Objection to witness evidence delays former Sharemax auditors’ disciplinary hearing Three auditors face a total of 413 improper conduct charges related to the failed property syndication scheme.

Objection to witness evidence delays former Sharemax auditors’ disciplinary hearing Three auditors face a total of 413 improper conduct charges related to the failed property syndication scheme. By Roy Cokayne 26 Jan 2021  00:01 The half-built Villa Retail Park: a tombstone of the costly investment scheme and one of the biggest eyesores in Pretoria. Image: Moneyweb The half-built Villa Retail Park: a tombstone of the costly investment scheme and one of the biggest eyesores in Pretoria. Image: Moneyweb The resumption of the Independent Regulatory Board for Auditors’ (Irba’s) disciplinary hearing against the former auditors of the failed Sharemax property syndication scheme was adjourned early on Monday following defence objections to the evidence to be presented by a witness. The hearing previously convened in March 2020 but was brought to a premature temporary halt by the Covid-19 pandemic. Read: Covid-19 halts Sharemax auditors’ disciplinary hearing Three former Sharemax auditors, 413 improper conduct charges Mike Maritz – counsel for the three audit practitioners facing a total of 413 improper conduct charges related to Sharemax – objected to the type of evidence Freddy Fobian would be giving at the hearing. Fobian, a former Irba investigator who is currently working as a forensic accountant at the UK Financial Reporting Council, was not called as an expert witness. Maritz said Advocate Kate Hofmeyr, appearing for Irba, has made it perfectly clear she wants Fobian to identify documents that underpin or support or are relevant to particular charges being faced by the three audit practitioners. “This witness [Fobian] then becomes the arbiter of what is relevant or what underpins or what supports a particular charge. He can only do that if he expresses an expert opinion,” said Maritz. “It brings into play expertise and he [Fobian] is not called as an expert. It is no answer to say that he will only identify documents that support or underpin the charges, but what about the other documents which she [Hofmeyr] will not refer to and has excluded because they do not suit the conclusion or the inference? “All of that brings into play a value judgment by the witness to say a document is either relevant, or supports or underpins or not. In our view it’s entirely inadmissible,” he said. Necessary detail Hofmeyr said she will take Fobian through the charges and the voluminous documents in order for the documents that support the charges and their detail to be properly placed before the disciplinary hearing. “The mere fact that we take this committee through the documents that underpin each charge cannot in and of itself be prejudicial to the respondents in any way,” she said. Hofmeyr stressed that she will not ask Fobian questions that solicit opinion evidence or for conclusions. “But it is very important that this committee has an opportunity to go through the bulk of these charges. “They are lengthy, they are detailed and there are documents that are relevant to each of them that should be properly placed before you. “It is our submission that he [Fobian] should be permitted to do so,” she said. Hofmeyr added that she was doing this against the threat by the three audit practitioners who have indicated to the disciplinary committee that they have not yet committed to testifying at the hearing. Chair calls for written submissions Advocate Anthea Platt, chair of the disciplinary hearing, requested both Maritz and Hofmeyr to provide