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Johannesburg - The Financial Services Board (FSB) has begun an investigation into Edwabond, the financial services operation responsible for selling debentures in unlisted Edwafin.
Fin24.com was alerted to this development by Mario Koppers, an Edwafin debenture holder who is seeking answers as to why the company has been unable to meet interest repayment obligations.
The FSB is scheduled to meet with Edwabond on April 8.
Lawrence Muravha of the FSB confirmed that the meeting would be taking place.
Edwafin raised capital by issuing debentures which would see investors' capital protected and allow them to earn fixed interest. Investors became concerned when interest due to them was not paid in October 2008.
On Edwafin's website, Edwabond Capital Options is described as the "fund-raising arm of the entire group" and the site includes a line which says: "Edwabond pursues exceptionally profitable projects, and before investing undertakes a careful due diligence procedure to ensure that the post-investment profitability is sufficient to generate returns to Edwabond of 60% per annum-plus."
Edwabond, listed with the FSB as a financial services provider, is permitted to provide advice and intermediary services about debenture and security instruments. Donald Graham Hutchinson is identified as a key individual within the group and Clive Dudley Le Meme as the compliance officer registered with the FSB.
Taking to cyberspace
Edwabond lists a number of "preferred advisers" through whom its products are sold.
Of the 21 advisers listed on the Edwabond website, only four were licensed to provide intermediary services or advice related to debenture instruments, according to the information on the FSB website.
Koppers took his fight against Edwafin to the internet as he became increasingly concerned with the lack of communication from the group.
Interest repayments stopped abruptly in October 2008, although Kopper did indicate that he had received a payment equating to 25% of his interest due on Thursday April 3.
Edwafin originally comprised operating businesses, including Rainbow Paints and Dynamic Motor Company (DMC), which Edwafin says will manufacture low-cost vehicles for the South African market. The vehicle has yet to come into production.
- Fin24.com