The next white president of South Africa - NEIL DE BEER - MASON THEN BROEDERBOND - MK OPERATIVE

https://www.dailymaverick.co.za/article/2020-11-10-neil-de-beer-reinvented-the-bolognaise-loving-ex-anc-spy-intent-on-becoming-south-africas-president/

“I’m 52. I’m going to be the youngest president.”

Neil De Beer — ‘I’m 52. I’m going to be the youngest president.’ (Photo: Shelley Christians)

He speaks so confidently about such mega – almost ludicrously so –  aspirations it initially seems as if he’s joking, but it soon becomes clear he isn’t.

In June, the Constitutional Court effectively ruled that independent candidates can stand to be elected for provincial and national elections, not only municipal ones. Parliament was given 24 months to amend legislation accordingly.

“I’m running for the president of the Republic of South Africa. The law says I can,” De Beer says.

He fully believes 2024 – when the next general election will be held – will be critical in determining South Africa’s trajectory.

Neil De Beer fully believes 2024 – when the next general election will be held – will be critical in determining South Africa’s trajectory. (Photo: Shelley Christians)

Daily Maverick interviewed De Beer at a café in Cape Town’s city centre on Monday, the day before he was set to fly to Dubai to speak to expats and reinforce that while they left South Africa, “we didn’t leave you”.

He was accompanied by several bodyguards dressed in black.

De Beer has been in the news after launching the United Independent Movement (UIM), which is not a political party but a grouping that plans to educate South Africans about their right to, among other things, elect independent candidates to office, and for seemingly joining forces with former DA leader Mmusi Maimane and his One South Africa Movement.

Maimane, who was present when De Beer publicly announced his resignation from the ANC at the beginning of October and who also plans to stand as an independent candidate in the 2024 national elections, clarified to Daily Maverick that they had not merged any work and he did not share all De Beer’s views.

Instead, they shared an interest in independent candidates standing for elections.

De Beer seems to have gained support for taking a stand against “agri-violence” (he specifically does not refer to killings on farms as “farm murders” because workers and other employees are also targeted).

Neil De Beer has tried to get EFF leader Julius Malema to agree to a public debate on the country’s economy. (Photo: Shelley Christians)

He has also made news by taking on and trying to get EFF leader Julius Malema to agree to a public debate on the country’s economy.

But EFF spokesperson Vuyani Pambo told an IOL reporter that Malema would not “legitimise a non-entity, a political chancer”.

On the business front, De Beer runs nine companies, several overseas, with the main one, the Nedebe Group, based in South Africa.

The group’s website says: “We are a [sic] African Business Development consulting agency that brings out positive social and economic developments in South Africa and Africa by forming business ventures and relationships with small and medium enterprises.” 

De Beer, who sometimes refers to himself in the third person during the interview, explains that the reason for moving around with bodyguards is that he receives several death threats weekly.

Without going into detail about these, he says someone with true intent to target him would do so without threatening him first. His history hints at the types of opponents he may have accrued over the years.

De Beer was born in Stellenbosch in 1968 and roughly two decades later, in 1987, joined the SA National Defence Force. A year later, the “Afrikaans boy from Stellenbosch” who got involved in apartheid’s security police decided to turn his back on the regime and instead became an undercover intelligence operative for Umkhonto weSizwe (MK).

Some of this history is detailed in the book Undercover with Mandela’s Spies – The Story of the Boy who Crossed the Square by Bradley Steyn and Mark Fine, that shows his MK commanders had included Western Cape police major-generals Jeremy Vearey and Andre Lincoln.

De Beer realised “whites were brainwashed” under apartheid and this is what spurred him to switch sides. He further explains: “Neil De Beer is a normal human being who grew up in an abnormal society.”

Neil De Beer says the reason for moving around with bodyguards is that he receives several death threats weekly. (Photo: Shelley Christians)

His time as an undercover intelligence operative in the 1990s led him into the heart of Cape Town’s underworld and he was involved in a security outfit that was a police front.

De Beer rubbed shoulders with the likes of nightclub security kingpin and intelligence operative Cyril Beeka, who De Beer describes as “a great man, but he stayed in the trenches”.

Beeka, he says, did a lot for the liberation struggle, but has gone down “wrong” in history because he “stayed in the trenches”. De Beer’s time undercover still churns up rumours in certain quarters, with ties to policing and suspected underworld figures, of him being involved in dubious matters.

The first of two main rumours is that he still actually works for the ANC and handlers have planted him in the political arena with an end-goal of boosting the ANC.

“It’s utter rubbish, utter rubbish,” De Beer says. “I’m no longer [part] of any intelligence movement in any matter of the state.”

His last state job ended about two years ago when he resigned as voluntary special adviser to the Deputy Minister of Defence and Military Veterans, an unpaid position that left him bored as he was not given the space to help military veterans as he had planned.

The second rumour of involvement in dubious matters is of him having been involved in the 1994 abduction and murder of Michael Shen, a shark-fin exporter in Cape Town.

A 1994 news article by the South China Morning Post in Hong Kong said Shen was originally from Taiwan and that a group of men posing as police officers had abducted him early in May, and that a fortnight later his body was found with the throat slit.

“Two of five men later arrested were found to be a serving policeman and a prison guard who had allegedly been hired to kidnap and kill the Taiwanese businessman because he had refused to comply with the mafia’s control of the shark-fin market,” the article said.

According to De Beer, Shen was the head of a triad criminal group and involved in crimes involving drugs, shark fins and the import and export of women — in other words, human trafficking.

He says it was discovered that many police officers were working with Shen and were “on his books”.

De Beer says the rumours or claims about his ties to this are simply history and stem from his time in undercover intelligence.

“Every operation you do, it doesn’t always turn out the way it should… It’s an unconventional war,” he says. “The guy [Shen] got taken and told to leave South Africa. Two people within the operation murdered him.”

De Beer does not go into further detail about this matter, saying it was documented decades ago in an 800-odd-page judgment and is history, whereas his focus is on South Africa’s future.

“If there’s one thing I want you to know… I’m a good man.”

Fast-forward a decade from the Shen incident and De Beer was involved in rugby – he was part of the Springbok’s under-21 management team of 2004/2005.

South Africa went on to win the 2005 under-21 Rugby World Championship in Argentina, meaning De Beer was basically part of a globally winning team.

“I’m a life of conundrums,” he says.

Neil De Beer has been in the news after launching the United Independent Movement and for seemingly joining forces with former DA leader Mmusi Maimane and his One South Africa Movement. (Photo: Shelley Christians)

When De Beer talks, he often uses his hands to express himself and it’s hard not to miss the two rings he wears – one on each hand.

On the right hand is a thick silver ring with a sizeable blue stone in the centre. De Beer says he bought it in Dubai about three years ago and it symbolises that “we as Africa should be better than Dubai”, especially through making use of natural resources and expanses of seashores and mountains.

On his left hand he wears a thickish band with what at first glance appears to be a pattern on a pale background, but on closer inspection is an image of Jesus. De Beer, a Christian, says he “gave [my] life to God” in August 2020.

At roughly the same time, he says there was increasing pressure on him from an array of people, including some in the business sector, to get involved in a movement to steer South Africa towards a more promising future.

This is what led to the UIM.

The massive difference between apartheid South Africa and post-apartheid South Africa, De Beer says, is that under the previous regime “it was easy to see who the enemy was”.

Since 1994, this was no longer clear-cut.

De Beer says he decided to resign as an ANC member about three months ago, 32 years after joining the party, because “the spirit of [Nelson] Mandela is gone”.

“I’ll always protect the freedom of the rainbow nation,” he says, adding that he will do so even if it means going against others only purporting to do the same. But De Beer will not play “dirty” and does not plan to divulge any ANC “secrets”.

There are three things in life he is sure of – that “you’re going to die in God’s grace”, that you will pay taxes and will have your heart broken several times for various reasons.

“I’m buggered, I’ve given my heart to this country… It’s all or nothing. I’m a cool, calculated human being. I do nothing if I don’t understand why.”