the committee with written submissions by 16:00 on Monday relating to Fobian as a witness. Platt said she did not want the hearing to be interjected all the time, resulting in a 30-minute debate to deal with the objection. “That will just mess up our record completely and it will just be a whole lot of legal argument as opposed to trying to hear the witness testify,” she said. The hearing will resume on Tuesday when the committee will give its ruling on the objection. Jacques Andre van der Merwe is facing a total of 340 charges, Danie Dreyer 40 charges and Petrus Johannes Jacobus Bekker 33 charges. They were all directors of ACT Audit Solutions Incorporated at the time when they allegedly committed the offences, while Van der Merwe was also the managing partner of the firm. All three previously pleaded not guilty to all the charges against them. Earlier objection Maritz earlier also objected to Hofmeyr highlighting three important legal instruments that operated at the time the three audit practitioners were doing their audit work and limited assurance work for Villa Holdings and Zambezi Holdings. He said what started out as a professed brief recap of Hofmeyr’s earlier opening statement last year “has now transmigrated into a lengthy exposition of all new material that by no stretch of the imagination is a recap at all” and is new. Maritz added that much of what Hofmeyr has said did not even find traction anywhere in the charge sheets, notably her reference to Government Notice 459 on public property syndications. “We are not going to trial in a manner that will amount to a trial by ambush,” said Maritz. “This appears to us to be a substantial deviation from the charge sheet and the ambit thereof so we are raising that as an objection. “We are not going to permit an extension of the ambit of the charge sheet from our side,” he said. The three important legal instruments referred to by Hofmeyr were: – The Commercial Paper Notice in Government Gazette 2172 in 1994 that permitted companies to issue commercial paper without needing to be registered as a bank; – Government Notice 459 published in 2006 issued by the Minister of Trade and Industry, which required the promoters of public property syndication schemes to make certain prescribed information available to potential investors in such a scheme; and – The provisions of the 1973 Companies Act required a prospectus to adhere to the specifications of Schedule 3 of the Act, which required a particular report to be provided by the auditors of the company that was issuing a prospectus. Hofmeyr admitted that she did not previously traverse the detail on these three legal instruments, but they were flagged because they are certainly among the charges the three practitioners face. She said there is no debate that Government Notice 459 is of significance in the case. Read: Part 1: ‘Corporate capture’ of Sharemax rescue vehicle (Nov 2016) Part 2: Shareholder structure hides how directors acquired 87.1% of Nova shares (Nov 2016) Is the Sharemax landmark worth R1.6bn or R616m? (Jan 2017) Irba asked to investigate Nova auditor (Jul 2017) “There is charge of a reportable irregularity that is levelled at Mr Dryer that he failed to report the reportable irregularity when he discovered that withdrawals were being made from investor funds at a point in time prior to the transfer of the property into the investment vehicle. “That is a charge about an unlawful act and the law which governs the unlawfulness is Government Notice 459,” she said. Hofmeyr said the auditors in this case also faced charges because they failed to include reports as required in terms of the 1973 Companies Act.

