemax Investments is not owned by the Nova Group or any individual associated with the Nova Group and never will be. Similarly, Sharemax Investments have no Page 7 shareholding in and does not own any assets of the erstwhile ‘Sharemax Group’ and Sharemax Investments has no shareholding in and does not own any assets of the Nova Group, and never will.”
Even should this be technically correct, it is not consistent with the thrust of Haese’s arguments in her complaint. Nevertheless, I (again) rule that Nova does have the standing to complain (as argued above).
The text
The article, written by Cokayne, said that Sharemax Investments and four of its ex-directors have successfully appealed against two determinations by the Financial Advisory and Intermediary Services (FAIS) Ombud, which held the company and directors jointly liable for reimbursing two people who had invested in a scheme promoted and marketed by Sharemax.
Analysis
The first sentence: “Sharemax’s collapse in 2010 was precipitated by the findings of a registrar of banks investigation, that Sharemax’s funding model contravened the Bank Act, becoming public knowledge. This led to new investments drying up and it being unable to make monthly payments to investors.”
In later correspondence, Haese says there has never been a legal finding of any kind that such a Banks Act contravention has ever occurred.
She also:
· requests proof from Business Report that the matter has led to new investments drying up and it (Sharemax) being unable to make monthly payments to investors. “Monthly returns continued to be paid to investor[s] pre and post the 311 Scheme sanctioning”; and
· denies that Sharemax has ever collapsed. “[Instead], Sharemax Investments, as promoter, ceased its business operations.”
Cokayne refers me to correspondence on 7 October 2010 by the Deputy Registrar of Banks, advocate Michael Blackbeard, who stated: “I hereby confirm that as a result of an investigation by the duly appointed inspectors this Office was satisfied that the funding models of Sharemax and 33 property syndication companies were in contravention of the Banks Act, which included the Zambezi and the Villa.”
He says during the scheme of arrangement application process, he posed further questions to Blackbeard. One of these questions, in November 2011, related to Sharemax property syndication schemes being pyramid schemes. In response, Blackbeard explained that it was the funding model that was illegal and that a finding had not been made that it was a pyramid scheme.
On 14 February 2012, Blackbeard responds to Cokayne, stating, “This Office has requested the managers to inform SAPS that we were satisfied that the funding models were in contravention of the Banks Act.”
He concludes that these statements justified his reporting, as it was based on the information provided to him by the Statutory Regulator.
My considerations
The issues, as raised by Haese, are whether:
· there is a legal finding of any kind that a Banks Act contravention has ever occurred;
· there is proof that the matter has led to new investments drying up and it (Sharemax) being unable to make monthly payments to investors; and
· Sharemax has collapsed.
Legal finding
Haese’s argument (that there has never been a legal finding that such a Banks Act contravention has ever occurred) is irrelevant – the sentence in dispute does not say that. It mentions the findings of a Registrar of Banks investigation (which is not in dispute).
Proof
Haese asks Business Report to provide proof that new investments were drying up – while she herself provides adequate proof to this effect. She says in her complaint: “The damage continuously being caused by [Business Report’s] incorrect and misleading reporting, has far reaching negative effects on the Nova Property Group.”
That alone, to my mind, justifies this aspect of the reportage.
I have asked Cokayne to substantiate the second part of this matter, namely that Sharemax was unable to make monthly payments to investors.
His attorney (Jacques Louw) responds as follows:
“The…statement is based partly on…Cokayne’s personal understanding of the background facts, partly on various previous articles written by financial journalists who have drawn the same conclusion, but also on…Haese’s own statements under oath in the application to place Sharemax under business rescue. In this regard, on 30 November 2011, Ms Haese said the following under oath in court proceedings:
“[Sharemax] has since been placed under Directive on 15 September 2010, been unable to raise finance for its ongoing business requirements, including service of claims of all of its known creditors.” (sic) [The investors in Sharemax were debenture creditors of the company.]
“Accordingly…Haese has under oath made substantially the same statement Mr Cokayne has mentioned in his article.”
Cokayne adds:
“Even before the Reserve Bank notice, [I] started receiving complaints from investors in Sharemax who did not receive payments on their debentures.
“In early September 2010, [I] asked the FAIS Ombud’s deputy if the latter’s office had received any complaints regarding non-payment of ‘dividends’. In a letter on 8 September 2010, the deputy FAIS Ombud confirmed the complaints. [I] wrote an article about these non-payments on 10 September 2010.
