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Auditors probe KZN pyramid schemes

Published Feb 20, 2012

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Nompumelelo Magwaza

Five alleged pyramid schemes, believed to have fraudulently netted hundreds of millions of rand, are being investigated in KwaZulu-Natal.

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Auditing firm Thabani Zulu and Company was commissioned by the Reserve Bank to investigate the operations of Shining Future, Larjent, Igiya, Cashflow and TVI Express.

One of the schemes, TVI Express, also known as Travel Ventures International, sold travel vouchers which purportedly give recipients significant discounts for international travel and accommodation. TVI, owned by Parun Trika of India, first reared its head in London and later had dozens of franchises around the world. TVI Express has since been declared a pyramid scheme in Australia, London and the US.

Last year Cashflow Properties owner Jabulani Ngcobo made headlines when he spent more that R1 million on a lavish boat party. Questions were raised about whether his company had a stockbroking licence, as it had more than 1 500 members and operated by teaching people how to trade on the stock market.

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Last week Thabani Zulu, the managing member of Thabani Zulu and Company, confirmed that his firm had been investigating several pyramid schemes in the past year.

These pyramid operations are usually picked up by banks, which are obliged to monitor accounts and notify the Reserve Bank when suspicious amounts are deposited.

Besides legal “get rich quick schemes” such as betting on horses, the lottery and casino gambling, unwanted and opportunistic schemes had also emerged, Zulu said.

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“As pyramid schemes enrich a few, they dole out broken promises of unbelievable returns which have not been achieved in the history of business. They prey on the ignorance and vulnerability of our people, leaving broken homes, hunger and starvation,” he told Business Report.

One example Zulu gave was that of Ingede Mineral Holdings, where more than 3 000 investors lost about R80m.

It is believed that the scheme targeted civil servants, such as teachers, nurses and municipal workers as well as factory workers from big manufacturing plants.

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Many of the investors got small loans from banks and others cashed in their savings.

The company, owned by Goodman Goqo, 24, was shut down by the Reserve Bank in 2010. Goqo is currently in prison awaiting trial on several counts of fraud and for contravening the Banks Act.

According to The Mercury, Business Report’s sister newspaper, his company operated as a bank. Goqo allegedly told investors that their money would be invested in the stock market and promised a return of 30 percent over six months.

A similar company, Larjent, which offered investors 30 percent monthly returns, has allegedly defrauded investors of about R19m.

As a consequence, owners of this company have been arrested and are facing criminal charges. In January last year, the Durban Organised Crime Unit arrested Ntokozo Mayisela, Lindani Majola, Mduduzi Ndlovu, Keith Brown and Mpumelelo Mpanza on charges of fraud, contravening the Banks Act and theft.

Last week the Reserve Bank refused to give details of the investigations as the Banks Act prohibited it from doing so.

Zulu said it was regrettable that such investigations, although effective, took place after the perpetrators had already benefited handsomely from their crimes.

These businesses were often not registered and their bank accounts were often personal accounts belonging to owners.

“The ultimate victims generally do not recover investments, let alone the interest they expected to earn. The victims are completely oblivious of the functioning of the JSE and other international exchanges,” Zulu said.

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