Johannesburg - An investigation by the Hawks, the South African Reserve Bank, the National Prosecuting Authority and a private investigation firm has uncovered a Ponzi scheme that has apparently robbed more than 800 people of R380 million.
And as some investors in QSG Consult International battle to survive after losing their pension funds and life savings to the alleged scam, at least one former client has committed suicide.
Based in Joburg, QSG claimed to be an agribusiness development and management consultancy but offered its clients the opportunity to invest in a bio-diesel trading project in Dubai for a steady profit.
However, last month, the High Court in Joburg granted a preservation order, freezing the company’s Mercantile bank accounts. This came after father and son directors of the company, Johan and Riaan Smit, allegedly fled to Dubai in November following the revelation that the overseas oil deal had never existed.
The office of the National Director of Public Prosecutions’ affidavit for the preservation order revealed the in-depth investigation into the company’s finances and how the fraud scheme allegedly operated. The probe began after several clients of the company laid complaints, alerting investigators to a series of suspicious transactions involving tens of millions of rands being transferred between South Africa and Dubai. The government’s financial intelligence centre (FIC) was brought in to inspect the various transactions on QSG’s accounts and found that none of the investors’ money had been used to invest, but was instead shuffled around to provide monthly payouts to investors.
The FIC ultimately determined that the transactions were indicative of a Ponzi scheme. The Saturday Star spoke to many former QSG clients this week, some of whom had invested hundreds of thousands of rands, while others had put down millions.
However, each of the clients had worked initially through the investment deals with another suspected member of QSG, Danie Delport. By his own admission, Delport brought in at least 100 clients to invest in QSG, after allegedly seeing solid returns on his own investment.
Delport said yesterday that he too was an unwitting victim of the Smits, and that he had fully co-operated with an investigation by the SA Reserve Bank to ensure the scheme was uncovered. While he admits he was responsible for bringing hundreds of millions of rand into the company, he said he was never linked to the company “on paper”, and never employed by QSG.
“It was a Ponzi scheme The reason they are all blaming me is they thought I was the face of QSG,” he said. It was Delport who revealed a former client had committed suicide after losing vast amounts of money in the scheme.
One client, who asked to remain anonymous, said he had taken a second bond out on his house to invest R200000 into the company - on Delport’s recommendation - and saw returns of approximately 5% for the first six months. Eventually, his wife invested her entire pension fund in QSG, and the return payments subsequently came to a halt. He tried desperately to contact Delport, whom he claims blocked him after admitting the investment was a scam.
“All I want is our money back. We have no other income and don’t know what we can do,” he said.
IRS Forensic Investigations, a private firm, is currently representing several complainants as they attempt to build a criminal case against QSG.
IRS senior forensic investigator Chad Thomas said the private probe had revealed a strong potential case of racketeering and fraud. “The State thinks likewise and have moved exceptionally quickly and professionally in this case. Kudos to the Asset Forfeiture Unit and (Hawks) Serious Economic Offences Unit for the progress they have made,” he said.
Attempts to contact Johan Smit and QSG on two separate e-mail addresses were also unsuccessful.
However, an e-mail sent from the company to investors in April has promised investments would be returned at the end of July, though for the victims who spoke to the Saturday Star, this seemed decidedly unrealistic after the preservation order on Smit’s accounts.