“The Registrar of Banks issued its directive on 15 September 2010 and appointed statutory managers to Sharemax on 16 September 2010. As stated by Haese in her affidavit for the business rescue application, this led to the drying up of investments and an inability to pay investors (creditors). However, the 15 September 2010 directive was the culmination of investigation by the Registrar of Banks following complaints received by the Registrar and investments (funding) were already reducing at that stage.
“I attach a copy of email correspondence between the FAIS Ombud and [me] in early September 2010 as well as [my] article of 10 September 2010, where he mentioned the non-payment to investors.”
This provides enough evidence for me to decide that the reportage on this issue was reasonable and fair.
Collapsed
Haese says Sharemax has merely ceased its business operations; Cokayne calls it a collapse.
The difference appears to be little more than semantic, as it depends on the perspective from which one looks at the matter. The end result is the same.
The second sentence: “The registrar of bank laid criminal charges against Sharemax for alleged contraventions of the Banks Act in March 2012.”
Haese writes in later correspondence, “Firstly, this never happened. Secondly, how could criminal charges be laid on anything that is ‘alleged’.”
She states “for the record” that the opinion of the Registrar of Banks that there was a contravention of the Banks Act was taken on review by the Sharemax group of companies. It was then mutually agreed not to go to court, pending the restructuring of the syndication. “[B]y agreement, the Section 311 Scheme of Arrangement was proposed and sanctioned. There was thus NEVER a legal finding of any kind, that such a Bank Act contravention had ever occurred.”
Cokayne says that, on 14 June 2012, Blackbeard wrote to him stating, “The two appointed inspectors/managers (Jaco Spies & Neels Alant) met with Col Makhubele on 9 March 2012 and reported the matter to him…”
On 9 October 2012 he asked the DPCI: Communication of the SAPS the following question: “I understand that the Hawks are investigating the allegations of fraud against Sharemax Investments and whether it operated a pyramid or Ponzi scheme. Can you confirm?” The SAPS formally responded by saying, “Yes. We can confirm an investigation is currently under way.”
Cokayne concludes that the statement in question was based on official communication to him and was “thus justified and factually correct”.
On 11 November 2011 Blackbeard wrote to Cokayne, saying: “The report…concludes that the funding model…does not comply with the rule[s] and regulations – and hence that is in contravention of the Banks Act, ie illegal deposit taking from members of the public as a regular feature of the business by a company [that] is not registered as a bank.”
On 7 October 2010, Blackbeard informed Cokayne as follows: “Illegal deposit-taking is a criminal offence in terms of the Bank Act”.
My considerations
The reportage was clearly based on (overwhelmingly credible) information, as cited above, and the reportage was therefore justified.
Finding
Cokayne has provided me with all the correspondence to which he referred. I am satisfied that he based the disputed statements on reliable evidence and that his reportage was justified. The complaint is dismissed.
Appeal
Our Complaints Procedures lay down that within seven working days of receipt of this decision, either party may apply for leave to appeal to the Chairperson of the SA Press Appeals Panel, Judge Bernard Ngoepe, fully setting out the grounds of appeal. He can be contacted at Khanyim@ombudsman.org.za.
Johan Retief
Press Ombudsman
2 Likes
Fais continues with property syndication probe - SHAREMAX
BUSINESS NEWS / 2016, Roy Cokayne
141010 Zambezi mall one of Sharemax property.photo by Simphiwe Mbokazi 453
Pretoria - The ombud for financial advisory and intermediary services (Fais) has resumed issuing property syndication determinations, including against schemes promoted and marketed by Sharemax, following a two-year hiatus.
The issuing of determinations on all property syndication schemes was suspended in 2013 while an appeal by former Sharemax directors against two determinations issued by the Fais ombud’s office was heard by the appeal board of the Financial Services Board. This led to a 2 000-plus complaint backlog building up at the office of the Fais ombud.
Sharemax Investments and four of its former directors – Gert Goosen, Willem Botha, Dominique Haese and Andre Brand – last year successfully appealed against two determinations by the Fais ombud that held them jointly liable to repay two investors who had invested in a scheme promoted and marketed by Sharemax.
The outcome of the appeal meant the Fais ombud could only issue determinations against the broker or financial adviser and could not place liability at the door of the directors of the property syndication schemes.
