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 analyzed the sale of 21 properties earlier than the HS organizations were positioned into enterprise rescue in 2011. Moneyweb can now display, primarily based on the analysis of the home’s name deeds, 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, even though five – collectively valued at R328 million inside the enterprise rescue plan (BRP) – had been sold within six months of the HS corporations’ going into business rescue 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 also becomes 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 and some others to at least one agency named Orthotouch.
An experienced group of asset professionals would then manipulate the homes to generate the specified earnings to repay traders.
At the time, the administrators of Orthotouch had been Georgiou, Panagiotis Kleovoulou, Klopper, and Connie Myburgh. Myburgh is also chairman of the Nova Property Group, the failed Sharemax investment scheme’s rescue automobile.
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 “maximize” 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 centers, which include Southdale in Johannesburg South, Piazza in Randburg, Forum in Sasolburg, Safeway’s In Witbank and Lyttelton Manor in Centurion. Also, 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 adopting the BRP. Three of these properties have been sold inside six months. The primary (Southdale Shopping Centre) sold returned to Georgiou’s organization Zephan less than a month after the BRP became 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 residences’ selloff. Neither answered 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 had not been transferred as Orthotouch could not accumulate funding from financial establishments. This became because of the so-known movements 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.
However, the SoA did 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, explain why the general public of the diagnosed “primary residences” has 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.