The extraordinary case of the Picvest billions
The disposal of homes contradicts the purpose of the commercial enterprise rescue plan.
A Moneyweb observe-the-cash investigation into the sale of the 79 homes syndicated via the Highveld Syndication (HS) corporations found out that absolutely all of these homes were sold to third parties before and soon after the HS organizations had been put into commercial enterprise rescue.
A previous article analysed the sale of 21 properties earlier than the HS organizations were positioned into enterprise rescue in 2011. Moneyweb can now display, primarily based at the analysis of the name deeds of the homes, that the disposal of properties to 0.33 parties in reality improved after the graduation of the enterprise rescue technique in December 2011.
The research determined that at the least 50 properties at the start syndicated as a part of the HS schemes had been offered rapidly after the graduation of the business rescue process.
Virtually all of the residences were bought in 2013, despite the fact that five – collectively valued at R328 million inside the enterprise rescue plan (BRP) – had been sold inside six months of the HS corporations going into business rescue on the cease of 2011. (The first property became offered lower back to property multi-millionaire and patron of the scheme Nic Georgiou within a few weeks; he then right now bought it to a 3rd party for an income – see underneath.)
The sale of these homes is in stark contradiction to the provisions in the BRP, penned by business rescue practitioner Hans Klopper. Klopper becomes also a director of Orthotouch.
BRP and Section one hundred fifty-five Scheme of Arrangement
To position the sale transactions in context, the unique motif of the BRP wishes to be revisited.
The premise of the BRP was to switch all of the historical HS residences, as well as some others, to at least one agency named Orthotouch.
An experienced group of assets professionals would then manipulate the homes to generate the specified earnings to repay traders.
The administrators of Orthotouch at the time had been Georgiou, Panagiotis Kleovoulou, Klopper and Connie Myburgh. Myburgh is also chairman of the Nova Property Group, the rescue automobile of the failed Sharemax investment scheme.
The BRP gave the board the authority to promote “non-acting” properties and use the proceeds to maintain, upgrade and enhance positive other “primary” centers to “maximise” funding returns for investors.
This is contained in paragraph 2.3 of the Orthotouch business plan, which forms a part of the BRP and reads:
2.3 The goal of Orthotouch is to maximize the funding go back of shareholders and all stakeholders in Orthotouch by way of selling off the non-appearing properties and utilizing the proceeds to redevelop primary shopping centres, which include Southdale in Johannesburg South, Piazza in Randburg, Forum in Sasolburg, Saveways In Witbank and Lyttelton Manor in Centurion. In addition, Orthotouch will maintain sure retail and industrial properties along with those in Charles Crescent in Sandton, Cell C in Sandton and Ethos in Parktown.
However, despite this provision within the BRP, the number one homes and other retail and industrial houses described in the paragraph have been offered shortly after the adoption of the BRP. Three of these properties have been sold inside six months, with the primary (Southdale Shopping Centre) sold returned to Georgiou’s organization Zephan less than a month after the BRP become adopted.
No response from Klopper or Georgiou
Moneyweb despatched questions to Georgiou and Klopper (in his capacities as both enterprise rescue practitioner and director of Orthotouch) on November 9, 2018, relating to the selloff of the residences. Neither answered to the questions.
Section one hundred fifty-five Scheme of Arrangement (SBA), which became applied three years after the failure of the BRP, provided proof. The SoA stated that the residences have been not transferred as Orthotouch wasn’t capable of accumulate funding from financial establishments. This became because of the movements of so-known as “detractors”, which “sought to bring about the failure and death of the HS Companies”.
These detractors have been by no means named, but have been accused of influencing economic institutions towards providing investment to the group.
The SoA did, however, the spotlight that Georgiou went to awesome lengths to accumulate funding from numerous economic establishments, a technique that might have taken several months. The SoA does not, on the other hand, provide an explanation for why the general public of the diagnosed “primary residences” have been bought within some months.
A few of these sales transactions deserve further evaluation.
The Southdale Shopping Centre became the flagship belongings within the HS 17 syndication and became syndicated to buyers for R205.Five million. At the time, it becomes the biggest single property ever syndicated with the aid of any HS syndication.
The BRP also mentioned the center as one of the “number one” shopping centers destined to receive additional funding to grow its sales capacity, but this never materialized.
The property changed into bought much less than a month after the implementation of the BRP.
It becomes sold through a lower back-to-lower back transaction from Orthotouch to Georgiou’s employer Zephan, which then on-bought it to Serica Investments. The transaction resulted in an income of R26 million for HS 17, however a massive loss of R57 million for Orthotouch. Zephan, in flip, earned a profit of R33 million from the transaction.