Three former employees of a Johannesburg-based gold coin dealer have accused the company of defrauding customers who paid money to invest in Krugerrand sets which were never delivered.
The accusations by Peter Conradie, former sales and marketing manager of the Gold Investment Corporation, and two other former employees who prefer to remain anonymous, have been strongly denied by the company's owner, Alan Demby.
Conradie says the corporation, which is closely linked to another company owned by Demby, the SA Gold Coin Exchange, targets mainly black investors. Potential customers are offered Krugerrand sets. The sets are made up of a Krugerrand, a half-Krugerrand, a quarter and a tenth.
According to Glen Schoeman, chairman of the South African Association of Numismatic Dealers, these sets can be bought for about R4 200 each and sold back to dealers for about R3 600. But the Gold Investment Corporation's customers, Conradie says, are encouraged to buy the sets on a lay-by system over four years, paying about R11 500 a set.
Customers are told that their coins are being kept in safe custody until they have finished paying. But this, the former employees say, is not true. "There are no coins, or very few," Conradie says.
"When customers finish paying and come to collect their coins, they are told the coins are safely in the vault and they are encouraged to leave them there," he says. "If the customers say they need to sell the coins, they are encouraged rather to take out a loan against the coins, and they end up paying high interest on that, too."
The former employees claim that between 100 and 200 coin sets are sold each month, but coins are delivered to only two or three customers a week. Demby denies this.
Not Delivered
Conradie says "at least" R3,5 million in coins has been paid for but never delivered, and sales worth a further R3,5 million are currently being paid by customers.
Money paid by investors, he says, is used on running expenses and salaries instead of on the purchase of coins.
Customers who default on their lay-by contracts are not allowed to get back the money they have paid and are often sued for the balance, Conradie says.
Demby says it is "simply not correct" that R3,5 million in coins has been paid for but never delivered.
"Mr Conradie has never had access to our safe or vaults and has no idea of our stockholding ... To date, thousands of customers have bought coins and received them. Those people who have not paid for their coins in full have not received their coins, and will not until they have been paid for in full. At this stage, there are some 20 clients awaiting delivery of coins.
"In addition, we have delivered thousands of coins to satisfied customers over the years," he says.
Demby says Conradie and the other employees "left the company under a cloud".
Mariam Tootla, of Lichtenburg, is one dissatisfied customer whose coins have not been delivered to her, although she says she paid up her lay-by account at the end of April. Repeated telephone calls to Demby's office have not yielded any results, she says.
"They are playing the fool with me," Tootla says.
Mario Robson, of Port Elizabeth, says he finished paying for his coins in May last year and left them in safe custody with the Gold Investment Corporation until July this year when he decided he wanted to show them to his wife.
But although he has followed up a written request for the coins with one telephone call after another, his coins have still not been sent.
"They keep on promising but nothing happens. I said to them, 'you are playing around with my money'," Robson says.
Still Waiting
Joel Mokonjane, of Mmabatho, has been trying to get his coins for two years. "I finished paying for them in 1996 and left them in safe custody. Then two years ago, I phoned to get my coins. Nothing happened. I sent my ID and all the information they needed to send the coins. Last month, I phoned again and they keep saying they will send the coins. But I am still waiting."
Other clients have complained that they have not been able to get their money back after cancelling their lay-by contracts with the Gold Investment Corporation.
Legal firm Legal Wise has represented clients with complaints about the company in both Durban and Bloemfontein.
In Benoni on the East Rand, Scorpion Legal Protection has acted on behalf of at least one customer impatient to get his coins.
The Numismatic Association's Schoeman says he has had several complaints from dissatisfied customers about Demby's companies. The Gold Investment Corporation and the SA Gold Coin Exchange have been refused membership of the association because as yet they do not have a credible track record in meeting the association's ethical standards, he says.
"No other coin dealers in South Africa sell on credit," he says.