REPRESENTATIONS: SHAREMAX – BROOKLYN CAS 697/10/2010

The National Director of Public Prosecutions National Prosecuting Authority VGM Building Hartley Street Weavind Park 0002 Per E-mail: SBatohi@npa.gov.za mmutshivhana@npa.gov.za Dear Adv. Batohi, REPRESENTATIONS: SHAREMAX – BROOKLYN CAS 697/10/2010 OUR LETTER DATED 22 JUNE 2020 AND ATTACHED UNNUMBERED LETTER FROM ADVOCATE R DE KOCK DATED 29/07/2020 REFER: 1. The purpose of this letter is to direct representation to your office regarding the above-mentioned matter. 2. Advocate De Kock’s letter dated 29 July 2020, under the heading CURRENT POSITION OF THE NPA states that “As a result of this there appears to be no “illegality” as the companies and their underlying assets taken over by Nova complied with the Bank’s Act and can therefore not be regarded as assets acquired from the proceeds of crime.” 3. We infer from the abovementioned that a decision was taken not to proceed with an asset forfeiture application. 4. We are calling for Advocate de Kock’s decision regarding an asset forfeiture application to be reviewed. Moreover, this also serves as notice that based on our understanding of the facts and the law we view the decision as irrational and incongruous with the facts and/or the law. 5. We accept that you share our commitment to ensure that justice is done and that the principle of equality before the law is upheld. Having a reasonable understanding of the functioning of the NPA we hope that those who briefed Adv de Kock merely exhibit a lack of understanding of the law, the facts or the practical implementation thereof in the interest of the victims of crime. 6. Having been exposed to the horrific stories of those who have lost their life savings we feel obliged to enlighten you with our view. This we do with the stated caveat that we have not had access to the police case docket and have only utilised publicly available information. We infer that Adv de Kock was provided with representations by Nova and/or individuals that may be benefitting under the NOVA scheme and neither have we been privy to these arguments. 7. Kindly forgive us for stating the obvious and for repeating our earlier arguments. This we, however, do in an endeavour to ensure that our argument is understood 8. The entire Sharemax investment scheme was declared illegal following proven transgressions of the Banks Act. In terms of this Act, no person may conduct the business of a bank unless such a person is a public company and registered as a bank which Sharemax was not. 9. During 2012 all the property-owning companies promoted by Sharemax were transferred to and became part of Nova Properties. The Nova scheme cannot absolve the contravention of the Banks Act by Sharemax. The Nova scheme has no bearing on the initial criminal conduct of Sharemax. The mentioned withdrawal, by the Reserve Bank, of the directive to repay the investors can also not absolve the contraventions of the Banks Act. Whatever administrative directives the Reserve Bank may have withdrawn is a nullity if crimes were committed. We feel strongly and consider this an aspect that perhaps did not get the attention it deserves and we, therefore, reiterate that if the original funds were procured through criminal conduct it remains proceeds until restitution is made to the victims. 10.The fact that the inspectors reported the contraventions of the Banks Act to the Serious Economic Offences Unit of the South African Police Service on 09 March 2012, indicates that they shared the same view. This was done after the establishment of Nova. 11.Advocate de Kock’s assumption that the Reserve Bank “appears to have supported” the Nova rescue vehicle is correct but the fact remains that it has no bearing on the initial criminal conduct by Sharemax. Our argument may seem crude but the principle is stark that the Reserve Bank cannot condone criminal conduct or affect the reality that assets were procured with the proceeds of crime. 12.The logic of Advocate de Kock’s argument that the NPA/AFU will “be assuming the functions of Nova” if it should proceed with an asset forfeiture escapes us. The NPA should not be seen to be transferring their obligation to deal with proceeds of crime in terms of POCA to Nova. The NPA is obliged and equipped through the Asset Forfeiture Unit (AFU) to take action concerning the proceeds of crime. We argue that a Chapter 6 Asset forfeiture intervention is required in the interests of justice and protecting the rights of the investors since the other safeguards have failed them dismally to this point. 13.Illegally obtained property which is “proceeds of crime” cannot be manipulated utilizing a compromise to change its nature. It remains “proceeds of crime” as defined in POCA. 14.The failure to proceed with an asset forfeiture application, based on the reasons provided by Advocate De Kock, may be viewed as irrational. The NPA has positioned itself as an organisation that is victim orientated in its application of the law. We are convinced that an asset forfeiture application brought by the NPA will go a long way in restoring the trust of society in the NPA’s commitment to deal with commercial crime. 15.Likewise, an inference is possible that the delay to prosecute the directors of Sharemax is not only inexplicable but may contribute to the dissemination of assets by the board members of Nova which may, in turn, deprive the investors of their investment funds for an extended time. Kindly also consider the undue delay and seeming disinterest by the prosecution team dealing with this matter to ensure a prosecution. 16.The mere fact that Nova may be a compromise “to protect the interest of investors” cannot and should not excuse Sharemax and the directors for the illegal contravention of the Banks Act. 17.We kindly request a re-evaluation of the decision not to proceed with an application in terms of Chapter 6 of POCA. Yours sincerely, GERRIE NEL PRIVATE PROSECUTOR EMAIL: onsvervolg@afriforum.co.z

NPA decides not to freeze Nova’s assetsAfriForum says decision is ‘irrational’ and ‘incongruous -SHAREMAX

