Directors blow investors' money

2012-04-29 12:13

Johannesburg - Over the past week a horrific tale has unfolded of how around R1.15bn belonging to investors who thought their money was safe in a money market has apparently been plundered for personal gain by the directors of various investment companies.

Some of the money (almost R1m) was allegedly even used by the directors to accompany the Springboks on a rugby tour and covered up in the books as “management costs”.

The curators of Corporate Money Managers (CMM), the Cash Managed Fund (CMF) and 10 associated companies are on a fierce offensive to recover money for the investors in the CMF.

Last week the curators served a summons for R1.1bn on Absa Group [JSE:ASA] which, as CFM trustee, said the curators, was supposed to have picked up the malpractices.

But a summons for the same amount was also issued on 21 individuals, 18 of whom were allegedly part of the "reckless, negligent or deceitful management" of 26 companies through which investors' money in the CMF was apparently siphoned.

The curators' court documents contend that the individuals were all involved in managing CMM and allegedly enriched themselves through misappropriation of the money invested in CMF.

CMM raised money from investors and invested it in the CMF, which was supposed to be a safe money market investment.

The joint and separate actions of the directors of the bank, according to the curators, had led to investors in the CMF suffering a R1.15bn loss.

It is this amount that the curators are now attempting to recover from individuals who, according to one of them, had been involved in nothing other than fraud which they attempted to cover up.

The money in the CMF was not, as had been intended, invested in safe money market instruments, but was allegedly used as bridging finance for dubious property transactions, loans to companies in trouble and for property developments.

And when things started to go wrong, the losses were allegedly concealed by the issue of worthless promissory notes between the various related companies.

These promissory notes, issued between the related companies, were also lodged with Absa as proof that the CMF, of which Absa was the trustee, would be able to meet its obligations to investors.

The promissory notes were however worthless because the companies had no assets and, according to the curators, the issuers and signatories were aware of the fact.

In the process of apparently concealing the insolvency of the related companies, the promissory notes were repeatedly rolled over by cancelling the originals and replacing them with new ones.

The main protagonists in the alleged plundering of the CMF include the directors and management of the CMM and Allegro Holdings, a former subsidiary of the listed company African Dawn.

When CMM was put under curatorship in 2009, Johan Bakkes was the chief executive and head of investments at CMM and a director of seven of the related companies and three trusts, with himself and his family as the beneficiaries.

Frik Vermaak, who was appointed chief executive of Athletics South Africa last December, was the chief executive of Allegro Holdings and a director of Allegro Group Investments, Allegro Bridging, Allegro Property Services and five of the related companies that were allegedly involved in the misappropriation of the money invested in the CMF.

CMM and Allegro Holdings were joint shareholders in the company Miro Holdings, which in turn was the holding company of Miro Capital.

Miro Capital, according to the CMM curators, was one of four companies established with the special purpose of issuing promissory notes in favour of the CMM and the CMF so as to get money from the CMF to finance property deals for four other related companies.

The summons served on the individuals notes that the indebtedness of the respective related companies to one another - and ultimately the CMF - amounts to R1.6bn and that 16 of the individuals involved in managing the companies are jointly and severally responsible for repayment of the R105.6m to CMM or the CMF.

During the past week Absa announced that it intended defending itself against the steps being taken by the curators.

An amount of R989 000 that the CMM curators are demanding from former board members of CMM and related companies, was apparently spent on a rugby tour to Europe accompanying the Springboks in November 2008.

Two directors of CMM and six board members of Allegro Bridging, including Bakkes and Vermaak, were on the tour.

An amount of R1.1m was apparently withdrawn from CMM’s bank account for travelling expenses.

The curators further argue that investors' money was used for the rugby tour and, by means of creative accounting, was indicated as amortised debt in the CMM and Allegro books.

In the two companies’ books the money spent on the rugby tour was reflected as a loan to a related company, Miro Capital (in which CMM and Allegro were equal shareholders). The payment of R17 000 to each of the board members on the tour was also noted in this loan account.

Miro Capital “repaid” the loan to CMM by, firstly, on two occasions crediting the loan account with “repayments by Miro” and then debiting the amounts in its books as management expenses to CMM.

 - Sake24

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  • Ian - 2012-04-29 13:00

    nothing new here, anc style

      Rob - 2012-04-29 13:08

      Yep. People will not learn. Greed ! On both sides.