He no longer has a private life and his family has had to take a back seat as he pursues the highest office in South Africa. De Beer is at pains to explain he does not consider himself a politician, but rather an activist. He also does not like being labelled a spy – someone he defines as a highly intelligent individual who extracts information from another person without that person knowing – but rather as a former intelligence operative.

De Beer jokes that if he does indeed become president, his food cravings will dictate his first stop – Wembley Road House in the Cape Town suburb of Athlone.

“The day I’m state president my motorcade will go straight to Wembley,” he says as he laughs.

Throughout the interview, De Beer asks that only two matters he’s spoken about be kept strictly private. Neither has to do with his aspirations or past and one is the secret ingredient to a seven-hour bolognaise sauce he loves making to serve with pasta. He talks about this secret in a conspiratorial hush, head bowed.

Later, adopting a more serious tone again, he says maybe South Africa requires a jolt of sorts and his sheer desire to steer the country could be it.

“I’m going to leave you with this thought,” he says. “Maybe you need Neil De Beer for now.” DM

COMMENTS BY SONNY

LIKE BRAAM FISHER, NEIL DE BEER IS JUST ANOTHER AFRIKANER TRAITOR!

HOW MANY OTHER SA INTELLIGENCE OPERATIVES ARE ON HIS PAYROLL TO TAKE UP HIS CABINET AFTER HIS ELECTION AS PRESIDENT OF SOUTH AFRICA?

WE CAN THINK OF QUITE A FEW.

Tribunal appeals to FAIS Ombud to get her act together (SHAREMAX)

Tribunal appeals to FAIS Ombud to get her act together by Mark Bechard on 25 November 2021 Posted in Uncategorized The Financial Services Tribunal has sharply criticised the FAIS Ombud for not holding an oral hearing during which material disputes of fact could be aired and considered, before making a finding. The tribunal set aside the ombud’s determination against an FSP who advised his client to invest in Sharemax and ordered her to reconsider the complaint. This is not the first time the tribunal has rebuked the ombud for not exercising the discretion accorded to her by section 27(3) of the FAIS Act and adopting the appropriate procedure, as we have previously reported (for example, see here). The application to the tribunal was a sequel to the determination issued in October last year. The FAIS Ombud found that Ermelo-based Gawie en Adri du Toit Makelaars and Gawie du Toit were liable for the financial loss incurred by a client who invested in the Zambezi and The Villa property syndication schemes. Advocate Nonku Tshombe ordered them to pay the client R516 000 and R670 000 – the amounts invested in each scheme respectively. The applicants contended before the tribunal that: The ombud’s record of decision was defective, and, as a result, the tribunal would not be able to reconsider the matter appropriately. Two “extensive” responses from the applicants did not form part of the ombud’s records. The responses were material because the determination considered them. There were material disputes of fact. The ombud “ignored” documentation submitted by the applicants that showed that the risk associated with the investment had been “fully disclosed” to the client. He had thus been in a position to make “an informed decision” as to whether he wanted to invest in Sharemax. Conflicting versions The tribunal found that, based on the evidence placed before it, the FSP’s and the client’s versions were in conflict. “By virtue of the ombud’s statutory powers in terms of the FAIS Act, the ombud was required to address the said disputes in the appropriate manner.” The tribunal referred extensively to the Supreme Court of Appeal’s observations in the recent judgment in Ombud for Financial Services Providers v CS Brokers CC and Others. This case turned on whether the ombud properly exercised her discretion in dealing with the matter in terms of section 27(3) of the FAIS Act. The tribunal said the SCA took “a dim view” of the ombud’s response that she did not hold a hearing with oral evidence, but applied a predetermined policy, without reference to the specific issues. ‘Heed our concerns’ The tribunal appealed to the ombud to “heed” its concerns. It said procedural criticisms have been made “time and again” against the ombud similar to those that were raised in this matter. These were that the ombud: Did not follow the proper process in investigating and determining the matter; Did not act fairly and impartially; and Accepted the complainant’s version despite evidence to the contrary and where there were material disputes of fact. “The fact that such matters come before the tribunal and for the tribunal to make a finding that the [ombud] failed to deal with the matter appropriately is concerning. Such an approach is contrary to the very purpose for which the [ombud’s] office was established, which includes the expeditious and effective resolution of matters.” In addition, the tribunal had found it difficult to prepare properly for the hearing, because the record was not only “replete with irrelevant documents” but incomplete. “The said responses were material and should have been before this tribunal.” The tribunal listed several reasons – including the ombud’s observations in her determination – that should have alerted her to material disputes of fact. Based on the “albeit incomplete” record, “material disputes of fact seem to exist that should be properly ventilated”. As a result, the ombud should have appropriately exercised her discretion in terms of section 27(3) of the FAIS Act. The tribunal referred the matter back to the ombud “on the understanding that the proper and appropriate processes would be followed by its office”. ABOUT MARK BECHARD Mark Bechard is the managing editor: publications at Moonstone Information Refinery. View all posts by Mark Bechard →

