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.

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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.