Moneyweb’s June 22 post on the Afriforum intervention.

AfriForum asks the NPA to freeze Nova’s assets

Gerrie Nel’s unit says Nova was established with the proceeds of crime

Civil rights group AfriForum has approached the National Prosecuting Authority (NPA) to seize the assets of the Nova Property Group to prevent the group from selling the properties at below market values.

Nova is the so-called rescue vehicle of the failed Sharemax investment scheme in which around 18 700 investors invested approximately R4.6 billion. All Sharemax’s underlying property assets were transferred to Nova in terms of a Section 311 Scheme of Arrangement to manage. The proceeds were to be used to repay investors.

Advocate Gerrie Nel, head of AfriForum Private Prosecution Unit, said in a statement it has drafted an order of preservation to prevent Nova from selling properties at “far below the market value” and requested the NPA to bring the order before a court of law. He said: “The properties in question were acquired by the proceeds of unlawful activity, including money laundering and fraud, as contemplated in the Prevention of Organized Crime Act, 121 of 1998, as well as the Banks Act, 94 of 1990.”

Andre Prakke (forensic accountant), Iva Kautsky (her dad committed suicided in front of Sharemax office), Kallie Kriel (CEO AfriForum), Adv Gerrie Nel, and Herman Lombaard at a briefing on Monday. Image: Shutterstock

Nel said “Since the property was instrumental to committing the above-mentioned crimes against the investors, and because Nova has been in control thereof since 2012 (but this company was founded with the proceeds of illegal deposits that had been accepted by Sharemax from the public), AfriForum has requested that the NPA take these properties into its custody.”

This relates to a directive the Reserve Bank issued in 2010 in which it found that Sharemax contravened the Banks Act and ordered the repayment of investors. Nova was then established as a vehicle to repay investors.

AfriForum contends that the Nova scheme is illegal as it did not absolve Sharemax’s contravention of the Banks Act and its underlying assets were acquired with the proceeds of crime. The statement said the Private Prosecution Unit also found evidence that the board members of Nova pay themselves excessive salaries, and pay themselves before paying debentures holders.

“It also seems that Nova is getting rid of buildings in an attempt to avoid liquidation. The actions of the Nova board are unscrupulous, and we have therefore been compelled to draft this application and send it to the NPA to keep investors from suffering further losses,” Nel added.

Nova has fallen into financial difficulty over the past few years. The company’s auditors have qualified both its 2018 and 2019 financial results and also expressed its concerns that the company was not able to continue to operate as a going concern. The auditors also said it was concerning that Nova was selling properties to finance operational expenses.

However, the Nova board denied the auditor’ concerns and said the company was in a sound financial position.

Kallie Kriel, the CEO of AfriForum, said “many of the investors in this scheme are elderly people with meagre resources who hoped to make an income by investing their nest eggs. The board of Nova/Sharemax have lived the high life at the expense of these people and as a civil rights organisation, AfriForum cannot allow that they are not held accountable. This scheme can be equated to the operation of a crime syndicate and for this reason their actions have to be stopped immediately.

Author: Ryk van Niekerk

This article can be viewewd by Moneyweb Insiders at: https://www.moneyweb.co.za/in-depth/investigations/afriforum-asks-the-npa-to-freeze-novas-assets/