Johannesburg – Almost 1 000 investors, including pensioners and widows, find themselves in a financial fix after having invested millions of their retirement money in questionable property developments.
About eight developments are involved. The marketers of the investments were brokers operating under the licences of Propspec Investments and Property Spec (Propspec), said Ronnie Matthee, an auditor who himself invested a huge amount.
Propspec is linked to Katota, the controversial company belonging to Ghanaian businessman Joseph Eshun, who has been stringing more than 100 developers along for over four years with promises that he wants to buy their property developments.
Leon Erasmus, a Propspec developer, is also the president of the Katota Landlords Union RSA. He has every faith in Katota and is “satisfied with the past four months’ progress towards realising the dream of a better life for all”.
Meanwhile, senior citizens do not have money to put food on the table because the 30% interest per year that they were promised in the Propspec prospectus dried up four years ago. The investors' millions lie in developments that cannot proceed because of the economic downturn, and can therefore not deliver a return.
Unbeknown to the investors, some of the developments have been put into provisional liquidation, said Matthee. He said the investors cannot get answers and have not seen any audited financial statements.
Before the 2008 recession, he said, the 30% annual interest yield that had been promised was paid because the properties in some of the developments were selling briskly. When the sales dried up overnight the payments also stopped.
Matthee said that at that stage Katota was not in the picture and there was an offer on the table for the developments from a serious buyer.
“This offer was rejected when Katota entered the picture with its promises, following which the Propspec developments were incorporated in Katota.”
What goes against the grain is that investors are still being strung along with the illusion that Katota will come up with the guarantees.
Matthee said the Bay Bridge development at Hartbeespoort Dam has meanwhile been put into provisional liquidation, after a creditor submitted an application for its liquidation. He wants to know both why investors were not informed, and the source of the property's debt component, as the investors had paid cash for the land.
Erasmus admits that there is no outstanding debt – “only outstanding auditors' fees”.
Matthee said that at this stage it is critical for investors to regain control of their property and decide for themselves on a solution. “We don't want to have the properties liquidated, because that would simply be to the benefit of the attorneys and the liquidators.”
Erasmus said that although the prospectus promises an annual interest payment of 30%, investors were warned about poor economic conditions that might lead to delays and losses.