Registered users can save articles to their personal articles list. Login here or sign up here

24 facts Nova directors cannot deny

Directors of Sharemax rescue vehicle try to calm down “disturbed” debenture holders.

The board of the Nova Property Group, the rescue vehicle of the erstwhile Sharemax property syndication group, last week sent at least two communications to its 31 000 debenture holders in an attempt to calm down many of them who have been “disturbed” by Moneyweb’s recent revelations.

The Nova board came out swinging by claiming that the articles are “negative, biased and mostly incorrect”, and refers debenture holders to the “correct” information that appears on the Frontier website. Read the full statement here.

These communications followed the publication of several Moneyweb articles in recent weeks about how the four Nova directors have managed to secure 87.1% of the shareholding and 91% of the voting rights in Nova without paying a cent.

This was revealed when Nova opened its shareholder registers to Moneyweb after the board fought for more than three years in various courts to keep their shareholding a secret.

The directors’ dominant shareholding also made it possible for them to pay themselves exorbitant salaries, whilst the board also recently announced that all interest payments to debenture holders were suspended.

The Nova board also said in the communication that the negative media reports are “regrettable, especially having regard to the inordinate amount of time and effort that the Group has invested in sharing correct and detailed information with relevant media, as appears from the information contained on the Frontier website”.

This is not quite accurate, as the board’s reference to an “inordinate amount of time” actually refers to one physical meeting lasting around 90 minutes at which the board opened the shareholder registers to Moneyweb, and then answering three sets of emailed questions. Nova CEO Dominique Haese also gave a radio interview. Unfortunately, the board does not disclose that it terminated all communication with Moneyweb prior to the publication of the first article and did not find the time to answer three additional sets of questions.

Here are the questions Nova did not answer. One, two, three.

Nova’s response

Despite the Nova board’s response and accusations of incorrect reporting, the board offers no new reasons to counter the serious allegations Moneyweb makes. In fact, Nova only republishes the transcript of the Haese/RSG interview, and the emailed questions and answers between Moneyweb and the board that have already been published on Moneyweb.

There is no official response or additional information from the board to refute Moneyweb’s information.

Below appear 24 indisputable facts related to the Nova directors, how they managed to “capture” a dominant shareholding in the company and how this shareholding has influenced their decision making.

  1. 95.7% of Nova is owned by the 4 directors and 3 current and former senior executives of Nova, through a nominee company, Nova Nominees, which holds these shares on behalf of the directors and senior executives.
  2. These shares were issued to Nova’s 4 directors and 3 senior executives for free in August/September 2013.
  3. About 2 000 former Sharemax investors who elected to receive shares and not Nova debentures, secured 4.3% of Nova’s issued shares, but effectively paid R94 million in total or 98c for each share.
  4. Before issuing shares to the 2 000 Sharemax investors, the shares were stripped of all voting rights, which meant that the shares issued to the directors and senior executives, exercised 100% of the shareholder votes in Nova.
  5. Chairman Connie Myburgh, frequently referred to as the architect of the Section 311 scheme of arrangement, received 21.8% of the Nova shares without paying a cent.
  6. The other three directors, Haese, Rudi Badenhorst (financial director), and Dirk Koekemoer (chief operating officer) each received between 21.6% and 21.8% of the shares without paying a cent. The remaining three senior executives pocketed the remaining 8.7%, also for free.
  7. Nova shareholding        
     Shareholder   A Shares   B Shares through Nova Nominees   D shares  % of total Equity % Voting (direct & indirect)
     Connie Myburgh  10  510 712 950   21.80% 22.80%
     Dominique Haese  10  510 712 950   21.80% 22.80%
     Dirk Koekemoer  10  510 712 950   21.80% 22.80%
     Rudi Badenhorst  10  506 233 012   21.60% 22.60%
     Corrie van Rooyen  10  67 199 072   2.90% 3.00%
     Matthew Osterloh  10  67 199 072   2.90% 3.00%
     Nel van Zyl  10  67 199 072   2.90% 3.00%
    2000 former Sharemax investors      99 923 617 4.30% 0%
     Total  70  2 239 969 079  99 923 617 100.00%

