Monday, 22 July 2013

Pinnacle Point inquiry finds directors may have ‘traded recklessly’

A COMMISSION of inquiry into the financial affairs of troubled property company Pinnacle Point Group has found that some actions taken by directors may constitute "reckless trading".

Under the Companies Act directors could be held personally liable for the debts of the company if a company’s business is carried out recklessly or with "intent to defraud" creditors.

Edward Nathan Sonnenbergs (ENS), the law firm which represented the liquidators of Pinnacle Point in the inquiry, said on Sunday there were discussions with creditors to issue summons against those who may be deemed liable. ENS director of insolvency, Leonard Katz, said the claims could be in excess of R60m.

Mr Belmont raising his glass for the project with Marie May Kolsh in the background 

Parties who lost money following the demise of Pinnacle Point Group in 2011 include banks, shareholders and workers aligned to the Southern African Clothing and Textile Workers Union whose pension moneys were invested in the ailing company.

The inquiry, led by retired Judge Meyer Joffe, looked into the dealings and affairs of Pinnacle Point Group as part of a winding up process for the company.
ENS was appointed by liquidators Progressive Administrators to lead evidence at the inquiry.

The inquiry’s findings noted, among other things, that some Pinnacle Point directors who paid more than R4.4m to Seychelles consul-general Marie-May Kolsch had acted recklessly.

Joel Morgan involvement with the project worth US $150M


Pinnacle Point had ambitions to develop a luxurious golf estate in the Seychelles to be known as the Ile Aurore Nouvelle.It won the tender but the project never took off.

Pinnacle Point’s former CEO, Hennie Pretorius, had testified in the inquiry that when he joined the group he was not given satisfactory explanations by directors Steve Kruger and Ivor Stratford of why Ms Kolsch had been paid.

Judge Joffe’s report quotes an e-mail from Mr Stratford describing the payments as: "Commission due as a finders’ fee and for ongoing lobbying of support that the Seychelles Consulate provides to PPG in dealing with governmental matters with regard to the ongoing development of the island".

A miniature plan of the project

The other matter that could constitute reckless trading, according to Judge Joffe’s findings, concerned a refund to Pinnacle Point Group from the Seychelles government.
In the Seychelles, Pinnacle Point Group had entered into a 99-year lease with the government for an amount of $5m.

The $5m had been paid in tranches between September 2007 and September 2008. The rand equivalent of the money then was about R39m.

As a result of cash-flow problems, Mr Stratford asked the Seychelles government for an urgent refund. The amount refunded was about R49.7m at the then prevailing exchange rate in March 2009.
About R28m of the R49m was paid to Property Promotions Management, a company linked to Mr Stratford and one Mervyn Key. Only R21.7m was made over to the Pinnacle Point Group.

Judge Meyer noted in his report that the payments to Mr Stratford’s company constituted a "gross breach" and the amounts were paid when Pinnacle Point Group was in dire cash-flow straits.

The R49m refund from the Seychelles and R28m paid to Property Promotions Management were never disclosed in the 2009 annual financial statements of the Pinnacle Point Group.

The judge said the abstraction of the money and the failure to report it "constitutes reckless conduct".
The other matter that may also constitute reckless trading by some directors was the payment of R4.4m to entities linked to one Richard Kawie, who had trade union links.

Judge Meyer noted in his report that the payment of more than R4.4m, "where no tangible services were rendered is, on the face of it, highly irregular".

The judge’s report noted that the invoices made out to Mr Kawie were "questionable in a number of respects". Some of the invoices were for "massive amounts with very little or no detail being provided as to the services which were allegedly rendered".



Considering the fact that Pinnacle Point had critical cash-flow problems, such payment, in the absence of clear reasons, could constitute reckless trading by the directors involved, the judge’s report said.

The difficulties at Pinnacle Point could be dated back to 2008 when the company merged with Acc-Ross, a company focused on primary residential development, resort and leisure developments.

When the R1.7bn share deal happened, through a reverse takeover, it was stated that the company would also raise R400m by issuing shares and the proceeds would be used for new developments and to settle debt.

After the deal Acc-Ross changed its name to Pinnacle Point Group. The company could not raise all of the R400m.