Read also: Judgment clips ombud’s wings
In a determination released yesterday, Juriën Jordaan, a financial adviser who assisted a teacher to invest in The Villa, an investment scheme promoted and marketed by Sharemax, was ordered by Fais ombud Noluntu Bam to repay the woman the R100 000 she had invested in the scheme.
No records
This is the first property syndication determination issued by the Fais ombud since the appeal was finalised. Bam found that Jordaan had failed to act with due skill, care and diligence and in the interests of the complainant when he advised her to invest in a product without first advising her.
She said Jordaan was unable to produce records to demonstrate the basis on which he had considered the high risk Sharemax Investments suitable to the complainant’s circumstances. Bam said Jordaan had also failed to disclose the risk inherent in The Villa investment.
The determination is the first issued by the Fais ombud against a financial adviser related to a property syndication scheme since the appeal was finalised. Bam confirmed last year that her office had launched a project to eradicate the property syndication complaints backlog.
Bam told Business Report in November that the administrative aspects of the “shelved” cases had been completed but had to be evaluated to make sure, for instance, they had not prescribed. She added that a decision would be taken on the merits of each case before a determination could be written.
“We have had to co-opt law firms to help us brief counsel for that because it was not possible for us to do it on our own, due to our limited resources,” she said. About 40 000 people invested about R4.5 billion in the various schemes promoted and marketed by Sharemax.
Read also: CIPC has no power over Sharemax rescue
Sharemax collapsed in 2010 after the findings of a registrar of banks investigation that Sharemax’s funding model contravened the Bank Act became public knowledge. This led to new investments drying up and Sharemax being unable to make monthly payments to investors. The registrar of banks laid criminal charges against Sharemax for alleged contraventions of the Banks Act in March 2012.
Allegations
The Hawks confirmed in October 2012 that they were investigating allegations that Sharemax had committed fraud and were probing whether it had operated a pyramid or Ponzi scheme.
During 2012 in a court sanctioned scheme of arrangement, the schemes were taken over by Nova Property Group and Sharemax investors were issued with debentures or shares in Nova.
In the determination released yesterday against Jordaan, Bam highlighted what she called “a few interesting points”. She said about the time of the announcement of the scheme of arrangement in 2011, the executive directors of the Sharemax Group – Dominique Haese, Rudi Badenhorst and Dirk Koekemoer – held 43.2 percent of Nova’s issued shares and were currently listed as directors of Nova. She said the registered address for Nova Property was the same as the old Sharemax head office.
Bam added that Frontier Asset Management had provided a range of administrative services to Nova and Centro Property Group and managed the property portfolio on behalf of Nova. The directors of Nova were: D Haese, D R Koekemoer, CJ van Rooyen and RN van Zyl, who were also formerly directors of the Sharemax Group, plus M J Osterloh. The directors of Centro Property Group were E Grobler and M J Osterloh, she said.
Bam said Frontier Asset Management had sent out a communiqué dated August 6, 2013 warning investors that those who brought complaints to the office of the Fais ombud would “lose their right to have their Sharemax Investments converted into Nova debentures or shares”.
BUSINESS REPORT
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Claims against advisers shoot to R15mBUSINESS NEWS / 2016
Roy Cokayne
newly appointed Financial Advisory and Intermediary Services (FAIS) Ombud, Ms Noluntu Bam.photo supplied
Johannesburg - The amount financial advisers have been ordered to repay their clients whom they wrongly advised to invest in the Relative Value Arbitrage Fund (RVAF) has now escalated to more than R14.8 million.
This follows the ombud for financial advisory and intermediary services (Fais) Noluntu Bam ordering L Loxton Nel and Associates and/or Llewellyn Claudius Loxton to Teresa Karwowski the R120 000 they had advised her to invest in RVAF.
Read: Adviser must pay R800 000 to RVAF client
Karwowski was a friend of Loxton’s wife.
The fund collapsed after its manager and trustee Herman Pretorius committed suicide in July 2013 after shooting dead his business partner Julian Williams.
Bam said no adviser would have recommended RVAF as a suitable component of any investment portfolio had they exercised the due skill, car and diligence required in terms of the Fais code of conduct.
She said the complaint was about being advised to invest in a scheme that “was not above board”.
Bam said L Loxton Nel and Associates and/or Llewellyn Claudius Loxton appeared to have blindly accepted whatever they were told about RVAF without any proper attempt to verify such information and this information was then recklessly conveyed to their client.
