Beware of elegant men wearing patent leather shoes trying to sell you investments that are too good to be true is the warning from the Cape Chamber of Commerce and Industry following the shooting of Julian Williams, a Cape Town businessman.
Williams, 37, was one the co-founders of Basileus Capital, which provides development capital for start-up businesses. The firm has recently been instrumental in funding the billion rand Wesizwe Platinum mine – near Sun City – with massive Chinese investments.
“I had known him for three years… he was a great intellect, a phenomenal thinker and visionary,” said friend and Basileus Capital spokesman Julian Gwillim.
Although a police probe is under way into the events of William’s death at Basileus Capital’s offices on the third floor of the Icon Building on July 26, it is believed that he was shot twice by Herman Pretorius, a former business partner whose dodgy investment outfit had been visited by the Financial Services Board (FSB) earlier on that fateful day.
There is little suggestion that Williams – who was married with two children – had done anything unethical or bad. He has been described in glowing terms by Gwillim.
Williams co-founded a company 10 years ago with former ANC Western Cape chairman James Ngculu – who is the chairman and now acting chief executive.
Gwillim said on Friday the only remaining link that Basileus had with Pretorius was through SA Superalloys, but he was emphatic that it would have no impact on Basileus’ business operations. There was no connection at all with Pretorius’ dodgy Relative Value Arbitrage Fund (RVAF), which now appears to be a glorified pyramid scheme.
Asked what could have motivated Pretorius to kill Williams, Gwillim said: “I could go into the reasons but that would not be right… the police are investigating.”
Williams had not been associated with any wrongdoing in the industry, Gwillim said. It is believed, however, that Williams had warned investors off the RVAF.
Moneyweb first reported a spat between Williams and Pretorius earlier this year over shares in a company called SA Superalloys. It is venture capital company designed to raise funding from venture capital investors through the issuing of cumulative preference shares that offer investors protection by exposure to a known and measurable asset – Avalloy, a subsidiary company of SA Superalloys.
A report that a R35 million investment by the Industrial Development Corporation (IDC) into a venture linked to Avalloy could be at risk following Williams’s death, could not be confirmed.
The IDC said it would comment tomorrow.
It appears that the strained relationship between the two men – apparent for some months – reached a crisis on that day. After shooting Williams, Pretorius, 40, turned the gun on himself and died later in hospital from head wounds. Police reported finding a 9mm firearm at the scene.
Gwillim said in a statement on Friday: “Julian Williams and Herman Pretorius were former business partners who jointly founded the Abante Group in 2002. Julian Williams, together with a group of key staff members, split from… Pretorius and the Abante Group to form Basilieus Capital in 2008 together with James Ngculu.
“The only remaining link between Julian Williams and Herman Pretorius was SA Superalloys, which was a legacy investment of Basileus Capital acquired from the Abante Group as part of the process of dissolution,” Gwillim said.
“The RVAF was at no stage ever part of the Abante Group nor did Julian Williams ever have any connection to the RVAF,” he added.
Pretorius must have been feeling the heat of the FSB’s probe into the RVAF. Subsequent to his death, an investor in the fund and lawyer, Morné Strydom, applied for a sequestration at the Western Cape High Court, which was granted last week by Judge Burton Fourie, Bloomberg reported.
The RVAF apparently had investments of R1.8 billion, much of it from small investors in the Western Cape. It is reported to have some 3 000 investors.
Michael Bagraim, the president of the Cape Chamber of Commerce and Industry, said the scandal surrounding the RVAF – which was starting to look like a Ponzi scheme and could overshadow the Fidentia scandal – “doesn’t do business any good at all”.
He said investors should always check with reputable auditors, attorneys and banks whether an investment company was known in the market and endorsed by the larger recognised institutions.
The fund and Abante were allegedly paying out returns of 20 percent or more, but was based on a system where new investors provided the capital to pay out older investors.
“When people offer you something which is too good to be true then it is not true. That should be the rule of thumb. When returns are unreal, they are,” Bagraim said.
Gwillim said Basileus Capital was an independent private equity firm specialising in early-stage developmental capital and that Williams had left a proud legacy. The platinum mine project for which he had found funding was poised to create thousands of jobs.
In addition, Basileus Capital supported some 46 projects in the country. Williams had been a key player in the development finance sector, he said.