By Nompumelelo Magwaza and Tania Broughton
A retired judge will begin to probe the failure of investment company Edwafin this week in an effort to find out what happened to the money which thousands of South Africans lost when it went into liquidation earlier this year, and whether the business had been anything more than a pyramid scheme.
Judge Pete Combrinck, who has served on the bench of the Supreme Court of Appeal, will question the directors of the Hillcrest-based company, at an interrogation conducted under the Companies Act, to establish if they committed fraud.
He has also been tasked by the liquidators with finding out if the directors have money in accounts overseas.
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The inquiry coincides with investors expressing concern that two of Edwafin's directors are back in business, operating a new company from central Durban.
However, the two deny any wrongdoing and say their business is legitimate and sells no financial products.
According to a communique to debenture holders - some of whom are threatening to launch a class action suit against the directors - the inquiry will be held behind closed doors.
"However, in broad terms, the investigation relates to the causes of the demise... it appears from our initial investigation that the company was never an income-generating activity," the provisional liquidators, Berrange Incorporated and GPA, said.
They ask that anyone who invested in the company or its subsidiaries via an overseas bank account provides details - this apparently because of suspicions that some of the money is still lying in such accounts.
The Mercury understands that should the judge find that the directors committed fraud, the liquidators would be entitled to claim from a R20m insurance policy which Edwafin took to protect itself against fraud and theft by employees.
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