Rakeen Development, a real estate development company in the United Arab Emirates, had paid R200m for its shares, but Lurco Trading 278, linked to one Jac de Beer, failed to put up its R200m for the shares it had subscribed for.


Failure by Lurco to subscribe for its shares put Pinnacle Point Group under financial pressure, causing a cash crisis for the company, and forcing it to restructure its debts.

The report by the commissioner of inquiry noted that the failure by Lurco to subscribe for its shares worth R200m was not relevant to the failure of Pinnacle Point Group.

There has been a complaint by some of the Pinnacle Point directors that the role of Nedbank and Absa in the collapse of Pinnacle Point Group has never been investigated.
The directors, who include Mr Kruger, had wanted an investigation into the role of the banks in a single-stock futures deal.

 by Phakamisa Ndzamela, 22 July 2013, 05:55
 http://www.bdlive.co.za/business/property/2013/07/22/pinnacle-point-inquiry-finds-directors-may-have-traded-recklessly

19 comments:

  1. Minister Morgan said government is certain the developers are serious since they are putting the down payment of US$25 million and they would therefore be keen to generate the revenue back.


    Where is the money Minister Morgan?

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  2. When one adds up all these companies, and millions being exposed by SFP in offshore companies, it really adds up and gives us an picture where the millions went.
    Guy Adam uses offshore companies in Mauritius for hotels, and Cyprus for tankers.

    Kolsch takes $5 Million for herself and powers that be to share on deal that is reclaimed land, not paid for yet by the People;

    Savy banks overseas and uses offshore companies;

    The list is endless.

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  3. This is what corruption, the love for money and get rich quick attitude makes people do. These were the e mail sent by Marie May Kolsch to Ivor Stratford.

    Some women in Seychelles will sell their ass for money.

    "The last time we met, you mentioned something about exchanging my 3% shares for Ile Aurore in Seychelles to Pinnacle Point in South Africa. If that offer still stand[s][...] can you explain to me details of how it works as I need to discuss it with Fred. [...] Lots of kisses xxx Marie-May."

    In another, she said:

    "Thanks a million for the 3% shares of Ile Aurore. When I see you again, I will kiss you all over – make sure to wear protection underwear."


    Very affectionate. But unfortunately for everyone, the development never got off the ground, resulting in a major financial blow for Pinnacle Point, which went bust.

    Gary Tall

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    Replies
    1. Everything that woman touches has gone bust, she had a resort called Xanadu in Anse Cache and its closed down why because she can't work with money always keeps it for herself. But Karma has a way knocking u down when u don't expect it - and she will fall ...very hard

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  4. Corruption of epic proportion is the malignant cancer that has metastasized throughout Seychelles' body politics:SFP has been on the front line Diagnosing corruptioj in Seychelles"it is a clinical diagnosis which has determined the cancer cells of corruptio are not confind to one organ of state"customs authoirty"which can be surgically removed and treated with penal qêquivalent of Chemotherapy and radiation.The corruption cancer has spread throughout all organs of the State.

    The chemotherapy for the cancer of corruption in Seychelles is a free press can aggresively and dogggedly investigate and report corrupt officals and practices ofr Public scrutiny.The radiation therapy for the cancer of corruption is an independent prosecutial office that coud catch not the small winnows(Like Lucas)in the pond but most importantly the big whales and sharks swimming at the highest level of government.

    Corruption continue to Skim the "cream off the top"which is one major hindrance to our country's development,undermining institutions,economy ,society and a threat to humanity.

    Aug San Suu Kyi once said"It is not power thar corrupts but fear.Fear of loosing power corrupts those who wield it and fear of the scourge of power corrupts those who are subject to it"

    Corruptions is something gentic in their PP,only change can stop them ofr they just donot have the moral capicity to resist the temptation when presents beofre them.

    And a word to the first post--No investment made by Pp in 40 years have never generated revenues and the reasons for that is ignorance of economy,corruption ,mismanagement.SMB bankrupted,Airseychelles Bankrupted,Seychelles hotle bankrupted,etc.etc... the list is just nedless.

    Jeanne D'Arc

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  5. Indeed, excellent job SFP! It just keeps rolling out, it shows what can happen when people put their hearts to work for their country instead of their pockets.

    RAM- you are a disgrace! Either you resign from the Anglican Church or shut the church down.