She said the fact was that they were out of their depth and therefore could not have had any understanding about the economic activity that generated the returns or the sustainability of the investment.
In a separate determination, Bam ordered Huis van Oranje Financiele Dienste and/or Stephanus Johannes van der Walt to pay Eduard Mostert of Gauteng the R267 000 he was advised to invest in Purple Rain Properties 15 trading as Realcor Cape.
The agreement constituted an application to purchase shares to the value of R267 000 in the Blaauwberg Beach Hotel, of which property holding company Midnight Storm Investments 368 was the registered owner.
After the completion of the hotel, the shares were to be purchased by the investment company for the benefit of the investor.
No losers
Mostert was allegedly told by Van der Walt that it was a good, safe investment with a healthy interest rate “in which there could be no losers”.
The investor concluded the agreement in December 2009 and continued to receive his monthly dividend until October 2010 when the payments suddenly stopped.
He was assured that the delayed payments were due to an administrative problem and payments would resume shortly but subsequently learned via Radio Pretoria that the investment scheme was experiencing financial trouble.
An inspection conducted in terms of the SA Reserve Bank Act concluded that Realcor Cape and/or related individuals obtained money by conducting the business of a bank without being registered as a bank and directed them to repay all money raised.
A business rescue process failed and an application for the liquidation of Midnight Storm Investments resulted in the hotel being sold in May 2013 for R50 million, dashing any hopes of investors recouping their investments.
A total of R616m was lost.
Bam said Van der Walt advised Mostert to make the investment without first assessing his financial needs and determining his risk profile, which was in contravention of the Fais code of conduct.
The Fais ombud said Van der Walt had also failed to maintain his records of advice, which was also in contravention of the code, and failed to provide financial services honestly, fairly with due skill, care and diligence and in the interests of his client and the integrity of the financial services industry.
BUSINESS REPORT
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Two more advisers must repay Sharemax clientsPERSONAL FINANCE / 21 May 2016, 07:05am
Laura du Preez
The financial advice ombud this week ordered two financial advisers who advised investors to invest in property syndications promoted by Sharemax to compensate them for the almost R700 000 they lost.
One investor, a 65-year-old KwaZulu-Natal widow, invested all her savings of R650 000 in the Sharemax Zambezi Retail Park in 2008. In June 2010, she received her last interest payment.
Noluntu Bam, the Ombud for Financial Services Providers, ordered her adviser, Johannes Mostert, to repay her the R650 000 after he failed to justify his investment advice to the ombud.
According to Bam’s ruling, Mostert initially paid the widow, Mrs L, her monthly payments himself, but he was unable to keep up the payments and reduced the amount.
Mrs L was forced to sell the home in which she had lived for 39 years to have capital to provide an income and rent a flat, the ruling says. She is worried she will be stranded when this money runs out.
When Mostert learnt that she had sold her home, he stopped his payments.
The second investor, also from KwaZulu-Natal, Mr R, invested R40 000 in Sharemax’s The Villa Retail Park in 2009, Bam’s second ruling reveals.
His adviser, Alida du Preez-Maritz of Bahati Yetu Brokers, was ordered to repay him what he lost, after she responded to Bam with “unpalatable statements and gratuitous attacks” on Mr R and said she did not have time to waste on “this rubbish” and the “stupidity” of having to exonerate herself.
According to the ruling, Mr R said Du Preez-Maritz had persuaded him to sell an Old Mutual policy to invest in The Villa in 2009 because he could earn better returns.
Mr R told the ombud he did not see anything untoward in the advice because he had invested R100 000 in another Sharemax property syndication, and was receiving regular interest.
But in September 2010, he read media reports that The Villa was bankrupt, and he has not recovered his investment.
In both cases, Bam found the advisers were responsible for the losses.
Mrs L was of the view that she should invest her money with Momentum, but she sought the advice of Mostert because she feared she was not knowledgeable about investments, the ruling says.
She told the ombud that Mostert guaranteed that her funds would be safe and that she would enjoy capital growth after five years, even if she withdrew the interest as a pension.
Bam found that both Mostert and Du Preez-Maritz could not have followed the general code of conduct under the Financial Advisory and Intermediary Services (FAIS) Act, which requires financial advisers to recommend an investment that is suitable for you given your financial needs and the risk you can afford and are willing to take.
Mrs L was a pensioner who relied on her investment for an income and therefore could not take the risk of losing it.