NPA decides not to freeze Nova’s assetsAfriForum says decision is ‘irrational’ and ‘incongruous’. By Ryk van Niekerk 2 Sep 2020 Former state prosecutor Gerrie Nel, representing AfriForum, maintains that an asset forfeiture intervention is required since other safeguards have failed investors ‘dismally’. Image: Phill Magakoe, ReutersFormer state prosecutor Gerrie Nel, representing AfriForum, maintains that an asset forfeiture intervention is required since other safeguards have failed investors ‘dismally’. Image: Phill Magakoe, Reuters The National Prosecuting Authority (NPA) has decided not to freeze the assets of the Nova PropGrow Group, the rescue vehicle of the failed Sharemax property investment scheme. The decision follows civil rights movement AfriForum asking the NPA in June to seize Nova’s assets on the basis of the South African Reserve Bank’s 2010 finding that Sharemax had contravened the Banks Act. AfriForum said this was a criminal offence, meaning that Sharemax had acquired the properties with the proceeds of crime. The Reserve Bank’s finding triggered Sharemax’s collapse. Nova was then established through a Section 311 Scheme of Arrangement (SoA) to take ownership of the properties and to repay investors. AfriForum contends that the SoA does not remit Sharemax’s contravention of the Banks Act, and that Nova acquired assets that were procured with proceeds of crime. AfriForum labelled the NPA’s decision not to freeze Nova’s assets “irrational and incongruous” and asked Shamila Batohi, national director of public prosecutions, to take it on review. Read: AfriForum asks NPA to freeze Nova’s assets Nova: Insolvent, or in a sound financial position? NPA’s letter to AfriForum Moneyweb is in possession of a letter the NPA sent to AfriForum in response to the request to freeze Nova’s assets. In the letter Advocate Rodney de Kock, deputy national director of public prosecutions, motivated the NPA’s decision. He also acknowledged that the Hawks had handed the case to the Gauteng division of the Director of Public Prosecutions for a prosecution decision and that Nova, through its attorneys, submitted “representations” in response to AfriForum’s action. (Moneyweb has not had sight of this letter and has asked the attorneys for a copy. At the time of publication, it had not been forthcoming. However, Nova issued a press release in response to the AfriForum claims shortly after the original announcement, which can be read here.) De Kock stated that the court sanctioned the SoA and that the Reserve Bank supported the scheme. “As a result of this there appears to be no ‘illegality’ as the companies and their underlying assets taken over by Nova complied with the Banks Act and can therefore not be regarded as assets acquired from the proceeds of crime.” He added that Nova continues to sell properties and “they have already sold a large number of the properties”. De Kock also said that if the NPA froze the assets, the NPA would merely assume the functions of Nova. “The purpose of Nova is to compensate the investors who lost their money. The purpose of any possible asset forfeiture intervention, at this stage, will be exactly the same,” said De Kock. “The NPA/AFU [Asset Forfeiture Unit] will therefore be assuming the functions of Nova at great expense to itself.” AfriForum’s response In response, Advocate Gerrie Nel, head of the AfriForum Private Prosecution Unit, wrote directly to Batohi and called for a review of the NPA’s decision not to freeze Nova’s assets. “The entire Sharemax investment scheme was declared illegal following proven transgressions of the Banks Act … During 2012 all the property-owning companies promoted by Sharemax were transferred to and became part of Nova Properties. The Nova scheme cannot absolve the contravention of the Banks Act by Sharemax,” he wrote. “We feel strongly and consider this an aspect that perhaps did not get the attention it deserves and we, therefore, reiterate that if the original funds were procured through criminal conduct it remains proceeds until restitution is made to the victims.” Nel said AfriForum’s argument “may seem crude, but the principle is stark that the Reserve Bank cannot condone criminal conduct or affect the reality that assets were procured with the proceeds of crime.” Further, De Kock’s argument that the freezing of Nova’s assets would result in the NPA and AFU assuming the functions of Nova “escapes us”, said Nel. “The NPA is obliged and equipped through the AFU to take action concerning the proceeds of crime. We argue that a Chapter 6 asset forfeiture intervention is required in the interests of justice and protecting the rights of the investors since the other safeguards have failed them dismally to this point,” Nel wrote. Nel also criticised the delay in the decision to prosecute. “An inference is possible that the delay to prosecute the directors of Sharemax is not only inexplicable but may contribute to the dissemination of assets by the board members of Nova which may, in turn, deprive the investors of their investment funds for an extended time.” AUTHOR PROFILE Ryk van Niekerk MORE ARTICLES Financial journalism is in Ryk's blood. He has been in the industry for 20 years, and is looking forward to the next 20. Ryk has won numerous journalism awards, including several Sanlam Financial Journalist of the Year category awards and the coveted Radio Journalist of the Year award in 2016. He was also acknowledged as the National Press Club’s Editor of the Year in 2013. Ryk is also the anchor of the largest national business radio show in South Africa, RSG Geldsake, and hosts other dedicated personal finance and entrepreneurship shows. He is a well-known public speaker and facilitator, and a regular political and economic commentator on many South African television and radio platforms. Ryk has an MBL and M.Phil in Journalism – both achieved cum laude. Get full access to Moneyweb's financial insights and support quality journalism. .

AfriForum soek geregtigheid vir slagoffers van Sharemax-bedrog

> AfriForum soek geregtigheid vir slagoffers van Sharemax-bedrog

deur Alet Rademeyer | Jun 22, 2020

AfriForum en adv. Gerrie Nel, hoof van die burgerregtewaghond se privaatvervolgingseenheid, wil toesien dat geregtigheid ná byna ’n dekade vir die slagoffers van die Sharemax-bedrogspul geskied.

Sowat 34 000 beleggers het meer as R4,5 miljard in die skemas gestort en die meeste van hul geld verloor.

In agt jaar se tyd het die Nasionale Vervolgingsgesag (NVG) nog geen stappe gedoen om oortreders en direkteure te vervolg nie.