Highveld Syndication BRP and Nova chair sued for R110m

Highveld Syndication BRP and Nova chair sued for R110m Hans Klopper and Connie Myburgh, along with others, receive summons related to alleged misconduct in delaying the liquidation of a company. By Ryk van Niekerk 19 Feb 2021  00:01 Klopper and Myburgh (pictured) have and continue to be closely involved in the rescue process of some of South Africa's biggest failed investment schemes. Image: Supplied Klopper and Myburgh (pictured) have and continue to be closely involved in the rescue process of some of South Africa's biggest failed investment schemes. Image: Supplied The liquidators of Harrison & White Investments (H&W) have sued the company’s directors, its business rescue practitioner (BRP) and its former legal advisors for R110 million for delaying the “inevitable” liquidation of the company by more than three-and-a-half years. The summons states that this delay allowed the former directors to loot the company by selling off virtually all the assets, leaving the creditors nearly empty-handed when the company was eventually liquidated in 2017. The BRP is a well-known restructuring specialist and head of BDO’s Business Restructuring Unit, Hans Klopper. Hans Klopper. Image: Supplied The former H&W legal advisors are corporate lawyer and current Nova Property Group chair Connie Myburgh, and Diaan Ellis, a director of Faber Goërtz Ellis Austen. Diaan Ellis. Image: Faber Goërtz Ellis Austen website Klopper and Myburgh were involved with the rescue efforts of the failed Highveld Syndication (HS) companies. They are also still involved with the rescue efforts of the failed Sharemax property syndication schemes. More than 30 000 people collectively invested nearly R10 billion in these schemes. The former directors of H&W are Gavin Zietsman and Michael Ralston. Zietsman is probably better known for being convicted of insider trading and fined R1 million in 2011. Read the full summons here. Responses Klopper, Myburgh and Ellis responded to Moneyweb’s questions and confirmed they would defend the summons and claim. They did not comment on the merits of the allegations made in the summons. However, Myburgh and Ellis stated that some of the allegations are defamatory and warned Moneyweb that republishing these allegations would also be defamatory. The full responses appear at the bottom of this article. Zietsman and Ralston could not be reached for comment. Read: The dark underbelly of the business rescue industry ‘Guilt without trial’ – Klopper History and damning Section 417 report H&W was a Benoni-based company that offered crane hire services to the construction industry. It ran into financial difficulty in 2011 and defaulted on loan repayments to FirstRand. It owed the bank nearly R150 million at the time, and the parties entered into a restructuring agreement to repay the outstanding debt. However, H&W failed to repay the amounts under the agreement, and FirstRand called up the loan in July 2013. The directors put the company into business rescue a few days later, and Klopper was appointed as the BRP. A business rescue process intends to allow a financially-distressed company some breathing room from creditors’ legal challenges to recover their debts and afford the BRP time to formulate and publish a rescue plan to return the company to financial viability. Business rescue is intended to be a short-term process – and if the BRP decides the company cannot be saved, it must be put into liquidation immediately. The summons and a Section 417 report (see below) allege that the company was insolvent at the time and should have been liquidated immediately. However, the business rescue process was prolonged and the company was only finally liquidated in February 2017 – more than three-and-a-half years later. This is despite FirstRand applying for the company’s provisional liquidation in February 2015, which the parties opposed. Claim of R110 million Cloete Murray and Kgashane Monyela, the joint liquidators of H&W, issued the summons in December last year. The summons claims the company owned assets valued at R116 million when it entered business rescue in July 2013, but only R6.1 million when the final liquidation order was granted in February 2017. This delay, they claim, resulted in over R110 million in losses, which the liquidators are now claiming from the individuals. Critical of Klopper, Myburgh and Ellis The summons alleges that the delay paved the way for the selloff of the assets to the creditors’ detriment. It is especially critical of Klopper’s conduct as BRP and says he failed to investigate H&W’s affairs properly and that not putting the company in liquidation was “grossly negligent”. Klopper, according to the summons, also failed to ensure that the business rescue process was not abused by Ralston, Zietsman, Myburgh and Ellis. The summons is equally critical of Myburgh and Ellis and states that they were in breach of their fiduciary duties to H&W and its shareholders and creditors. “Had Myburgh and Ellis not breached their obligations and acted properly, H&W would have been liquidated in June 2013.” “The conduct of placing H&W in business rescue, keeping it in business rescue, opposing the winding-up and leaving the affairs to Ralston and [Kevin] Kemp [a manager at H&W at the time] was intended to benefit Ralston, Kemp, Myburgh, Klopper and Ellis and the shareholders and some creditors of H&W. The conduct aforesaid was reckless and was intended to, or resulted in, prejudice to and was in fraud of the general body of creditors of H&W and in particular to FirstRand.” Section 417 report The summons follows a Section 417 report, penned by respected retired judge Eberhard Bertelsmann as the commissioner, in 2019. He was appointed in November 2017 by the Master of the Court to investigate whether H&W’s assets were indeed stripped or looted before the liquidation. Bertelsmann also concluded that the business rescue process was fraudulently abused to delay an inevitable liquidation, which allowed for the selloff of the company’s assets. Bertelsmann also recommended that the master refer the conduct of Zietsman, Ralston and Myburgh to the National Director of Public Prosecutions for criminal investigation. Read the full Section 417 report here. Sharemax and Picvest Klopper and Myburgh are closely involved with the rescue schemes of two of South Africa’s biggest failed investment schemes: Sharemax and Picvest. Klopper was the BRP of the failed HS companies, which were placed in business rescue in September 2011. In terms of the original business rescue plan and a subsequent Section 155 Scheme of Arrangement, all properties syndicated as part of the HS schemes should have been transferred to a single company, Orthotouch, but this never happened. Virtually all of these properties were subsequently sold to third parties during the eight years it remained in business rescue, including the listed entity Accelerate. The business rescue process ended when Orthotouch itself was placed into business rescue in November 2019. Klopper and Myburgh were directors of Orthotouch. Read: Georgiou puts Orthotouch and Zephan into business rescue For the full story, read: The peculiar case of the Picvest billions (Part 1) (Background) The peculiar case of the Picvest billions (Part 2) (Background) The peculiar case of the Picvest billions (Part 3) (Overvaluation of properties) The peculiar case of the Picvest billions (Part 4) (Property transactions before HS companies being put into business rescue) The peculiar case of the Picvest billions (Part 5) (Disposal of properties contradicts the intent of the business rescue plan) The peculiar case of the Picvest billions (Part 6) (The sale of 31 ‘Orthotouch Properties’ to Accelerate) Klopper and Myburgh are also involved with Nova, the rescue vehicle of the failed Sharemax investment scheme. They are the two receivers and are responsible for implementing the scheme of arrangement to repay investors. Myburgh is also Nova’s executive chairman. However, Nova has been in financial distress for a few years and has sold several underlying property assets to finance its operating expenses. The company is also facing corporate governance challenges. It failed to publish its annual financial statements (AFSs) for three consecutive years within six months after the year-end, as the Companies Act prescribes. The 2020 AFS, which was due before the end of August 2020, has still not been published. Furthermore, Nova’s auditors qualified Nova’s 2018 and 2019 AFSs and expressed concerns regarding its ability to continue as a going concern. Read: Nova teetering on the verge of insolvency (Dec 2018) Nova plans to sell another five properties (May 14, 2019) Nova properties auctioned off (May 31, 2019) Nova: Insolvent or in a sound financial position? (Mar 2020) Full response from Klopper (via his legal counsel) Dear Sir Questions sent to Mr JF Klopper on 29 January 2021 1 We act for Mr Klopper in the claim brought by Harrison & White Investments (Pty) Ltd (in liquidation). 2 We refer to your email to our client on 29 January 2021, in which you addressed a number of questions to him in relation to this matter. 3 Our client will be addressing the allegations made in the claim against him, in the normal course of the litigation proceedings. 4 Our client will not be commenting further on this matter at this time. Yours faithfully WEBBER WENTZEL Full response from Connie Myburgh Mr van Niekerk. I refer to your email dated 29 January 2021. I will be defending the action through my lawyers. The matter is sub judice and you will appreciate that I cannot comment on or enter into a debate with you regarding the allegations raised in your email. The allegations raised by you regarding me are defamatory of me, and I caution you regarding publishing such defamatory matter, as such publication will be equally defamatory. You are requested to quote this response verbatim in any publication you may release. Yours faithfully. Connie Myburgh. Full response from Diaan Ellis Dear Mr van Niekerk 1 I am defending the action that you speak of, insofar as it pertains to me and am legally represented in that regard. 2 You will thus readily appreciate that it would not be appropriate to enter into a debate with you regarding the merits of the matter whilst the matter is the subject of litigation and I will not do so at this juncture, particularly in circumstances where my professional indemnity insurance policy precludes me from commenting on the matter. 