In his complaint to the ombud, Mr R says Du Preez-Maritz did not tell him that the Sharemax investment was a high-risk one.
Bam wrote to Du Preez-Maritz stating that property syndication investments are high-risk ones because they are unlisted companies and the way in which the properties are valued is never disclosed. The ombud asked the adviser to provide evidence that she had made Mr R aware of the risks. Du Preez-Maritz did not respond.
Bam also says in her ruling there was no evidence that Du Preez-Maritz had followed the FAIS Act requirements for replacing one investment (Mr R’s Old Mutual investment) with another: the Sharemax property syndication.
Bam found in both cases that the advisers had failed to conduct a due diligence on the Sharemax investments and there was no evidence that either of them knew how the investments would fund the interest they promised to pay the investors, given that the properties were still being constructed and therefore had no rental income.
Bam says in both rulings that there was no evidence that the advisers were aware of the risks involved in Sharemax.
“These include the lack of apparent safeguards to protect investors against director misconduct; the lack of visible governance arrangements; and the complicated structure of the investment itself, which left the investors with no protection,” she says.
Bam also found Mostert contravened the FAIS Act because he was not licensed to give advice on shares and debentures.
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Adviser berated for ‘product peddling’PERSONAL FINANCE / 2016
Angelique Arde
The ombud for financial services providers this week ruled that a financial adviser whose client lost R100 000 in a Sharemax property syndication investment repay his client her capital.
Jurien Jordaan, of Jurien Jordaan Advisory Services in Wonderboom, Pretoria, was ordered to reimburse Mrs MN, due to his failure to provide appropriate advice and because he was guilty of “product peddling”, according to ombud Noluntu Bam.
In early 2009, Jordaan executed a request by Mrs MN’s father, who had invested in Sharemax, to invest R50 000 on his daughter’s behalf, in a Sharemax investment known as The Villa Retail Park Holdings. In June 2009, Jordaan contacted Mrs MN and persuaded her to make a further investment of R50 000 in The Villa. He had been approached by a client who no longer wanted his shares and was willing to sell them at less than the original price.
Mrs MN says no disclosures regarding the risk associated with such an investment were ever made to her.
In his defence, Jordaan maintained that, at the time, he was a representative of Unlisted Securities South Africa, established by Gerhardus Rossouw Goosen while he was a director of Sharemax. It has since been liquidated.
Regarding the first investment, Jordaan said he never interacted directly with Mrs MN; he dealt strictly with her father, who had invested in Sharemax and was familiar with it. He also said he didn’t advise Mrs MN to invest. “Sharemax is often bought by the investor, not sold by the adviser,” he contended. He conceded that he had sold her the second investment, but said the circumstances should have alerted her to the risk of losing her capital.
In her determination, Bam says being a representative of a financial services provider doesn’t absolve Jordaan of responsibility; both the provider and the representative are duty bound to comply with the provisions of the Financial Advisory and Intermediary Service (FAIS) Act and code of conduct.
Bam says Jordaan also can’t hide behind the veil of “no advice rendered”. In terms of the code, a provider must know their client, assess their needs and circumstances, and keep a record of advice. Jordaan did none of this. Since he failed to establish Mrs MN’s tolerance for risk, he was not able to assess whether or not the investment was suitable for her.
“Simply offloading shares or strictly executing the instructions of the complainant’s father without any application of the mind or attempt to properly undergo the financial planning process beforehand, is in a violation of the Act and code.”
According to the ombud’s ruling, Sharemax was a public property syndication company, started in 1989, purportedly engaged in renting, operating, and managing commercial properties for shops and offices.
Investors were told they would receive a return of 11.5 percent in the form of income and this was further guaranteed for the first year of the investment term.
In September 2010 a newsletter was issued outlining the difficulties the various property syndications under Sharemax were experiencing in paying out the promised income, mentioning The Villa, but asking investors to be patient because “several new proposals” were promising “excellent rental agreements, which will make the product valuable”, the ruling says.
During October 2012, a request was made to the regulator to lapse the FAIS license issued to Sharemax.
Sharemax and its syndication companies were investigated by the registrar’s office and it was concluded that the funding models were in contravention of the Banks Act.
Directives were issued to Sharemax for the repayment of funds collected from individual investors in September 2010.
In 2012, in a court-sanctioned scheme of arrangement, the schemes were taken over by Nova Property Group Holdings (Nova), and Sharemax investors were issued with debentures or shares in Nova, the ruling says.
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