      David - 2012-04-29 13:20

      How narrow minded you are Ian.... not ANC style but Broederbond style as you would have seen by their names... behind every ccorrupt black official is a white man pulling the strings, not only South African but in this instance it has nothing to do with the ANC at all, it is Broederbond mentality..these men should get life sentences in prison to show that private business does not tolerate this, these men are partying it up on our money, how many families may end up bankrupt because of this. How often is it a rich white business man that screws over loads of families pensions so they can have a big house and 30 cars.... this is very different to political corruption.

      joeballito - 2012-04-29 13:36

      @ David,Where can we see the names?

      David - 2012-04-29 13:39

      Did you read the article :-) Frik Vermaak and Johan Bakkes.

      Dee - 2012-04-29 14:23

      Ian - Rubbish!!! This has got nothing to do with ANC. There really is a great deal to be critical of ANC about - but don't diminish that argument by blaming them for this non-political pure criminal greed. If you are really so dom as to think there is no 'white' perpetrated crime (and typically on a grand scale!!) how do you explain the 'Boere Mafia' leading the rhino poaching syndicates?

      Chumscrubber1 - 2012-04-29 16:05

      I fail to understand why you okes condone white corruption, just because the ANC is corrupt. What is it you actually believe in? Hypocrisy at its worst, these people should rot in jail for life - we are robbed continually by big business, yet seem to find it acceptable. Absolutely amazes me ...

      Randomhero6661 - 2012-04-29 20:50

      you people are mad!

      Ian - 2012-04-30 10:39

      thats right dawid, wow you can count hey, LOSER

  • Sello - 2012-04-29 13:09

    Crime is very diverse. It is not only house breakers and robbers who deserve lengthy jail times, there's a lot of white collar crime that goes on daily and never makes it to the news. The Auction Alliance was just a small hint of what is going on behind corporate suits and gloss. Misapropriating investors' millions is the same as robbing a bank. Pity we have a lax criminal justice system that hardly bites. Oh by the way, the perpetrators should hurry up to jail, they will be released next week together with Jackie Selebi and 35000 others. What a timing on the part of the criminals!

  • Ivan - 2012-04-29 13:26

    Crime in all sectors of the populace is happening on a daily basis, no wonder the rich stay rich and the poor gets poorer and the countries economy stays below par !!!

  • IAnon - 2012-04-29 13:31

    So much for checks, balances and transparency - SA has become and is a criminals Heaven. Sorry for all you investors!

      Chumscrubber1 - 2012-04-29 16:07

      I think actually worldwide investors get taken for one big ride. The okes with fancy cars and suits that sit around big boardroom are not the angels some make them out to be.

  • Koos - 2012-04-29 13:33

    I worked for a company where the investor's money were used to buy new Pajero's for each director, house renovations, max out of newly approved credit cards. All there houses were moved into trust accounts before the company went belly up. 45 of us missed out on our salaries of two months, leave payments, the works. In the end we got paid 11cents to the Rand. The directors opened up another business on the side even before the first one went under.

      David - 2012-04-29 13:41

      Thats absolutely shocking... I am afraid some vigilante justice is something that will start to take place in such situations since nothing gets done against these blatant acts of disregard for people.

      Reon - 2012-04-29 13:46

      Name them Koos.

      Glenda - 2012-05-01 09:16

      Yes name them Koos!!!

  • miandra.vanzyl - 2012-04-29 13:34

    another tin of worms...crawling out...mmm all over the directors faces.... I see nightmares, no sleep, divorces, selling houses in Sandton etc in my cristal ball.

      Hadebe - 2012-04-29 14:29

      And they richly deserve it, lets allow them to enjoy it.

  • CapeTownRob - 2012-04-29 14:01

    So if I'm not mistaken, this is the type of crime for which Zuma has announced a remission of sentence ?

  • noah.mamba - 2012-04-29 14:24

    Finaly Absa will pay.

  • Sharon - 2012-04-29 14:26

    The irony behind this all is it will take ten years to investigate and another ten years for trial. The investors will be out of money and will never see a sent coming from this investigation.

      Theresa - 2012-05-01 08:48

      My parents put all they had into this, the investigations have been 4 years in the making so far, they will never see their money but live in hope.may the directors of Absa get their just desserts

  • david.lebethe - 2012-04-29 14:32

    I think the court that appointed curators of these two entities (including, companies which did business with) should order investigation into the past of those affected with a view to gauge the trail of damage they have caused before a lid was opened on their activities.. I know Frikkie Vermaak to have been the CEO of Compushare - a multinational investment company that is overseeing, Nzalo and other BEE investments. I believe in so doing, we will come to know the extend of their activies as I don't think it only started now. I beleieve, we are dealing with a tip of the iceberg here and there is a lot to unravel in the sector concerned. I hope minister of sport is also following the report as we may face another scandal.