3 I trust that you will agree with me that it would be unreasonable, in the circumstances, to expect me to respond in any other manner at this time. 4 As a postscript, I must just point out that the assertions made against me in the action are defamatory and any publication by Moneyweb of these allegations would similarly constitute an act of defamation on the part of Moneyweb, the author of the article and Moneyweb’s editor. Sincerely Diaan Ellis FABER GOERTZ ELLIS AUSTEN INC AUTHOR PROFILE Ryk van Niekerk Ryk is an award-winning financial journalist with over 20 years' experience. He is Moneyweb’s editor and hosts the Market Commentator podcast and RSG Geldsake, covering the markets, and financial and investment content, joined by CEOs, entrepreneurs, policymakers and others. Ryk is a renowned public speaker and facilitator, and a regular political and economic commentator on local media platforms. He has an MBL and M.Phil in Journalism – both achieved cum laude. ------------------------------------------------------------------------------- COMMENTS CIPC has no power over Sharemax rescue By Roy Cokayne Time of article published Sep 25, 2014 SHARE THIS ARTICLE: Roy Cokayne THE COURTS are the correct forum to review the conduct of the business rescue practitioner appointed to run Sharemax Investments, according to the Companies and Intellectual Property Commission (CIPC). Astrid Ludin, the CIPC commissioner, said this week that the provisions of the law did not impose an obligation on the commission to monitor business rescue practitioners. Ludin’s comments follow claims by the SA Revenue Service (Sars) that Sharemax’s business rescue practitioner, Liebenberg van der Merwe, had been appointed on December 7, 2011, but to date had not published a business rescue plan for the company. The Companies Act requires a business rescue plan to be published within 25 business days after the date on which the business rescue practitioner was appointed. Any extension had to be approved in court or the holders of a majority of the creditors’ voting interest. Sars has applied for the setting aside and termination of Sharemax’s business rescue and its liquidation because of the company’s alleged inability to pay R15.7 million in outstanding taxes. Ludin said business rescue practitioners were officers of the court and the CIPC currently licensed practitioners for each rescue process. The CIPC was also responsible for receiving the initial business rescue notice, status updates and the termination notices. “The purpose is to provide creditors and members of the public [with] information about the status of the enterprise. The status report provides us with an indication of whether the process is ongoing,” she said. Ludin stressed that progress had to be reported to the shareholders and creditors by the practitioner and the CIPC was not in a position to monitor compliance because it did not have the power to do so. “The CIPC only has powers to revoke conditional licences issued to business rescue practitioners. We did not issue a conditional licence in this case and, therefore, cannot revoke the licence,” she said. “We have no other powers related to business rescue. The court is the correct forum to review matters of compliance. Attempts to obtain comment from Van der Merwe about Sharemax were unsuccessful. However, Elle-Sarah Rossato, a Sars official, said that in an affidavit in support of Sars’s application, Van der Merwe claimed in October last year that a business rescue plan for Sharemax could not be finalised until quantification of Sars’s claim was finalised and finality was achieved on the complaints adjudicated by the ombud for financial services providers. This referred to the determination by the ombud between Gerbrecht Siegrist and Sharemax group companies, including Sharemax Investments, in terms of which all of these companies were held jointly and severally liable for the payment of R580 000 to Siegrist. Rossato said using the quantification of Sars’s claim to delay matters was “disingenuous and incorrect” because the correctness of the tax debt was confirmed at a meeting in September last year. Van der Merwe’s assertion that the business rescue plan could not be finalised until finality was achieved on the Siegrist determination was “equally disingenuous”, because the decision was handed down on January 29 last year. Rossato said it appeared the reason for placing Sharemax Investments into business rescue was to obtain a moratorium against payments of debts, as afforded by the Companies Act. “The inescapable inference is that creditors of the first respondent [Sharemax] were misled with a promise that R40 million would be coming their way, while the controllers of the first respondent [Sharemax] had already decided to abuse the Companies Act’s business rescue provisions.” About 33 000 investors invested about R4.5 billion in Sharemax’s various schemes. Sharemax was placed under statutory management by the registrar of banks in 2010 when it defaulted on monthly payments to investors “Justice delayed is justice denied” Edited to add: Article from IOL. Madmax 9 months ago Sharemax chronicles continue: ‘Old people die, the fat cats laugh’ Phillip De Wet 2 Dec 2016 Empty promises: Glynnis Morris has not seen any return from her investment. Empty promises: Glynnis Morris has not seen any return from her investment. Every few months 70-year-old Glynnis Morris receives a letter from Frontier Asset Management. In broad strokes the letter tells her how well everything is going with Frontier’s sibling company, Nova Property, into which her entire R300 000 pension was forcibly invested. She no longer reads the letters. She goes straight back to figuring out how to get by on her R1 500-a-month government old-age grant. “It’s always the same letter, only the dates change,” she says. She has not seen a single cent from her investment for many years now, Morris says, no hint of the R3 125 monthly income — plus maybe some capital growth if the property market did well — she thought she was buying when she invested in the ill-fated Sharemax property syndication scheme in 2009. Instead she has seen many promises from the directors of Nova, which stepped in as the rescuers when Sharemax collapsed and took over Sharemax’s assets. In return for delivering that service to Morris and others, the directors of Nova each paid themselves an average of R4.9‑million in the past financial year. Morris has it better than most. She lives in a granny flat attached to the home of one of her daughters, and her two other daughters help her out with food “when I run out, which is often”. When the Mail & Guardian this week traced two other former Sharemax and now Nova investors, we found that one had died in March and the other had recently slipped into a coma. “This is what happens all the time,” said a relative of the latter. “These old people had their money taken. Now they don’t eat properly, then they get ill and they die, while the fat cats are laughing all the way.” The Nova directors — Dominique Haese, Rudi Badenhorst, Dirk Koekemoer and Connie Myburgh — deny they are anything other than businesspeople who work hard to manage the assets in which Sharemax participants had invested. But the difference between their rewards and those of the original investors is stark. This week, specialist financial website Moneyweb calculated that the four Nova directors’ combined R15.1‑million cash salaries in the past financial year were more than double the average earned by executives at most property management companies. Those cash salaries, Moneyweb said, represented 17% of Nova’s total cash receipts for the financial year. The four directors have near total control over how the company spends its money. After a legal battle stretching over several years to obtain the technically public register of Nova shareholders, Moneyweb last week revealed that the directors own 87.1% of the company, and have even greater voting rights thanks to a structure that reduces debenture holders to recipients of money and information as and when the four directors see fit. The directors value their shareholding, which in effect they received for free, at more than R1‑billion. Nova chief executive Haese played a pivotal role at Sharemax before it collapsed, and fellow director Koekemoer was also a director of Sharemax for several years. It is clear that directors pay themselves first from the company’s proceeds before any payments to the debenture holders they are responsible for, Moneyweb said. As a result, averaged over the past two financial years, Nova directors paid themselves out R3.6‑million each a year. The 31 000 debenture holders whose money they manage were paid an average of just less than R400 each. Average payments to debenture holders are a poor metric, because often the Nova directors do not see fit to provide. In the last communication Morris received, Nova was self-congratulatory about a 2013 decision “to reduce and/or cease projected monthly return payments” to debenture holders in favour of using the cash to refurbish shopping centres. Morris did not get any real say in the decision to pay her no interest, just as she was never really consulted when Sharemax morphed into Nova, or even on how her pension would be invested in the first place. In fact, she did not understand the mechanism of the investment. But then, nor did her investment adviser. Morris thought she was putting her money into The Villa, a large shopping centre to be built east of Pretoria. That sort of bricks-and-mortar investment suited her risk appetite — extremely low — as it did many pensioners, which seems to be the main reason Sharemax drew so many of their ilk. What her savings were actually buying, later perusal of a prospectus would reveal, was “an unsecured subordinated interest rate acknowledgment of debt linked to a share”. In the rush to get her money invested, that went over Morris’s head. Her investment adviser had been “hounding” her about when she would receive her pension lump sum, she recalls. The very morning it landed in her bank account he accompanied her to the bank, explained to the teller what she wanted, took the resulting cheque from the teller and had Morris sign some forms. Interrogation of the mechanism of the investment was limited. “I said to him: ‘Are you absolutely positive that I’m not being conned here?’ and he said: ‘No,’” she recounts of the 20-minute transaction. Investment advisers were notoriously keen on Sharemax, which paid very large upfront commissions: like the current Nova directors, advisers got paid regardless of whether the risk their clients were taking paid off. And some, like Morris’s adviser, had no understanding of that risk, the office of the ombud for financial services providers, known as the FAIS ombud, has consistently ruled. “It is apparent from [Morris’s advisor’s] version that he had no idea just what the investment was about and, as such, could not appreciate that the complainant was lending money to an entity, which entity would in turn lend the funds to a developer, leaving investors with no form of security whatsoever,” ombud Noluntu Bam ruled in Morris’s case this August. There was also the small detail that the shopping centre Morris was supposedly investing in had not yet been built and could therefore not generate rental income to pay her 12.5% interest — the promised payments could only come from the investments of other people. Although Sharemax has never been found by a court to have been one, that is the common structure of all Ponzi schemes. The FAIS ombud ordered Morris’s adviser to repay her investment in full, under rules that make advisers liable for losses incurred because of their negligence. For a short while it looked as if she would get back her savings. Then she was notified that her adviser had appealed against the ruling. That leaves only the chance that the four well-paid directors of Nova will see fit to direct some money her way. But she is not overly optimistic, and she is not alone. “The investors who complain to this office have received no credible information as to the steps that are being taken to repay their investment,” Bam wrote in May about another Sharemax-related complaint. “Most investors see incomplete and ghost buildings all around, with no suggestion that they will ever recover their money.” But in a June letter the Nova board told Morris that the various hurdles to cashing in on her partially built shopping centre were “constantly being addressed by the board” — just as it has been telling her since at least 2014. Nova did not answer detailed questions. Earlier this week, chief executive Haese told Moneyweb she would no longer provide information because it “will be twisted and used out of context for the purpose of further negative reporting”. Subscribe to the M&G These are unprecedented times, and the role of media to tell and record the story of South Africa as it develops is more important than ever. The Mail & News report …..2016