Kallie Kriel, uitvoerende hoof van AfriForum, sê ’n duidelike boodskap moet uitgestuur word dat mense wat ander se hardverdiende geld steel nie daarmee kan wegkom nie. “Die skema was van die begin af onwettig, terwyl die direkteure steeds in weelde leef. Hierdie skema kan gelykgestel word met die bedryf van ’n misdaadsindikaat en daarom moet hulle optrede onmiddellik gestop word. Mense werk hard om nie arm af te tree nie. Die slagoffers verdien geregtigheid.”

Nel en die privaatvervolgingseenheid het ’n bewaringsbevel opgestel om te verhoed dat die Nova-eiendomsgroep (vir alle praktiese doeleindes ’n voortsetting van Sharemax) die maatskappy se eiendomme teen pryse ver onder die markwaarde daarvan verkoop – ten koste van aandeelhouers. AfriForum het hierdie bevel aan die NVG gestuur en geëis dat hulle dit in ’n hof bring.

Die batebeslagleggingseenheid van die NVG kan hierdie eiendomme ingevolge ’n hofbevel in bewaring neem, maar die vervolgingsgesag het nog geen só ’n aansoek gebring nie.

In die aansoek wat AfriForum se privaatvervolgingseenheid vir die NVG opgestel het, voer die burgerregte-organisasie aan dat die eiendomme ter sprake bekom is met die opbrengs van onwettige aktiwiteite, insluitend geldwassery en bedrog soos vervat in die Wet op die Voorkoming van Georganiseerde Misdaad, Wetno. 121 van 1998, asook die Wet op Banke, Wetno. 94 van 1990. Aangesien die eiendom instrumenteel was tot die pleeg van die bogemelde misdade teen die aandeelhouers, en aangesien die maatskappy Nova sedert 2012 in beheer is daarvan (maar dié maatskappy gestig is met die opbrengs van onwettige deposito’s wat deur Sharemax van die publiek aanvaar is) het AfriForum versoek dat die NVG hierdie eiendom in bewaring neem.

“Ons ondersoeke het ook bewyse opgelewer dat die raadslede van Nova vir hulself buitensporige salarisse betaal, en ook eers hul eie salarisse betaal voordat hulle skuldbriefhouers uitbetaal. Dit blyk ook dat Nova besig is om van geboue ontslae te raak in ’n poging om likwidasie te vermy – ten spyte van die verdere reuse-finansiële verliese wat dit vir aandeelhouers kan inhou. Die Nova-raad se optrede is gewetenloos en daarom was ons genoodsaak om hierdie aansoek op te stel en vir die NVG te stuur om te verhoed dat aandeelhouers verdere verliese ly.

“Ons wil baie graag met die NVG saamwerk en bied al ons hulp tot hul beskikking aan sodat daar vordering in die saak kan kom,” sê Nel.

Herman Lombaard, wat ’n trust verteenwoordig wat in Sharemax belê het, meen die jongste stappe is die beste ding wat in jare gebeur het. “Soveel mense is reeds dood of het selfmoord gepleeg weens hierdie debakel.”

André Prakke, ’n ouditeur wat ook jare lank ondersoek oor Sharemax gedoen het, sê verskeie wette is oortree en bedrog is gepleeg. Daar moes baie lankal teen die direkteure opgetree geword het.

Eva Kautzy, ’n slagoffer wie se pa weens die impak van die bedrogspul in 2013 voor die Sharemax-gebou selfmoord gepleeg het, het bewoë gesê sy is dankbaar dat mense nou kan hoor waardeur beleggers soos haar pa is en hoe swaar hulle gekry het.

Sharemax chronicles continue: ‘Old people die, the fat cats laugh

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.


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

Sharemax woes not yet over

Sharemax woes not yet over
29 Mar 2011
Forensic investigator, Pierre Hough, claims that an offer of compromise to Sharemax creditors won’t resolve problems facing investors in the scheme.

Sharemax’s application for permission from the High Court to reach an offer of compromise with creditors may be halted according to Chase International managing director Pierre Hough.

He says the planned offer of compromise is trying to legalise an illegal act and is prejudicial to the rights of prospective investors.

Hough, who is a business strategist and specialist forensic investigator, alleges that there were no investors or shareholders in either The Villa or Zambezi Retail Park because a condition that had to be met for the scheme to become effective had not been fulfilled.

