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Hound that heads the pack

In January this year the share market finally woke up to what Noseweek had first exposed in February 2011 (yes, seven-and-a half years ago!): Resilient, the largest real estate group listed on the JSE is a criminal enterprise run by master crooks.

That tells you that Noseweek deserves its reputation for being ahead of the pack, sometimes by years, but what does that tell you about the state of regulation and law-enforcement in South Africa? Not to speak of the ethics of the major fund management companies who continued to invest their clients’ money in this obviously dicey property group?

Since January Resilient and its three major associated companies Fortress, Greenbay Properties and Nepi Rockcastle have been at the centre of a share manipulation scandal that caused a mass sell-off of their shares and saw their share prices drop by between 41%-62%. SA investors lost almost R120bn in share value.

The Financial Sector Conduct Authority (FSCA) – new name for the old Financial Services Board – has still to conclude the investigation  it began in March into alleged insider trading and market manipulation, as well as potential false and misleading reporting by the Resilient group.

“We have faced numerous allegations, which we showed had no basis,” Resilient flag bearer Des de Beer cheekily claimed when interviewed by Business Day.

“They need to come back to us with something in the next few months, or we will have to take legal action."

One of those allegations concernes a newly identified surrogate trader/ramper and churner of Resilient group shares, a certain Hendrik Johannes Oberholzer, a close friend and associate, it transpires, of the original ghostly inspirer of the entire Resilient scheme: Roque Hafner. Neither has ever gone on record as a director.

Only now, in August, did a group of the major investors – the PIC, Allan Gray, Coronation, Old Mutual, Investec, Stanlib, Sanlam and Prudential –  issue a joint statement (safety in numbers?) calling for an independent share price investigation at Resilient and its associated companies.

Some of the Resilient group directors have not been slow in taking some interesting action of their own. In December De Beer and his co-directors Andries de Lange and Nick Hanekom transferred their shareholdings – worth a total of R8.2 billion – to companies registered in Namibia, each of them in turn owned by a trust in which one or other of these directors have a “beneficial interest”.

Way back in 2011 the East Rand Special investigation unit opened a criminal investigation into Resilient and Fortress as well as a number of the directors of those companies. A magistrate granted the investigating officer a subpoena to seize relevant records from a number of banks and stock brokers. These directors and banks delayed proceedings with high court applications challenging the subpoena. They were ultimately unsuccessful: in February 2015 Judge Cassim ruled that the subpoena was valid and the investigation should proceed (nose191). But nothing further has been heard of the case.

The whole Resilient saga and Noseweek’s role in it, is equalled only by our coverage of the JCI/Randgold saga and our exposure of Investec’s dirty role in it. Noseweek already pointed where all that was going as early as November 2006 – close on 12 years ago! (see nose85) and has done so at regular intervals ever since.

But only now, on 4 September this year, has the Inspectorate of the Companies and Intellectual Property Commission (CIPC) issued a compliance notice to the directors of JCI (Peter Gray and Peter Thomas, both Investec appointees, and Denis Daly, son in law of old Kebble associate, Monty Koppel) to submit to the CIPC fully compliant Annual Financial Statements for 2011 to 2018 within 60 days.

For the past decade KPMG has assisted Investec in ensuring that JCI never produces legally compliant Annual Reports. This ensured that JCI was never called upon to return the full amount Kebble stole from Randgold – because the proceeds of that crime have in the meantime to a significant degree ended up in Investec’s pocket. 

In her compliance notice dated 4 September, the inspector poses the question: “Why would a review of historical data place JCI Ltd in an undesirable position [as alleged by its directors and auditors, should they have to appoint new auditors]?” 

Her speculative reply: “Is it that it can possibly reveal, as alleged, [JCI’s] insolvency as far back as 2013?” Which could trigger the unraveling of the fraud – and the directors can be held liable for the company’s debts. Claims against JCI arising from the theft could total in excess of R11 billion.

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