Findings against Nova chair referred to NPA _ ( SHAREMAX)

Findings against Nova chair referred to NPA An investigation into Connie Myburgh and others may be in the offing following the Master of the Court’s referral of a Section 417 report to the prosecuting authority. By Ryk van Niekerk 4 Mar 2021  00:01 The National Prosecuting Authority (NPA) may investigate Connie Myburgh, chair of the Nova Property Group, for his apparent role in delaying the liquidation and the subsequent looting of the assets of a company, Harrison & White (H&W). Such an investigation may follow after the Master of the South Gauteng High Court referred a Section 417 report to the NPA for investigation in February. The report found that the conduct of Myburgh and H&W directors Gavin Zietsman and Michael Ralston resulted in creditors suffering significant losses, and recommended its referral to the NPA. The referral is of significant public interest as Myburgh is the current chair of Nova, the rescue vehicle of the failed Sharemax investment scheme, and a former director of Orthotouch, the rescue scheme of the failed Highveld Syndication schemes. Both companies are currently in financial difficulty, and both sold off many assets in recent years. More than 30 000 people invested nearly R10 billion in these schemes, and it seems unlikely they will be refunded their original investments, if anything. Read: Highveld Syndication BRP and Nova chair sued for R110m The dark underbelly of the business rescue industry ‘Guilt without trial’ – Klopper Referral of the report The case stems from 2017, when the Master of the South Gauteng High Court ordered a Section 417 investigation into several individuals’ conduct during the three-and-a-half years from when the directors put the company into business rescue to its eventual liquidation. Retired justice Eberhard Bertelsmann was the commissioner of the inquiry, and he found the business rescue process was abused and allowed for the widescale illegal sell-off of assets. Creditors, which include Rand Merchant Bank, were left with virtually no dividend. Bertelsmann submitted the report to the master in 2019 and recommended its referral to the NPA. The Department of Justice and Constitutional Development confirmed to Moneyweb that the Master of the South Gauteng High Court referred the report to Advocate Andrew Chauke, the Director of Public Prosecutions in Gauteng. Interestingly, it seems the master initially decided not to refer the report. In response to Moneyweb questions, a spokesperson said the master did not refer it as the report did not make such a recommendation, citing an incorrect paragraph in the report. However, Moneyweb drew the official’s attention to the correct paragraphs in the report, which recommend the referral to the NPA, after which the master seemingly changed the decision. Myburgh’s response In response to Moneyweb’s questions, Myburgh said he was unaware of the referral and denied any wrongdoing. “You cannot, with respect, expect me to respond to this assertion, which you have elevated to a ‘fact’, without this ‘fact’ being confirmed. I certainly am not aware of any such ‘decision’. “I have not committed any wrongs which could substantiate investigations or proceedings against me and whilst I disagree with and reject the views of the Commissioner regarding me in the confidential Section 417 Report, as being baseless, the media is not the forum to debate any issues regarding the Report and the Report will be dealt with in the fullness of time in the appropriate forum, should the need therefor arise.” Myburgh also stated that he would not resign as chair of Nova as a consequence of the referral. “The board of the Nova Group has dealt with the Report and has already confirmed that my resignation from the board is not necessary.” (Read Myburgh’s full statement at the end of this article.) Neither Zietsman nor Ralston responded to Moneyweb questions. Civil action The master’s referral of the report to the NPA follows earlier civil proceedings the H&W liquidators instituted against the directors and former management of the company for the losses the company and creditors allegedly suffered. The liquidators claim R110 million from the directors, Myburgh, H&W business rescue practitioner Hans Klopper and Diaan Ellis of Pretoria-based law firm Faber Goërtz Ellis Austen. They all indicated that the action would be opposed. In the summons, the liquidators claim H&W owned assets valued at R116 million when it entered business rescue in July 2013, but only R6.1 million remained at liquidation in February 2017. According to the summons, H&W’s total debt at liquidation was R66 million. This delay, they claim, resulted in over R110 million in losses, which the liquidators are now claiming from the individuals. Read: Highveld Syndication BRP and Nova chair sued for R110m Findings and recommendations of the Section 417 report Bertelsmann found in the 79-page Section 417 report that H&W was “the victim of directors and management bent upon personal enrichment in disregard of the rights of creditors”. Regarding Myburgh, Bertelsmann states that he breached his fiduciary duties as H&W’s legal advisor and found himself in a triple conflict of interest. The report states that Myburgh should have been aware of the company’s dire financial position and recommended the company’s immediate liquidation rather than put it into business rescue. “As a legal advisor he was obliged to engage the company directors and management as soon as the red lights of inability to meet financial commitments as and when they occurred began to flicker. He did nothing of the sort. “He continued collecting retainers while the sham of business rescue proceedings played itself out over a period of about three years,” the report reads. Bertelsmann also found that Myburgh colluded with the directors and management. “He colluded with the company directors and management in obstructing the flow of justice by delaying the finalisation of the liquidation application through the stratagem of the intervention of the trusts, who were to his knowledge by no stretch of the imagination bona fide creditors. “In his role as legal advisor, he indubitably participated in the management of every one of the companies in the group, including the insolvent company. The actions stipulated above were clearly reckless, if not worse.” The Section 417 report made damning findings and recommendations related to Zietsman and Ralston, finding their conduct to be reckless, fraudulent and dishonest. Legal Practice Council Bertelsmann also recommended that Myburgh and Klopper be referred to the Legal Practice Council (LPC) for investigation and possible disciplinary action. After Moneyweb alerted the LPC in 2019 of the existence of the Section 417 report, the LPC approached the master to release the report. Jaco Fourie, senior legal officer at the LPC’s disciplinary department, said the master only referred the report to the LPC in February this year. “We will now first have to give the respondents an opportunity to make their submissions in respect of the report by Justice Bertelsmann, before we proceed to refer the matter back to the investigating committee. In terms of Rule 39.3.1 we are required to grant a respondent 30 days to answer.” Full response from Connie Myburgh, chair of the Nova Property Group and former legal advisor of H&W: Mr van Niekerk. You suggest, without revealing your source, that the Master of the High Court has decided to refer the confidential Section 417 Report to the NDPP [National Director of Public Prosecutions]. You cannot, with respect, expect me to respond to this assertion, which you have elevated to a “fact”, without this “fact” being confirmed. I certainly am not aware of any such “decision”. I have not committed any wrongs which could substantiate investigations or proceedings against me and whilst I disagree with and reject the views of the Commissioner regarding me in the confidential Section 417 Report, as being baseless, the media is not the forum to debate any issues regarding the Report and the Report will be dealt with in the fullness of time in the appropriate forum, should the need therefor arise. The board of the Nova Group has dealt with the Report and has already confirmed that my resignation from the board is not necessary. Should you decide to print anything regarding this matter, you are requested to quote my response verbatim. Connie Myburgh AUTHOR PROFILE Ryk van Niekerk Ryk is an award-winning financial journalist with over 20 years' experience. He is Moneyweb’s editor and hosts the Market Commentator podcast and RSG Geldsake, covering the markets, and financial and investment content, joined by CEOs, entrepreneurs, policymakers and others. Ryk is a renowned public speaker and facilitator, and a regular political and economic commentator on local media platforms. He has an MBL and M.Phil in Journalism – both achieved cum laude. ______________________________________________________________ COMMENTS: supapaul 9 months ago Again, these Sharemax thieves has for too long dodge the bullets!!!! ------------------------------------------------------------------------- Juffrou Stoof 9 months ago Give that man – Ryk van Niekerk – a Bells. ------------------------------------------------------------------------- James Kingston 9 months ago I think the biggest miracle of this story is that Ryk got the Master to do something. Hopefully, he can also put enough pressure on the NPA to do the same. ------------------------------------------------------------------------- Illphil 9 months ago Agree If NPA fail to prosecute, soon, Gerrie Nel should take this on as ‘private prosecution’ At least then a proper case prep and follow through would take place. NPA – – not what they should be. -------------------------------------------------------------------------- Madmax 9 months ago News Report 2011 At long last the so-called new independent directors of Sharemax-promoted property syndications admitted last week that investors will – or already have – lost a large portion of their capital. That’s bad news for those financial advisers who have so far closed ranks in secret forums and tried to tell one another the Section 311 schemes were going to make capital losses disappear. Without capital losses they are, of course, free of any responsibility, as we reported a fortnight ago.In a letter dated 16 May to investors, the new directors admit a R100 000 investment – in, say, Zambezi Mall – that’s now going to be repaid in 120 monthly payments (that is, 10 years), plus the balance after 10 years in a single payment, doesn’t have the same current value as R100 000 in a bank. In what amounts to a huge quantum leap, Dawie Roodt and former Judge Willie Hartzenberg admit the current value of the capital repayments to investors in terms of the A311 schemes aren’t worth as much as cash in the bank.The current value of money after all means R100 000 now is worth more than R100 000 in 10 years’ time. The promise of a R100 000 IOU to be paid in 10 years’ time doesn’t amount to the same as a R100 000 investment or debt today.That admission by the board has serious implications for all role players in the Sharemax syndications.Financial advisers can now again be held accountable for the capital losses suffered, or to be suffered, by investors. Someone is going to sit down and try to work out how much that is. And even though it will only be an estimate – because it’s impossible to place a value on the concoctions offered to investors – it will be worth less – far less – than the original investment. The board admits as much in its latest letter and that admission is now an important legal document for any investor who plans to put his case to the ombudsman.Roodt and Hartzenberg admit the debentures, or whatever they plan to call them, are worth less – a lot less (my emphasis) – than 100c in the rand. I still say they’ll be worth less than 20c in the rand and, especially in the case of The Villa, probably less than 5c in the rand.Roodt would be just as well explaining that clearly to the financial advisers when he again addresses one of their closed meetings. And he could do the same at the proposed A311 meetings of investors coming up soon. Both Roodt and Hartzenberg should also give the assurance that the latter won’t be closed meetings but that the press may also attend. 2011 News Report ----------------------------------------------------------------------------- Madmax 9 months ago Johannesburg – The three so-called independent directors – Dawie Roodt, Judge Willie Hartzenberg and Rudi Badenhorst – appointed on Tuesday to the boards of the 33 syndications of troubled property syndicate Sharemax were installed by the outgoing boards and not by the statutory managers appointed by the Reserve Bank. These boards were made up exclusively of the previous directors of Sharemax itself. They can therefore hardly be called independent. The press release by Baird’s – which is acting on behalf of Sharemax – reads: “The Sharemax statutory managers appointed by the South African Reserve Bank announced the appointment of three independent non-executive directors for all the individual property investment companies by the respective boards.” This is cleverly worded but misleading. The respective boards, that is the old Sharemax-controlled boards of Willie Botha and Andre Brand, appointed the above-mentioned independent directors. The statutory managers – the real powers currently in control of the billions invested in the schemes – merely “announced” the appointments. The statutory managers will probably report to the Reserve Bank within a couple of days that all the syndications are technically and legally insolvent. The directors of an insolvent entity, whether independent or not, have little more power than to order new toilet paper for the respective buildings. Investors in Sharemax should not get carried away by the appointment of these so-called independent directors to the boards of the syndications. They don’t have fresh money, and stacks of fresh money is what is needed to save Zambezi Mall, the Villa as well as various other run-down and poorly-managed older buildings. – Sake24 November 2010 ---------------------------------------------------------------------------------- Logic 9 months ago Give Ryk 2 bells!! Ryk please do not forget about the Pic kvest/Highveld Co/Ortotouch scam. It has the same stench than Novus with the same strategy and some role players like ***. Hopefully some bullets will hit this shame as well. Plse update ------- Julius Cobbett 9 months ago Not the NPA! Those fearless prosecutors of white-collar crime. Poor Myburgh must be beside himself with worry.

