Johannesburg - A company linked to the Treoc group, one of
South Africa’s largest property schemes – with nearly R5bn in investments – has
been found to be a pyramid scheme, according to an official inquiry.
The executive chairperson and founder of Treoc Limited is
the flamboyant Somerset West property developer Coert Coetzee.
His “Treoc Way”
approach to property investments allows young first-time buyers, who would
normally only be able to afford to pay for one property, to own as many as
four.
The scheme allows buyers to use trusts that have been
created by Coetzee’s Treoc network to buy multiple properties financed through
different banks.
The bank loans are mainly financed with income from rentals,
while the founder of the trust remains responsible for the outstanding balance.
But Media24 Investigations has obtained documents that show
that Treoc Capital, one of the Treoc stable’s financing arms, was liquidated
earlier this year, and that investigations by concerned investors and
liquidators shortly before a confidential inquiry labelled it a pyramid scheme.
Treoc Capital promised investors 24% a year in returns on
their investments, but was unable to meet its obligations, leading to the
investigations and hearing.
The investigations also found that Treoc Capital operated as
a bank without a banking licence.
Some of the investors who brought the initial liquidation
action have started to prepare a criminal complaint against Coetzee, who denies
any responsibility, and one of his colleagues, Treoc Capital chief Ian Deyzel,
who plays a key part in the Treoc group.
The findings were reported to the Reserve Bank, but the bank
has declined to take action pending a police investigation.
Coetzee, who is planning a public listing of Treoc, this
week said he had nothing to do with Treoc Capital and the loan scheme it
operated as he had resigned from his executive and non-executive positions at a
number of Treoc entities, including Treoc Capital, in 2006.
The liquidation of Treoc Capital - a company that acted as a
bridging finance vehicle for property investors in which Treoc Limited, the
holding company for Treoc entities, was a shareholder - followed a 2009
sequestration hearing into Surf Trust.
Surf Trust was owned by a young investor who owned multiple
properties using the “Treoc Way” and who was unable to service his debt to the banks.
Werner Britz, whose monthly income was less than R20 000,
had a shortfall exceeding R20 000 on the payment of his properties worth more
than R3m obtained with Treoc’s assistance.
Planet Administrators liquidator Ryno Engelbrecht, whose
company was involved in the hearings into both Surf Trust and Treoc Capital,
said this week that he intended to use provisions of the Companies Act to
investigate the possibility that certain creditors had benefited before the
liquidation of Treoc Capital.
Coetzee this week told a group of top property experts
attending a Real Estate Investor Group property development seminar that
investors should buy more property by using rental income to repay bank loans.
It is unclear how exposed South Africa’s largest commercial
banks were to Treoc-linked loans.
Absa and Nedbank did not respond to requests for comment.
First National Bank head of home loans, Jan Kleynhans, said
while a few loans had been processed about three years ago, no current ones had been processed.
Standard Bank’s Erik Larsen said the bank had no direct
exposure to Treoc, but it could have financed some of the trusts that were part
of the investment scheme.
“We would have had no way of knowing this (link to Treoc) as
it was not disclosed upfront and it would be difficult to trace. We will
obviously continue with our investigation,” he said.
Coetzee on Friday launched his new book, Sien die lig of
sien jou gat! (See the light or see your backside!).
- City Press