Investors who bought shares in a company called Fame Investment Holdings, which has links to convicted fraudster Niko Shefer, are out of pocket. However, in April this year, they received some financial compensation from an unlikely source: JSE-listed Metorex (JSE:MTX).
As part of the settlement they agreed not to make any public statement in relation to the agreement without the written consent of Metorex.
Moneyweb is aware of an investor who bought shares in Fame from Lucas Ferreira, who is a broker at FSB-registered Silver Falcon Financial Services.
A company search for Fame reveals Ferreira is a director. Ferreira tells Moneyweb that he only became a director of Fame after the company had lost money. He did this as part of a rescue plan, and to prevent its liquidation, he says.
Disgraced empowerment heavyweight Danisa Baloyi is also listed as a former director of Fame. Her spokesman, Dominic Ntsele tells Moneyweb that she was involved in the company for less than a year, and was introduced as a non-executive director by Ferreira, back in 2001.
Ferreira confirms this, saying that Baloyi was introduced to the company as part of a plan to list it on the JSE, which never materialised.
Other Fame directors included Hermanus Engelbrecht and Wessel Schumyn, Adam du Plooy, Craig Kinsman and Hercules Schoombie.
It seems that Fame invested money into a company called Comtrade Co-operative Society, which features in the Government Gazette number 27130 and has links to Shefer.
Around the end of 2001, The Department of Trade and Industry appointed forensic auditors Fezal and Associates to investigate the business practices of Comtrade.
The Gazette notes that Comtrade “was not involved in commodity trading. All trading was done by Tandan. Comtrade had an exclusive arrangement with Tandan to provide investment funds with each to share 50/50 in the profits. Niko Shefer, a director of Tandan, allegedly had nothing to do with Comtrade”.
Fezal found that the Comtrade scheme be declared an unfair business practice. He recommended that a curator be appointed to realise the assets of the company. He also recommended that the “curator might look more closely in into the relationship between Comtrade and Fame Equities to determine if some asset has been hidden there”.
Fame Equities appears to be related to Fame Investment Holdings. Lucas Ferreira and his Silver Falcon colleague Arthur Castle are both listed as directors of Fame Equities, which has since been deregistered.
The Financial Services Board (FSB) confirms that it has received a complaint against Silver Falcon. Spokesman Russel Michaels says the FSB sent it a letter on July 19 2007, requesting responses to questions relating to African Mining and Metals Management, which is a corporate successor to Fame Investment Holdings.
“It is not clear at this stage that a response was received,” says Michaels.
Ferreira initially arranged to meet with Moneyweb to explain the history of Fame. However, he subsequently backed out, saying that he was effectively silenced by the confidentiality agreement.
Investors in Fame received the settlement from Metorex earlier this year. While the details are secret, the Fame shareholder that Moneyweb is aware of received less money out of the settlement than his initial investment.
As part of the settlement, investors agreed to renounce all claims against Metorex, Sentinelle Global Investments Limited, Ruashi Holdings Limited and Niko Shefer. They also undertook not to “make any public announcement, statement or comment of any nature whatsoever” in relation to the settlement agreement “without the prior written consent of Metorex”.
Metorex CEO Charles Needham maintains that the only connection between his company and Shefer is that Sentinelle Global Investments, a company with links to Shefer, was a co-shareholder with Metorex in the Ruashi project in the Democratic Republic of Congo.
Metorex owned two thirds of the Ruashi project, while Shefer’s Sentinelle had about 13%. Metorex bought out Sentinelle’s share in March this year for R327m.
At the Metorex AGM in November last year, people claiming to be creditors of Shefer showed up, asking questions about money they had invested with him.
Needham says these claims had nothing to do with Metorex. But the company handed the matter over to its lawyers, who came up with a plan to pay forward earnings, that were due to Sentinelle as part of the Ruashi transaction, over to Shefer’s investors in advance.
The way Needham puts it is that Metorex used Sentinelle’s money to pay Sentinelle’s creditors. Sentinelle no longer has any claim to future earnings from Ruashi.
No doubt Metorex is relieved to be disassociated with Shefer.
Needham says that Metorex’s status as a listed company makes it an easy target for people who may have a bone to pick with Shefer.“We run mines profitably and efficiently,” says Needham. “We don’t get involved in this nonsense.”