    100%

  8. Haese and Koekemoer were also directors of Sharemax.
  9. These four directors have been the only directors on the Nova board since 2012.
  10. The four directors of Nova received their free shares in Nova while they were also employees, and are liable for tax on the gain they made.
  11. The four directors received their shares courtesy of one paragraph hidden away in an appendix of the original Section 311 scheme of arrangement document. The effect of this paragraph was not discussed or explained anywhere else in the documentation.
  12. Dawie Roodt, the well-known economist, a previous director of the syndication companies and key proponent of the scheme was not aware of this clause and the eventual impact – that it would hand 87.1% of Nova’s shares to the directors for free.
  13. The four directors kept their shareholding a secret. The shareholding was not disclosed to debenture holders. Haese has said in the RSG interview that Nova has disclosed it to “relevant stakeholders at relevant times”, but it is apparent that it was never disclosed to debenture holders. Apart from Roodt, Moneyweb has spoken to more than 100 debenture holders, 25 shareholders and various other stakeholders and not one person was aware of the directors’ dominant shareholding. 
  14. The four directors fought an application of former Moneyweb journalist Julius Cobbett and Moneyweb to access the shareholder registers for more than three years in various courts. (The board was eventually forced to hand over the shareholder registers after the Constitutional Court denied them leave to appeal against a Supreme Court of Appeal judgement that stated that they had no option but to open up their shareholder registers.)
  15. In response to Moneyweb’s questions, Nova’s auditor, BDO, is undertaking an extensive investigation covering the period of the last five years.
  16. If Nova manages to repay all the debenture holders, the board members will own the majority share in all the remaining property assets that were transferred from the historic Sharemax schemes.
  17. The four directors are paid salaries that are out of kilter with industry norms. They each earn between R280 000 and R346 000 a month.
  18. The four directors pay themselves approximately R1 for each R3 paid out to 31 000 debenture holders.
  19. Under the leadership of the four Nova directors the company’s operational activities have never been cash flow positive.  This means that operational expenses, which include the directors’ salaries, are financed through the proceeds from the sale of buildings and external loans.
  20. The Nova board does not adhere to the King III codes of good corporate governance. In fact, Haese said in a radio interview that it is “unfair” to expect the board to adhere to the King III codes.
  21. The board is not overseen by an independent audit committee, contrary to the requirements of the Companies Act 2008.
  22. Debenture holders have absolutely no rights to influence the way the directors run the company. They have no representation on the board or an official platform such as an AGM through which they can engage with the board. They are totally at the mercy of the board.
  23. There is not a director on the Nova board with the sole responsibility to represent the interests of debenture holders.
  24. The 2 000 Sharemax investors who elected to receive Nova shares, also do not have any say in how Nova is run. The four directors decided to issue class D shares without any voting rights to these shareholders.
  25. The 31 000 debenture holders and 2 000 class D shareholders cannot remove the four directors from the board.

 

Nova suspended all communication with Moneyweb.

Here is an earlier response from Haese confirming this:

Dear Mr van Niekerk,

It is regrettable that our efforts in engaging Moneyweb openly, constructively and in a bona vide fashion has not been reciprocated. In response Moneyweb has chosen to publish articles without prior reference to us, and in breach of your undertaking to allow us to see and comment on the articles first, which articles twist the facts, articulate a number of inaccuracies and untruths and seek to slander and defame the Nova Group and its directorate. We are considering our position and our rights in this regard are reserved.

It has become clear to us that any information that is provided by us to Moneyweb, will be twisted and used out of context for the purpose of further negative reporting of and concerning the Nova Group and its directorate and given that no further productive purpose would be served in engaging with Moneyweb, the Nova Group has decided to break off all forms of communication with Moneyweb. We will accordingly no longer respond to questions Moneyweb pose to us, requests for commentary on proposed articles or for that matter to any articles that Moneyweb might publish, subject of course to a reservation of the right to deal with any matter Moneyweb might publish, in a court of law.

Please ensure, should you elect to publish anything further regarding the Nova Group and any of its functionaries, that you include in such publication our above position, verbatim.