CIPC concerned about Nova’s ability to repay debenture holders_ ( SHAREMAX)

CIPC concerned about Nova’s ability to repay debenture holders Commission doesn’t believe Nova has the authority to postpone payments to after January 20, 2022. By Ryk van Niekerk 24 Nov 2021  00:01 The Companies and Intellectual Property Commission (CIPC) is concerned the Nova Property Group is not in a financial position to repay former Sharemax investors, and also questions whether the company has the mandate to repay investors after the deadline of January 20, 2022, as stipulated in the original Schemes of Arrangement (SoA) and the Nova Debenture Trust Deed. The CIPC also believes Nova did not disclose that it has the discretion to postpone repayments post this deadline properly to debenture holders – despite Nova’s assertion to the contrary. Moneyweb Insider Gold. Read: Sharemax rescue vehicle faces CIPC shutdown CIPC asks Nova to explain why it should not be closed down Auditor flags Nova’s ability to continue as a going concern for 3rd year in a row Nova has sold more than half of its investment properties This is evident from the two compliance notices the commission issued to Nova in February and October this year. Moneyweb obtained copies of the two notices, as well as Nova’s response to the first notice and a CIPC inspector’s report, after submitting a request in terms of the Promotion of Access to Information Act to the CIPC. The documentation reveals that the CIPC rejected the bulk of Nova’s response to the first compliance notice, in which the company claimed it was solvent and had the authority to postpone the repayment of debentures. The commission has now given Nova a final opportunity to prove it is solvent and has the cash to repay its liabilities when they become due. According to Moneyweb’s calculations, Nova needs to submit a response on or before December 20, 2021. If Nova fails to convince the CIPC, the commission may shut the company’s operations down. This will result in the Sharemax rescue vehicle being placed under administration, into business rescue or even into liquidation. Read: Moneyweb editor physically and forcefully denied entry to Nova’s AGM How former Sharemax investors ‘saved’ Connie Myburgh Compliance notices The CIPC issued the first compliance notice to Nova on February 4, 2021. It was a CoR 19.1 compliance notice issued in terms of Section 22 of the Companies Act, which prohibits a company from trading recklessly, negligently, fraudulently, or under insolvent circumstances. In the notice, the CIPC demands that Nova submit its annual financial statements (AFS) for its 2020 financial year. The commission needs the AFS to gauge whether the company’s financial position had improved from the previous year when the external auditors qualified the financial statements and expressed concern as to whether Nova could continue to operate as a going concern. The CIPC also disputed a note in the 2019 AFS that stated Nova has the option to delay the repayment of debentures beyond the 10-year deadline specified in the SoA. “The commission is of a different view in light of the contents of the debenture trust deed, in that it believes the debentures must be settled by no later than 20 January 2022,” the notice reads. The notice demanded that Nova submit a resolution in which it commits to repay debentures before the deadline and to prove it has the financial resources to do so. The commission also requested that Nova provide proof that debenture holders agree with the Nova board’s position that it has the discretion to repay debentures after the deadline. Nova’s formal response Nova formally submitted its response on March 3. In the response, Dominique Haese, Nova’s CEO, denied Nova was in contravention of Section 22 of the Companies Act and that it was operating “recklessly, with gross negligence, with the intent to defraud a person, or to have a fraudulent purpose, or that it is unable to pay its debt as they become due in the ordinary course of business”. Nova CEO Dominique Haese. Image: Nova website Haese said the CIPC did not refer to any specific conduct to justify such an assertion. She also stated repeatedly that Nova was factually and commercially solvent, that the company’s assets exceed its liabilities and that the company is able to repay its debts when they become due and payable. Regarding the qualified audit opinion of the 2019 AFS, Haese said: “The content of the 2020 AFS demonstrates that the auditors’ concerns, as expressed in the 2019 AFS, proved to be without merit and that the Nova Group, during the financial year ending 28 February 2020 not only managed to trade in solvent circumstances but generated a profit of R1.9 million (increased to R21.4 million having regard to certain adjustments).” However, neither the CIPC nor Nova refer to developments disclosed in Nova’s 2019 AFS that may be regarded as reckless behaviour. The first is the auditor’s warning that Nova used the proceeds of the sale of investment properties to fund operational expenses. The second is that the company borrowed nearly R40 million from a bridging finance provider at the astronomical interest rate of 1% per week, as it could not secure funding from commercial banks. Nor did either the CIPC or Nova refer to Nova’s qualified 2018 AFS, in which the auditor also expressed its concern that Nova could not continue to operate as a going concern. It would be a contravention of Section 22 of the Companies Act to operate insolvently. Payment of debenture holders Of particular importance was Haese’s assertion that Nova has the option to postpone the repayment of debentures beyond January 20 next year. In the CoR 19.1 notice, the CIPC expressed a view that Nova needs to settle the debentures before the deadline and doesn’t have the option to postpone payments. However, Haese said the debenture trust deed explicitly gives the company the option to postpone payment. Haese quoted several clauses from the trust deed to validate its position. The most pertinent is paragraph 6.3.1.2, which states that debentures shall be redeemable on “any date on which the company elects with the receivers and the trustee’s written approval to redeem some or all of the debentures”. Haese said “it is appreciated that the CIPC holds a different view but this is essentially a matter of differing legal opinion”. She continued: “Even if the company’s view in regard to the due date for repayment of debentures is found to be incorrect, its view is nonetheless held bona vide [sic] and should not be conflated with recklessness, gross negligence or fraud.” Haese also said Nova does not have to prove that debenture holders share this view, as the CIPC requested. “The terms of the debentures are objectively ascertainable. Those terms prevail whether the individual debenture holders understand that to be the case, or not.” Former Sharemax shareholders mingle after a shareholders’ meeting. Image: Moneyweb CIPC rejected Nova’s response However, the CIPC rejected virtually all of Nova’s explanations and issued the second compliance notice in October. It was a CoR 139.1 notice which was issued in terms of Section 71 of the Companies Act. Cuma Zwane, an investigator for corporate disclosure and compliance regulation at the CIPC, stated in an inspector’s report that there are discrepancies in Nova’s disclosure of the conditions tied to the debentures. In April 2021, Nova sent a communique to debenture holders in which it said that although the “board has the discretion to postpone the payment of Debentures, beyond the projected 10-year Scheme of Arrangement period, the Board, in February 2021, made the decision to commence Debenture payment during 2021”. But the inspector’s report refers to the fact that Nova did not disclose in its 2017 and 2018 AFS that repayments may be postponed, while stating in all of its other AFS between February 2014 and February 2020, that the period it had to repay the debentures could be extended. According to the report, these discrepancies in the AFS, read in conjunction with the SoA and Debenture Trust Deed, raised a concern. “There is no express provision in neither the Schemes of Arrangement nor the Debenture Trust Deed that gives