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  6. Where is the big mouth Volcere?

    Is he dead or alive?

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  7. to 5.54
    RAm can be difined as a sanatic rutal abuser--He is not longer a beleiver but abuse religion as ameans to capture people's support for his politcal survival.It is a dissociative identity disorder.

    Remeber RAM in 2008 told us publicly namely"I am not fit to be President"we couod then ask is RAm still leader of SNP and still participating in elections?Well,for one major reason---he depend on PP survivla for his astronomic life pension which are even higher than pension given legally to most Western leaders,ministers etc...

    You couldunderstand why our economy collapse---A samll economy that have to endure such astronomic pension canot be sustainable--and Both Pp thugs and RAM though the people concern and call on Pp to cancel thier self-given life pension has to date felt on death ears.

    Jeanne D'Arc

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  8. Great Job SFP

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  9. Aglican church must realise now,that Ram has to much devils on him and he not belong in the church any more for his sell out and letting his peoples suffering and leaving in proverty.

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  10. One day they will tell us were are those billion and they will bring back,if they die and put it on their wifes,daughters or son or who ever it will be investigated Seselwa will get it back.Because it will be needed for our countries to pay all its debts and get out of this mess Michel has drown us in.We are not expecting PP les voler de la repulic finishing paying those debts when tumbled down from Power.Michel are praying this never happen until he transfer to devils.No!dead line 2016 Pp.Those thinking befor Pp tumble they will escape abroad interpol will find them,first things when pp tumble all pp crooks will be under house arrest and their passports taken away till they face justice and get their time behind bar for stolen what belong to Seselwa.

    Johnny

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  11. James Michel told me Sarah owns the Plantation House on La Digue, next to Dolor Ernesta's 30 plots taken.

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  12. "the Seychelles Government raises an international loan and buy C&W Seychelles in its entirety."

    http://seyeu.clubdiscussion.net/t467-the-seychelles-government-raises-an-international-loan-and-buy-cw-seychelles-in-its-entirety#750

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  13. Ram destroying Anglican Church. Time to go judas. Your actions are shameful.

    Ram destroying snp. But he will stay because it has become party of cowards and sell out !

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  14. They stealing tea bags to make money in snp.

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  15. PP is Paroting about Brain Drain i want to say a few words.

    Brain Drain is a problem for developing countries and it is a global phenomenon.But let us concentrate on those causes that are affecting our country.
    The main reasons for the deteriorating environment are weakness we are still confronting in various areas of which need to be given strong priority and committment on the part of government.E.g INTERNAL BRAIN DRAIN-which occurs when trained human resources are not employed or find jobs in the fileds of their expertise at home.How many young Seychellois were trained abroad to be teachers?Once back home they gave up teaching becuase of inefficent working conditions which do not fulfill thier wishes.Salaries are negligible in comaprison to Expats with same qualification.Thus helping sky rocketing unemployment among highly trained Seychellois.
    -Slow promotion process.
    -No possibility for academic development and innovation,or jobs offerd to highly qualified workers etc..(Pp disregards local Talents).
    -Political,social and psychological implications of unequality.What does it means to live among multi-millionaires often their assets are often(BIEN MAL ACQUI)wing with people struggling to keep SR 1000 into their bank accout.They cannot abide by a passive cog in a highly scripted and often stultifying clan machine.
    -Lack of respect of the proffessionals and usually qualified workers are answerable to bosses that have no knowledge of their repective fields.Eg MITSY as Health minister.
    -High crimes rate,poverty,human rights abuses and lack of politcal freedom,insecurity.
    -Non-available facilities for research developemnt and innovations,lack of financial supports,incentives,housing etc...An word on Housing:Pp tells us it is building houses in order that return graduates can buy.Well Pp graduates just finished their studies and have not started to work yet ,so they donot have money to buy house.What can be done Pp,is provide them with houses to rent and for those who want to buy they can pay by instalment over the years to come as they settle in their proffesion and earn a salary.

    And so on.

    The barriers to attracting those Disaporas is not famine,overpopulation fighting for scarce resources.Passioante individuals are fleeing the Institutional environment that constrain,rather than amplify individuals passion and crativity.Thus in order to preventing Brain Drain Exodus,there is a need to promote and pratice good goverance by stemming corruption,cronyism,patronange,nepotism,etc...it is necessary to ensure unbiased and uniform distribution of resources to make certain stability.