  • Ted - 2012-04-29 14:33

    Someone steals a handbag with R50. He is sentenced to a lengthy jail term. Someone steals a billion Rand and he is allowed to keep it! Remember the Auction Alliance issue? These chaps keep stealing and get a pat on the back. I want to know why they aren't locked away for long periods of time.

  • Charmain - 2012-04-29 14:43

    The worrying thing is,we are constantly reminded to save for our old age and rightly so. But where in hell are we supposed to invest and save if no investment company is safe? Everywhere you look there's a greedy puts waiting to plunder the funds and enrich himself. What happens now to people who invested and trusted that their future will see some returns to retire on? Hopefully the new Companies Act will help put these ruthless robbers behind bars for life.

  • DuToitCoetzee - 2012-04-29 14:57

    All I can say is put them away and ensure that those type of "business" people are not allowed to trade. We are supposed to have so strict control on companies and a lot of responsibility that were shifted down on their accounting companies and it is still happening?

  • Ask - 2012-04-29 15:17

    Name ALL the culprits... definitely Broederbond style;... we need to name and shame ALL those involved...

  • Dee - 2012-04-29 16:19

    were is all those who said black people were corrupt?

  • Herman - 2012-04-29 19:52

    Yes, while the ANC specialises in corruption we as Afrikaners have a preference to fraud and rhino horn. Maximum sentences please!!

  • henry.jordaan - 2012-04-30 07:34

    Earth provides enough to satisfy every man's need, but not every man's greed.

  • Lerato - 2012-04-30 08:14

    If we are not careful very soon we will be going the European downfall route, If we allow a small number of greed guys to cripple our sound financial sector. Madonsela must get her priorities right, there is corruption in both private and public sectors. This issue must now be number 1 on Thuli's priorities, the ripple effects of such dirty dealings are diabolic; thousands will lose their jobs, our senior citizens' pension will be wiped out, our kids savings gone. This must be stopped asap, we won't cry if our taxes go towards building more jails for these scum bags

  • Lungile - 2012-04-30 08:22

    Wow creative accounting.

  • jeremy002 - 2012-04-30 11:01

    So company directors in the private sector have to give account of funds that are allegedly misappropriated, but we hear nothing about what the government has done with the levy on the fuel price for maintenance of roads over the past decade or two. What has happened to the billions involved there? Will anybody be called to account? Was the money used for something else?

      Chumscrubber1 - 2012-04-30 12:41

      Are you suggesting that due to one wrong we must condone another, by any chance?

      jeremy002 - 2012-04-30 17:39

      No. I'm saying that the misappropriation of the money paid to the gov for roads as part of the fuel price, should also be investigated along the same lines as this crowd above, because if that money had been properly allocated this whole e-toll thing might not have happened.

  • rose.maytham - 2012-04-30 12:03

    It would be better to start a list of names of the corrupt and those that sponsor them and have a blacklist of people not to deal with. So here is mine. Dynamic Wealth Management Cobus Van Wyk and his merry band Absa who are always involved. Plus these new names! What I don't understand is how come they have approval from Financial Services Board to conduct business and yet when you complain to them there is no help they can give you??

  • gailcarolynhayes - 2012-04-30 12:57

    Nothing new here. Any Bank that started off calling itself Trust Bank and then absorbed other funds.societies which went defunct would never get my vote. I had an incident where I was possibly the victim of a scam by phone through the internet which involved a company called eprotectionz and used my ABSA credit card (WFS) as it was pretty maxed out anyway. I immediately contacted ABSA BANK and attempted to speak to someone who could advise me and also to report the scam. There ensued a long drawn out period of being passed like a parcel from one nincompoop to another when all I wanted was to speak to the Fraud department. It appears they don't have one. I phoned my own bank FNB and was immediately dealt with by someone who obviously knew what they were doing and could advise me as to the right course of action to follow.Even in apartheid years this bank was well named as they gave out chequebooks to people who had no money deposited in an account with them. The more things change the more they stay the same.

  • Rudolf - 2012-05-01 04:02

    We need to get rid of corrupt people, regardless of race. And if they go to jail, our tax money gets used to keep this scum in jail.

      Dennis - 2012-05-01 11:13

      I agree 100% Rudolf. There is a huge courtcase coming up to take the banks to task for stealing billions from homeowners over the years. We ALL need to support the people involved. Go to and lets stand together to stamp out ALL corruption. It really doesn`t matter a damn what colour the person is that is stealing from us. A thief is a thief!

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