the directors the exclusive discretion to postpone the repayment period without the receivers and the trustee’s written approval,” the report states. Zwane also highlighted that the trustee of the trust resigned in 2019 and Nova never followed the prescribed process to have him replaced. “As such, debenture holders have no representation in the company and are unable to or have limited capacity to exercise their rights as outlined in the debenture trust deed.” The receivers are Hans Klopper, business rescue practitioner of the Highveld Syndication Companies and head of restructuring at BDO in South Africa, and Connie Myburgh. Myburgh is also chair of Nova and a major shareholder in the company. Read: Findings against Nova chair referred to the NPA Highveld Syndication BRP and Nova chair sued for R110m The dark underbelly of the business rescue industry Connie Myburgh, chair and shareholder of Nova (left), and Hans Klopper, business rescue practitioner of the Highveld Syndication Companies and head of restructuring at BDO in South Africa, are the receivers of the Nova Debenture Trust. They need to approve any postponement of the repayment of debentures to after January 20, 2020. Image: Moneyweb The CIPC also rejected Nova’s claims that it is solvent and has the cash to pay liabilities when they become due. This stems mostly from Nova’s failure to publish its 2020 AFS before August 2020. This was in contravention of the Companies Act, which prescribes that it must be published within six months after its year-end. Nova eventually published the 2020 AFS on February 26, 2021, nearly six months late. Zwane wrote that the absence of the 2020 AFS made it impossible for the commission to ascertain whether Nova is in a solvent financial position and could repay creditors for its financial year to the end of February 2022. The CIPC demands that Nova submit the following documents in response to its CoR 139.1 notice: A signed board resolution where Nova commits to repaying debenture holders as it undertook to do in a communique sent to debenture holders in April. In this communique, referred to above, the board indicated it would start to repay debentures in 2021. Nova’s AFS for its 2021 financial year, which was due to be published before the end of August. The CIPC states it wants to confirm the amount of current liabilities due at the end of February 2022 and whether Nova is solvent. Confirmation from the trustee of the Nova Debenture Trust that the Nova board “may postpone” the repayment debentures after January 20, 2022, as projected by the SoA. If Nova cannot submit such confirmation from the trustee, then “substantive proof” that the company is solvent and has sufficient liquid assets to ensure the company can meet its current liabilities in its 2022 financial year. The threat of legal action It is conceivable that this case could head to court, especially as Nova has already threatened the CIPC with legal action. Nova’s response to the first compliance notice was accompanied by a covering letter from Nova’s attorney Diaan Ellis of the law firm Faber Goertz Ellis Austen. In this letter Ellis proposed that should the CIPC reject Nova’s response, Nova is afforded an opportunity to approach the High Court for a declaratory order. Ellis threatened that should the CIPC not agree to such a course of action, Nova would apply for an interdict preventing the commission from validating the compliance notice pending the outcome of a declaratory process. Zwane confirmed to Moneyweb that the CIPC did not expressly agree to such a course of action, but that Nova did not take such a course of action. Download: The CoR19.1 Compliance Notice the CIPC issued to Nova in February 2021 Nova’s response to the CIPC CoR19.1 Compliance Notice CIPC inspector’s report in response to Nova’s response The CoR139.1 Compliance Notice the CIPC issued to Nova in October 2021 AUTHOR PROFILE Ryk van Niekerk Ryk is an award-winning financial journalist with over 20 years' experience. He is Moneyweb’s editor and hosts the Market Commentator podcast and RSG Geldsake, covering the markets, and financial and investment content, joined by CEOs, entrepreneurs, policymakers and others. Ryk is a renowned public speaker and facilitator, and a regular political and economic commentator on local media platforms. He has an MBL and M.Phil in Journalism – both achieved cum laude. Comments CIPC has no power over Sharemax rescue By Roy Cokayne Time of article published Sep 25, 2014 SHARE THIS ARTICLE: Roy Cokayne THE COURTS are the correct forum to review the conduct of the business rescue practitioner appointed to run Sharemax Investments, according to the Companies and Intellectual Property Commission (CIPC). Astrid Ludin, the CIPC commissioner, said this week that the provisions of the law did not impose an obligation on the commission to monitor business rescue practitioners. Ludin’s comments follow claims by the SA Revenue Service (Sars) that Sharemax’s business rescue practitioner, Liebenberg van der Merwe, had been appointed on December 7, 2011, but to date had not published a business rescue plan for the company. The Companies Act requires a business rescue plan to be published within 25 business days after the date on which the business rescue practitioner was appointed. Any extension had to be approved in court or the holders of a majority of the creditors’ voting interest. Sars has applied for the setting aside and termination of Sharemax’s business rescue and its liquidation because of the company’s alleged inability to pay R15.7 million in outstanding taxes. Ludin said business rescue practitioners were officers of the court and the CIPC currently licensed practitioners for each rescue process. The CIPC was also responsible for receiving the initial business rescue notice, status updates and the termination notices. “The purpose is to provide creditors and members of the public [with] information about the status of the enterprise. The status report provides us with an indication of whether the process is ongoing,” she said. Ludin stressed that progress had to be reported to the shareholders and creditors by the practitioner and the CIPC was not in a position to monitor compliance because it did not have the power to do so. “The CIPC only has powers to revoke conditional licences issued to business rescue practitioners. We did not issue a conditional licence in this case and, therefore, cannot revoke the licence,” she said. “We have no other powers related to business rescue. The court is the correct forum to review matters of compliance. Attempts to obtain comment from Van der Merwe about Sharemax were unsuccessful. However, Elle-Sarah Rossato, a Sars official, said that in an affidavit in support of Sars’s application, Van der Merwe claimed in October last year that a business rescue plan for Sharemax could not be finalised until quantification of Sars’s claim was finalised and finality was achieved on the complaints adjudicated by the ombud for financial services providers. This referred to the determination by the ombud between Gerbrecht Siegrist and Sharemax group companies, including Sharemax Investments, in terms of which all of these companies were held jointly and severally liable for the payment of R580 000 to Siegrist. Rossato said using the quantification of Sars’s claim to delay matters was “disingenuous and incorrect” because the correctness of the tax debt was confirmed at a meeting in September last year. Van der Merwe’s assertion that the business rescue plan could not be finalised until finality was achieved on the Siegrist determination was “equally disingenuous”, because the decision was handed down on January 29 last year. Rossato said it appeared the reason for placing Sharemax Investments into business rescue was to obtain a moratorium against payments of debts, as afforded by the Companies Act. “The inescapable inference is that creditors of the first respondent [Sharemax] were misled with a promise that R40 million would be coming their way, while the controllers of the first respondent [Sharemax] had already decided to abuse the Companies Act’s business rescue provisions.” About 33 000 investors invested about R4.5 billion in