Yours faithfully,

Dominique Haese

CEO Nova Property Group

Get access to Moneyweb's financial intelligence and support quality journalism for only
R63/month or R630/year.
Sign up here, cancel at any time.

COMMENTS   12

To comment, you must be registered and logged in.

LOGIN HERE

Don't have an account?
Sign up for FREE

Irrefutable facts – – but Myburg and his merry men (and one woman) will again deal with this as “Negative” and misleading.

WOW – how does Connie & friends sleep at night and how does it feel to spend money on christmas for family when so many poor and vulnerable people will have a miserable christmas?

Surely there must be a short cut route available for someone appointed by Regulator to step in urgently and relieve the situation?? But then, FSB is always acting too little too late
– – – – saxum insurance is the latest example!

Still no response from the organisation responsible for dealing with this situation? You would think that there is at least one person at the FSB who can understand and comprehend what has happened here and take some action to protect the interests of the debenture holders. At the moment one can wonder why
this organisation even exists.

Oh, I could possibly be of assistance as to your question: WHy does the FSB exist?

the answer is complex and long – from a regulatory view – the short answer is: it is just another vehicle for ANC stooges to fill important shoes – do very little – earn a lot – whilst most (if not all the top management) are appointed well above their abilities and trainign and expertise.

They do react – normally a year or so later – when damage was done and poor policy/stakeholders are injured.

Still no response from the organisation responsible for dealing with this situation? You would think that there is at least one person at the FSB who can understand and comprehend what has happened here and take some action to protect the interests of the debenture holders. At the moment one can only but wonder why
this organisation even exists.

This is an absolute disgrace! Well done to Moneyweb for uncovering this disgusting cesspool of “plein boere verneukery”!

Based on the picture, the CEO seems to know a lot about fixed assets.

Please correct me on this subject but it appear Moneyweb is having to do mouth feeding and the government’s job? Problem is do they (Hawks, FSB and SARS) read all the articles to keep themselves informed (being handed all the investigative information on a plate)? Well looking at the investigation along with produced facts, it is a most disturbing case with clear indications that major malpractices have occurred? Clashing both with the law and moral ethics (all the directors sharing in this malpractice?). This, and the Nic Georgiou case of recent, has a major affect on South Africa! Not only on the pensioners but also (and especially) the public for if not addressed with urgency then this is everyone’s future, for no longer is it only corruption by certain gov. departments, it is now spilling over to companies (which makes it worse for in cases of gov it is taking from tax, which degrades the country). Done by companies it literally destroys trust of the entire financial and commercial system and destroys the lives of all people.

White collar crime. This is the outcome of the direction the SARB advised. Where are they now? Ask Julius Cobbet to demand a statement of this affairs from the SARB. They stopped it then, they have to stop this now on the basis of the protection of investors money. These four directors should be sued for what was taken unlawful. If they cannot repay it, sell their assets. Get Derick from Carte Blanche in on the act. Chase them down like they did with Sharemax.

The trouble is that it only becomes a crime when someone gets off their fat bums at the FSB and decides to investigate this sort of situation. Then of course they have to go through a “process” to establish what action they will take. This takes another 6 months. With the “process” in hand, they then start their investigation. They will check regularly (say every 3 months or so) to see if the birds have flown the nest. When satisfied that they have, they decide that any further action would be a waste of time and go comfortably back to kip on those bums which are now even fatter, having enjoyed a nice salary and possibly a promotion for bringing the matter to a satisfactory conclusion (in terms of the “process” indeed they have).

What about a class action by the debenture holders against the directors on a contingency basis? Could be some money to be made by smart lawyers

What is likely to happen to Debenture payouts (never mind the interest payments) on due date if Nova goes under – will they be paid out at the end of the day or, is that it????? Nada – thank you for your money, we’ve enjoyed spending it!!!

Load All 12 Comments
End of comments.

LATEST CURRENCIES  

USD / ZAR
GBP / ZAR
EUR / ZAR

Podcasts

SHOP NEWSLETTERS TRENDING CPD HUB

Follow us:

Search Articles:Advanced Search
Click a Company: