Defunct Pretoria financial services company Huis van Oranje and one of its representatives, Stephanus van der Walt, have been ordered by the financial advice ombud, Noluntu Bam, to repay R695 000 to two investors in a liquidated hotel property syndication.
The only problem is that the company, which was owned by Jan Beyers, was deregistered as a financial services provider in November 2011.
At issue is an investment of R573 000 made by Carel Weideman and one of R265 000 made by his wife, Anna, both of Pretoria, in the now-liquidated, unfinished Beach Hotel development in Blaauwberg, Cape Town, which is fast becoming an eyesore on the Blaauwberg beachfront. They are among 3 000 mainly elderly investors in the scheme by property development company Realcor. The investors are expected to lose about 90 percent of the R600 million they invested.
The Reserve Bank has said that Realcor, as sponsor of the property syndication scheme, contravened the Banks Act.
The Blaauwberg hotel was funded through the sale of debentures. The debentures initially paid a return of 15 percent (from the investors’ own money).
The debentures were sold by financial advisers, who received extraordinary commissions ranging from six to 10 percent of the investment amount.
Bam found that:
* The Weidemans had been asked to sign printed, already completed documents, which were kept as a record of advice. But this was nothing more than a façade to create the impression that the provisions of the Financial Advisory and Intermediary Services (FAIS) Act and its code of conduct had been met.
* The Weidemans were not warned they risked losing their capital, and the documentation was unclear. Bam says the chief executive of Realcor, Deonette de Ridder, appears from the documentation, in a clear conflict of interest, “to be contracting with herself”.
“The powers of the directors (of the hotel syndication company), the scant details surrounding the loans, and the ease with which funds appear to have moved between the entities in the group, are all evidence of the risk investors were facing.”
She says if the proper information had been disclosed to the Weidemans by Huis van Oranje and Van der Walt, the couple would not have made the investment.
* Van der Walt failed to act with due skill, care and diligence and in the interests of the Weidemans.