    Some Ideas and solutions with follow.(From Brain Drain to Brain Gain).

    Jeanne D'Arc

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  16. SOME SOLUTIONS TO PREVENTING BRAIN DRAIN(REVERSE BRAIN DRAIN)

    In the case of INTERANL BRAIN DRAIN,PP has simply to pay the same slary being paid now to Expats(NB Pp still save money from perks such as free car,house,health care otherwise given to Expats)

    -Set up a CARRER ORIENTATION BODY/PROGRAM.
    MISSION:To conduct statisitcs and provide information on jobs/experts Seychelles need now and in the future.This will help sutdents in choosing therights career ,one that they sure after their studies they would find a job back home.It also reduce waste of Tax payers money on Scholarships.

    -SCHOLARSHIP/BUSAR
    Keep students to study locaaly instead of abroad can be part of the solution.It should also imporve standards of education at home.,Scholarship and Busar must be given priority to thosoe Students who opted for a career proposed by thwe CAREER ORIETATION BODY.

    -Sudsizing education to the lelvel actually demanded by the National Economy.Logics suggest that this policy reduced migration by subsiditing the kinds of education that would lead directly to alterantive employment.PP must create momentum that would be reflected in its economic and development growth.These individuals possess a comaprative advantage which is exactly what Seychelles need to gain comparative advantages in certain sectors.

    -Create Opportunities for Research at home that can inspire a reserve brain drain flow.For instance in :social ,Humanities,Medical,Agricultural ,fianance sciences and instituionals facilities.

    _Some other ideas:RESEARCH INSTITUION FOR EXPLOITATION OF THE SEA
    Mossion:Ensure better knowledge assessment ,values enhancement and streamlining in the exploitation of marine resources;improve Knowledge and measures to portect and restore marine environemnt.Enhacne socio.economic of developemnt of the Marine world.Provding assisstance to the ogvernemnt and public authorities and organisations concerned with scientific/technical or economic research.Contribute to implementing of agreements and conventions in the marine fields.Could for instance,make research on TUNA migrations,etc..)

    Note also we have given new Business ideas such as extracting mineral from seaweeds to be conveted into medications-Such a firm would need highlycientists,chemists,biologist,etc...

    -A NATIONAL INSTITUTION FOR INDUSTRY ENVIRONEMNT AND RISKS
    MISIION:to access and prevent accidental and chronic risks to people and the environment originating from industrial activities.chemical substances etc..

    a
    -A NATIONAL INSTITUION FOR AGRONOMIC RESEARCH
    MISSION:To produce and asseminate scietific know-how in the fields of agriculture,food and huamn health and environment.to develop innovations and know-how for the benefit of society.To develop scietific and technical culture and praticipate in the science/society debates.To inform through its expertise,decision-making by public and private sector players.

    Business leaders must create the conditions that would entice Seychellois --high salry,incentives,good work conditions etc...


    There must be a well-publized campaign to entice those disaporas to return.This campaign must be backed up with tangible enticemnts that make it then worthwide leaving the comfortable life in the developing owrld.

    Motivation is a critical dimension of capcity defined as "The ability of people,insititutions and societies to perform functions,solve problems,set and achieve objectives".Incentives and incentive systems are fundamentally important to developing capacities into better performance.It allows individuals to perform their functions effectively,efficiently and sustainbly.

    Finally there is aneed for International organization to step up to tackle the problem,which is eating up the resources of the developing countires ,without any significant coontribution to their own economic development.This goes to organizations like IOL to.

    For more ideas ans solutions contact us PP.

    Jeanne D'Arc

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  17. Let the graduates be free and the Brian drain will end. Pay them well. Allow them to have what they deserve. Stop enslaving them because they are smarter then you.

    Stop depriving your people of what they deserve.

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  18. Houreau walk free?shame on you Govinden and this kangaroo court and with this regime we dont have justice for every one in Seychelles, and we have a corrupt sytem we expect this court house to be same.

    Horeau had frame those two guys,if not those two guys have to save their ass,bring out the true Seselwa want to know the true story that escobars are Pp politicians and Govinden are involed in it.

    ReplyDelete