Sharemax’s various schemes. Sharemax was placed under statutory management by the registrar of banks in 2010 when it defaulted on monthly payments to investors “Justice delayed is justice denied” Edited to add: Article from IOL. -------------------------------------------------------------------- Madmax 9 months ago Sharemax chronicles continue: ‘Old people die, the fat cats laugh’ Phillip De Wet 2 Dec 2016 Empty promises: Glynnis Morris has not seen any return from her investment. Empty promises: Glynnis Morris has not seen any return from her investment. Every few months 70-year-old Glynnis Morris receives a letter from Frontier Asset Management. In broad strokes the letter tells her how well everything is going with Frontier’s sibling company, Nova Property, into which her entire R300 000 pension was forcibly invested. She no longer reads the letters. She goes straight back to figuring out how to get by on her R1 500-a-month government old-age grant. “It’s always the same letter, only the dates change,” she says. She has not seen a single cent from her investment for many years now, Morris says, no hint of the R3 125 monthly income — plus maybe some capital growth if the property market did well — she thought she was buying when she invested in the ill-fated Sharemax property syndication scheme in 2009. Instead she has seen many promises from the directors of Nova, which stepped in as the rescuers when Sharemax collapsed and took over Sharemax’s assets. In return for delivering that service to Morris and others, the directors of Nova each paid themselves an average of R4.9‑million in the past financial year. Morris has it better than most. She lives in a granny flat attached to the home of one of her daughters, and her two other daughters help her out with food “when I run out, which is often”. When the Mail & Guardian this week traced two other former Sharemax and now Nova investors, we found that one had died in March and the other had recently slipped into a coma. “This is what happens all the time,” said a relative of the latter. “These old people had their money taken. Now they don’t eat properly, then they get ill and they die, while the fat cats are laughing all the way.” The Nova directors — Dominique Haese, Rudi Badenhorst, Dirk Koekemoer and Connie Myburgh — deny they are anything other than businesspeople who work hard to manage the assets in which Sharemax participants had invested. But the difference between their rewards and those of the original investors is stark. This week, specialist financial website Moneyweb calculated that the four Nova directors’ combined R15.1‑million cash salaries in the past financial year were more than double the average earned by executives at most property management companies. Those cash salaries, Moneyweb said, represented 17% of Nova’s total cash receipts for the financial year. The four directors have near total control over how the company spends its money. After a legal battle stretching over several years to obtain the technically public register of Nova shareholders, Moneyweb last week revealed that the directors own 87.1% of the company, and have even greater voting rights thanks to a structure that reduces debenture holders to recipients of money and information as and when the four directors see fit. The directors value their shareholding, which in effect they received for free, at more than R1‑billion. Nova chief executive Haese played a pivotal role at Sharemax before it collapsed, and fellow director Koekemoer was also a director of Sharemax for several years. It is clear that directors pay themselves first from the company’s proceeds before any payments to the debenture holders they are responsible for, Moneyweb said. As a result, averaged over the past two financial years, Nova directors paid themselves out R3.6‑million each a year. The 31 000 debenture holders whose money they manage were paid an average of just less than R400 each. Average payments to debenture holders are a poor metric, because often the Nova directors do not see fit to provide. In the last communication Morris received, Nova was self-congratulatory about a 2013 decision “to reduce and/or cease projected monthly return payments” to debenture holders in favour of using the cash to refurbish shopping centres. Morris did not get any real say in the decision to pay her no interest, just as she was never really consulted when Sharemax morphed into Nova, or even on how her pension would be invested in the first place. In fact, she did not understand the mechanism of the investment. But then, nor did her investment adviser. Morris thought she was putting her money into The Villa, a large shopping centre to be built east of Pretoria. That sort of bricks-and-mortar investment suited her risk appetite — extremely low — as it did many pensioners, which seems to be the main reason Sharemax drew so many of their ilk. What her savings were actually buying, later perusal of a prospectus would reveal, was “an unsecured subordinated interest rate acknowledgment of debt linked to a share”. In the rush to get her money invested, that went over Morris’s head. Her investment adviser had been “hounding” her about when she would receive her pension lump sum, she recalls. The very morning it landed in her bank account he accompanied her to the bank, explained to the teller what she wanted, took the resulting cheque from the teller and had Morris sign some forms. Interrogation of the mechanism of the investment was limited. “I said to him: ‘Are you absolutely positive that I’m not being conned here?’ and he said: ‘No,’” she recounts of the 20-minute transaction. Investment advisers were notoriously keen on Sharemax, which paid very large upfront commissions: like the current Nova directors, advisers got paid regardless of whether the risk their clients were taking paid off. And some, like Morris’s adviser, had no understanding of that risk, the office of the ombud for financial services providers, known as the FAIS ombud, has consistently ruled. “It is apparent from [Morris’s advisor’s] version that he had no idea just what the investment was about and, as such, could not appreciate that the complainant was lending money to an entity, which entity would in turn lend the funds to a developer, leaving investors with no form of security whatsoever,” ombud Noluntu Bam ruled in Morris’s case this August. There was also the small detail that the shopping centre Morris was supposedly investing in had not yet been built and could therefore not generate rental income to pay her 12.5% interest — the promised payments could only come from the investments of other people. Although Sharemax has never been found by a court to have been one, that is the common structure of all Ponzi schemes. The FAIS ombud ordered Morris’s adviser to repay her investment in full, under rules that make advisers liable for losses incurred because of their negligence. For a short while it looked as if she would get back her savings. Then she was notified that her adviser had appealed against the ruling. That leaves only the chance that the four well-paid directors of Nova will see fit to direct some money her way. But she is not overly optimistic, and she is not alone. “The investors who complain to this office have received no credible information as to the steps that are being taken to repay their investment,” Bam wrote in May about another Sharemax-related complaint. “Most investors see incomplete and ghost buildings all around, with no suggestion that they will ever recover their money.” But in a June letter the Nova board told Morris that the various hurdles to cashing in on her partially built shopping centre were “constantly being addressed by the board” — just as it has been telling her since at least 2014. Nova did not answer detailed questions. Earlier this week, chief executive Haese told Moneyweb she would no longer provide information because it “will be twisted and used out of context for the purpose of further negative reporting”. Subscribe to the M&G These are unprecedented times, and the role of media to tell and record the story of South Africa as it develops is more important than ever. The Mail & News report …..2016