He says this condition was that the properties be transferred to the syndication vehicle and this condition had not been met. He says that in terms of the government notice on property syndications, the money deposited by prospective investors into the scheme had to be repaid to them

Hough says that the government notice is clear: the money deposited must be repaid to the applicants and he claims, the issue of share certificates to prospective investors is “highly irregular” and “possibly fraudulent”.

Meanwhile, Dawie Roodt, chairman of the Efficient Group and a director of Sharemax said that he cannot comment on claims that there are no shareholders in Zambezi Retail Park to The Villa.

He confirmed that the planned offer of compromise would probably involve four Sharemax schemes: Zambezi Retail Park, The Villa and Sharemax’s income and growth plans. He says the application to the High Court will be launched soon.

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About the Author
Paddy Hartdegen
Paddy Hartdegen

Freelance columnist at property24.com.

Sharemax: director unhappy over cold shoulder

Sharemax: director unhappy over cold shoulder

Independent directors Hartzenberg and Maartens are not directors of new company.
Julius Cobbett  /  29 March 2012 12:22

JOHANNESBURG – The Sharemax rescue scheme has resulted in directors Dominique Haese and Dirk Koekemoer strengthening their control of investors’ assets.
This is because two independent directors of the syndication companies, former judge Willie Hartzenberg and Sharemax investor Koos Maartens have not been appointed directors of the new company formed as part of the Sharemax rescue scheme.
The new public company, Nova Property Group Holdings, owns the entire Sharemax property portfolio. Company records show that it has just three directors: Haese, Koekemoer and accountant Rudi Badenhorst.
Two of these directors, Haese and Koekemoer, were involved with the old Sharemax structure. Thus, the Nova board is dominated by directors who are arguably responsible for getting Sharemax investors into the pickle they currently find themselves in.
Elderly Sharemax investor Koos Maartens was appointed to the boards of the various Sharemax boards after the resignation of economist Dawie Roodt.
Maartens tells Moneyweb that he was asked by Haese whether he wished to continue his involvement with Sharemax as a director of Nova. He expressed his wish to do so.
However, Maartens says that he has not received any invitations to attend board meetings.
Maartens says his efforts to get an explanation for this apparent “freezing out” have been unsuccessful.
It seems reasonable for Sharemax investors to ask why they lack representation on the Nova board.
Haese has been involved with Sharemax for several years. Haese was Sharemax’s financial director before being promoted to managing director in October 2010 after the resignation of founder Willie Botha. Haese’s father-in-law, Waldemar Gustav Haese, has performed a highly controversial valuation on Flora Centre. The Flora Centre’s auditors, ACT Audit Solutions, have accused WG Haese of lacking independence.
Furthermore, the independence of Nova’s third director, accountant Rudi Badenhorst, has been questioned. Badenhorst has long shared his business premises with Sharemax Investments. He was also one of the directors to bill investors hundreds of thousands of rand for consulting fees as part of the rescue process. (See: Sharemax: Big bucks for syndication directors.)
At last count Badenhorst had earned R600 000 for consulting services billed at R1 500 an hour. A further amount of R500 000 had been budgeted for his services.
In contrast, Badenhorst’s co-independent directors, Hartzenberg and Maartens were paid considerably less for their efforts. Hartzenberg stands to make R240 000. For Maartens an amount of R76 000 was budgeted.
Maartens’s predecessor, economist Dawie Roodt, did not receive any payment for his services as an independent director.
Judge Hartzenberg does not share Maartens’s concerns about the composition of the Nova board.
Hartzenberg says he would not wish to serve as a director of Nova, even if asked, because it would take up too much of his time.
Hartzenberg says he is confident that the board is in competent hands.
“I have no problem with Dirk and Dominique,” says Hartzenberg. “I can tell you, if there’s someone who knows what’s going on it’s Dominique. I am impressed with that woman and I’ve worked with many people in my time. I’m not scared that she’d be pulling wool over the eyes of investors.”
Hartzenberg also had a good word for corporate lawyer Connie Myburgh, who has been the architect of the Sharemax rescue scheme. “If it was not for Connie Myburgh, the whole thing would have been liquidated.”
Hartzenberg says that the press “has a warped idea” of what happened with Sharemax. “The press gave the impression that there was fraud and that sort of thing, which there was not.”
At the time of writing Haese had not responded to e-mailed and telephonic requests for comment.