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Johannesburg - Beleaguered property company Resilient has not only faced accusations of market manipulation before, but was also the focus of a criminal investigation by the Hawks.
News24 has seen case file documents which reveal that the Resilient stable - which comprises Resilient Reit, Nepi Rockcastle, Fortress and Greenbay - was the target of a multi-disciplinary task team, which was investigating numerous charges against some of the companies' directors, in 2013.
In recent weeks, the Resilient Group has been accused of artificially inflating its income and net asset value. In response, its share price has taken a significant knock.
In February, two reports were made public, one by 36ONE Asset Management and the other by Arqaam Capital, which both questioned why the Resilient Group had such high premiums to net asset values. They suggested the group had questionable accounting practices.
36ONE said that they believed the "premium valuation of each of the group companies did not arise from normal market activity, but from deliberate (and frequently concealed) actions by some of the influential owners and key management of the group".
Share price manipulation
Arqaam estimated that in 2017, related and "seemingly connected" parties accounted for R122bn worth of trade in the shares of Resilient, Fortress B, and Greenbay through hundreds of group companies.
In response, Resilient said 36ONE's research was more informed by its large short position than by objective analysis and that the allegations of share price manipulation were not substantiated and would not stand up to independent scrutiny.
When the reports came out, R110bn was wiped off the value of the Resilient Group's shares "in what some analysts believe is irrational dumping triggered by an aggressive profit-taking campaign by two or three local hedge funds", reported the Financial Mail.
News24 understands that one of the biggest losers is the Public Investment Corporation (PIC) who had at least R13bn invested in the Resilient Group of companies and lost billions of rand in less than a month.
PIC head of Corporate Affairs, Deon Botha, said the PIC was aware of developments at the Resilient Group of companies and like all shareholders the PIC was concerned about allegations levelled against these companies and the resultant decline in their share prices.
Looking back many years, however, reveals that the allegations against the group are not new.
In 2011, Noseweek followed by the Sunday Times in 2012, published articles alleging Resilient was involved in market manipulation and insider trading.
Resilient at the time, said the allegations were nonsense and the Johannesburg Stock Exchange (JSE) and Financial Services Board (FSB) investigations that were subsequently launched seemingly went nowhere because whistleblowers wished to stay anonymous.
Criminal cases
What the public was not aware of is that two criminal cases against the company were launched in 2012 and 2013.
Documents which give insight into a multi-agency investigation involving the Hawks, the National Prosecuting Authority (NPA), the FSB and the JSE at the time, have been seen by News24.
They reveal that a case, under the title "Old Age", was being investigated from the Germiston Organised Crime offices.
"Supporting documentation and the information supplied provided reasonable grounds to suspect high-level criminal activity to the prejudice of public investors, shareholders and public funds," a case docket into the investigation claims.
Arqaam claims that he estimated that in 2017, related party and "seemingly connected" parties accounted for R122bn worth of trade in the shares of Resilient, Fortress B, and Greenbay through hundreds of group companies.
The documents also reveal that "the suspects", who were some of the directors of the group, brought a High Court application to interdict financial institutions from supplying the police with information and documentation in terms of Section 205 of the Criminal Procedure Act.
The investigation was focused on six alleged offences: Corruption, money laundering, market manipulation, insider trading, failing to comply with the prerequisites of the Securities Exchange Act and JSE regulations, as well as fraud for not complying with the aforementioned legislation.
The case docket goes in depth into a number of what appears to be questionable property purchases by the company which, if true, point to serious criminal misconduct.
But even though a formal operational plan was presented and agreed to by the Hawks, it appears that after November 2013, the investigation lost momentum.
Allegations
Queries to the Hawks on the status of the investigation went unanswered.
Resilient told News24 that there are repeated allegations against the company because competitors and market participants have attempted to tarnish the company's good name to benefit commercially.
"These allegations have been made using a number of official and unofficial channels, including more recently informal reports leaked to the public domain by hedge fund managers to coincide with an aggressive short selling campaign set to benefit them directly," Resilient said.
The company said that, after the earlier allegations, an investigation by the JSE and FSB took place and was closed. Resilient said the board was satisfied that there was no substance to these allegations.
The company said that the Hawks investigation was initiated following a High Court judgment "which found that the police officials who had initially launched investigations into the financial affairs of the group, had acted in an irregular manner".
Resilient said there was no substance to the complaint at the time which was brought about by a commercial competitor who has "long since dropped civil litigation".
Resilient continues to co-operate fully with any authorities undertaking genuine investigations and in response to the most recent allegations, the Resilient board has also appointed the former Auditor-General of South Africa to undertake an independent investigation which is currently under way," they said.
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