Curators struggle to trace Herman Pretorius’s Ponzi billions

Less than R300m of estimated R2.2bn traced; family served with Anton Piller order.

JOHANNESBURG – Curators for Herman Pretorius’s investment scheme are struggling to track the billions he solicited from investors.

On July 26 Pretorius shot his former business partner Julian Williams before turning the gun on himself. Evidence emerged after his death that confirmed suspicions that Pretorius had been running a massive Ponzi scheme called the Relative Value Arbitrage Fund (RVAF).

RVAF curators estimate that the scheme received R2.2bn from about 3000 investors. At the time of Pretorius’s death, the RVAF owed an estimated R3.1bn to investors.

The difference between the amount received and owing is most likely explained by the fund’s performance, which is believed to be fictitious.

Investigations following Pretorius’s death show that he alone was in control of a tangled web of companies, close corporations, trusts and offshore bank accounts.

“Sadly, Pretorius took details of many of the transactions to his grave,” wrote curator Rynette Pieters in court documents.

After two and a half months of curatorship, the RVAF has given up few secrets. In the latest update to investors (click here to download) Pieters revealed that an Anton Piller order had been granted by the High Court against Pretorius’s wife and her two sons. Pieters says the purpose of the order, granted on September 27, is to “protect and obtain information relating to the whereabouts of missing funds belonging to creditors/investors.”

But Pieters says: “Our attorneys received notice from Mrs Pretorius and her sons’ attorneys that they are opposing the final order.”

The RVAF’s curators appointed De Jager Boshoff Chartered Accountants to investigate what happened to investors’ money. So far the reported findings of De Jager’s investigations trace funds of less than R300m – a mere fraction of the estimated R2.2bn invested.

De Jager’s findings are summarised as follows:

  • Between January 1, 2009 and August 1, 2012, R7.5m flowed from the RVAF Trust to Pretorius’s personal accounts.
  • Between July 18, 2007 to August 1, 2012, R14.7m flowed from RVAF to Seca Trust and on to Pretorius’s personal accounts.
  • From March 3, 2009 to October 14, 2009, R32m was advanced by RVAF to a grape farming entity in Namibia. Most of this money was repaid to SA Superalloys at Pretorius’s request.
  • Investment funds of approximately R50m were paid into Abante Trust, with only R3m remaining in that entity’s bank account.
  • Investors’ money was used to buy property at South Gate Office Park in an entity called Slipknot Investments. On April 1, 2011, Slipknot bought a property for an amount of R2.1m.
  • RVAF paid “secretarial services” fees of about R100m to Seca Trust, an entity associated with Pretorius.
  • Between June 10, 2008 and August 10, 2012, R52m flowed from RVAF to Trading Alpha Trust. Only R21m was repaid.

Pieters revealed that provisional sequestration orders have been granted for: Seca Trust, Abante Trust and Trading Alpha Trust. Slip Knot Investments has also been placed under provisional liquidation.

TIMELINE
2001 Julian Williams launches Penryth (Proprietary) Limited, a specialist securities lending business.
2002 Penryth placed into liquidation, liquidation halted after Cadiz buys it out.
Williams and Herman Pretorius establish the Abante Group of companies, comprising: Abante Capital (Proprietary) Limited, specialising in statistical arbitrage trading strategies; Abante Virtus (Proprietary) Limited, a private-equity company focusing on black economic empowerment transactions in South Africa;Asset Liability Management (Proprietary) Limited, a specialist securities lending and third party treasury management company; and Abante Management (Proprietary) Limited, an administrative and fiduciary service company.
2003 Williams co-founds Wesizwe Platinum Limited, a platinum explorer and mine developer, with James Ngculu. Owns 41% of Abante
2004 Pretorius sets up Relative Value Arbitrage Fund (RVAF).
2005 SA Superalloys is registered, a special purpose vehicle designed to raise funding from venture capital investors.
2005 Wesizwe lists in December. It is advised by Abante Virtus.
2006 A consortium comprising the Abante Group and a management team engineered by Williams buys theAvalloy plant from African Rainbow Minerals and oversees Rolls Royce taking a 15% stake in the company. 
Williams becomes chairman of Avalloy, South Africa’s only superalloy producer.
Pretorius and brokers affiliated to him sell SA Superalloys pref shares to investors promising consistent returns of about 20% a year.
2007 In May Rolls Royce buys a 15% shareholding in Avalloy.
2008  In March Williams splits from Pretorius to start Basileus, which specialises in private-equity transactions and corporate advisory work with Ngculu.
Basileus acquires SA Superalloys from the Abante Group as part of the split up.
Basileus Capital takes over Abante’s stake in Avalloy, now holds 55%, through two separate investment vehicles, SA Superalloys and Basileus Investment Ventures 1 (Pty) Ltd.
2012 Dividends run dry in Superalloys, which sparks some unhappiness among investors.
It emerges that Pretorius put R40m of his own money to keep Superalloys paying dividends.
14 June Moneyweb reports that questions were raised by financial advisers about the returns generated by Pretorius’s RVAF. These returns have been in the region of 20% a year. 
5 July Moneyweb reports that a war of words erupts between Williams and Pretorius over the failure of unlisted public company SA Superalloys to pay dividends on its preference shares. Williams is a director of Superalloys.
25 July Williams’s e-mails Moneyweb’s Julius Cobbett saying that he is stunned at the abuse directed at him by clients of his former business partner Pretorius.
26 July Pretorius allegedly shoots his former business partner Williams dead in his Cape Town offices, then turns the gun on himself. 
30 July Pretorius’s investors in RVAF receive a letter from liquidator Lambertus Von Wielligh Bester from the firm Progressive Administration, stating that an application will be made on 31 July to place the RVAF Trust in to sequestration
30 July sequestration court papers claim investors placed R1.8bn with Pretorius’s RVAF.
30 July Von Wielligh Bester RVAF has 3 000 investors.
1 August Cape Town High Court grants an order to sequestrate Herman Pretorius’s scheme.
3 August 4i director and fund manager Michal Calitz admits to referring clients to Pretorius and investing his own money in the RVAF. 
3 August Master of the High Court appoints Rynette Pieters, Lambertus von Wielligh Bester and Barend Pieterse as joint curators of the RVAF. 
10 August FSB explains its apparent failure to act on Pretorius
14 August Basileus Capital and 11 related entities including SA Superalloys initiate business rescue proceedings. 
20 August Moneyweb reveals how audit firm PwC helped Pretorius to sell his fund. 
27 August Curators estimate that Herman Pretorius’s fund owes R3.1bn to about 3000 investors
27 August High Court places Tor Construction under provisional sequestration
4 September Broker Simon Morton apologises to clients for advising them to invest with Pretorius
12 September Moneyweb reveals how two funds in the Ankh stable sold their entire BK One stakes on the day Julian Williams was shot

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