Advocate for former Sharemax auditors claims case is ‘a nullity’

Says it could be an exercise in futility to continue with the matter.
Mike Maritz has raised questions about the independence of the independent regulatory board’s disciplinary committee members. Image: Shutterstock

The actual or perceived bias of two members of the Independent Regulatory Board for Auditors (Irba) disciplinary committee in the disciplinary hearing against three former auditors of Sharemax has made the case a nullity, argued advocate Mike Maritz.

A nullity in law is defined as something which may be treated as if it did not exist or never happened.

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Maritz, who is appearing for Jacques Andre van der Merwe, Danie Dreyer and Petrus Johannes Jacobus Bekker, said this during an application this week for the recusal of Sorenzo Sooklal and Horton Griffiths, two members of the disciplinary committee hearing the case.

“All of it becomes a nullity, which is regrettable from our perspective because we say the pro forma [Irba] has no case and it is a huge imposition to our clients and of course it has been a massively costly exercise.

“But we cannot escape that conclusion of law,” he said after referring to several high court judgments that dealt with alleged bias or perceived bias in disciplinary or other hearings.

The three auditors at the time of the alleged offences were all directors of ACT Audit Solutions Incorporated.

They are collectively facing a total of 340 charges related to limited assurance engagement work they did for Sharemax. All three have pleaded not guilty.

Read:

The recusal application follows Griffiths confirming last week that he was a member of the Irba investigating committee between 1995 and 2007, initially as a member but subsequently as chair.

Maritz objected to this and some of the questions and statements made by Sooklal to Professor Harvey Wainer, an expert witness for the three auditors.

He also questioned the independence of the evidence of Brian Smith, the expert witness for Irba in the hearing.

It emerged during the hearing that Smith was part of Irba’s investigation committee from 2004 until 2016, and chair of the committee from 2011 until 2016.

Smith further admitted that he was chair of this committee when it concluded the investigations into the conduct of the three audit practitioners, reached an opinion on their conduct, and passed this on to Irba’s disciplinary advisory committee with a recommendation.

‘The well has been poisoned’

In an apparent reference to the alleged influence of Sooklal and Griffiths on other members of the disciplinary committee, Maritz said: “The legal position is quite clear that the well has been poisoned.”

Maritz added that with the conclusion they have arrived at “it could be an exercise in futility” to continue with the matter.

He accused Sooklal of misrepresenting Wainer’s evidence and of being disrespectful to Wainer by being dismissive, interrupting and arguing with him (verbally) and through his body language, and trying to ridicule Wainer’s evidence.

In regard to Griffiths, Maritz said he has too many hats and cannot sit on a disciplinary committee with his history and his Irba hat on.

Maritz added that when Griffiths made his disclosure about any involvement with Irba and its committees, Griffiths proudly turned the camera to some certificate on the wall and made a meal of pointing out that this was an Irba certificate of excellent service because of his involvement in the investigating committee work.

“What he said, what he achieved to demonstrate through that, was that he is an Irba man,” said Maritz

“Are we now as respondents to look at that and think, here we are going to have an objective unbiased independent adjudication of the issues in play in this matter. We think not, with respect.”

Maritz added that the powers that be at Irba do not understand that proceedings such as these are supposed to be seen to act completely independently and in an unbiased and impartial fashion, which is the cornerstone of a fair trial and a constitutional right.

“You do not load the committee with ex-investigating committee chairmen,” he said.

“You do not present evidence under the guise of an independent expert who happened to be the investigating committee’s chairman who had already investigated the matter and come to a conclusion. The entire proceedings are tainted by that,” he said.

Accuracy of allegations challenged

Maritz also attacked the accuracy of serious allegations made in Part A of the charge sheet, stating that during the course of the hearing it had been established that those allegations were false and constituted gross misrepresentations with the potential of severe prejudice to the three audit practitioners.

He referred to several of these, such as that the investors in Sharemax were typically pensioners and laypersons.

“We now know in the evidence that … there was never any foundation for that, yet that allegation was made for a particular reason, a false allegation and a misrepresentation was made.

“Why would an independent board acting through its officials and legal representatives or whoever else were responsible for the drafting of this Part A resort to this sort of conduct?

“That is the first elephant in the room,” he said. “What is that elephant doing?”

The hearing is continuing.

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”Lawyers should never marry other lawyers. This is called inbreeding, from which comes idiot children and more lawyers”

– Line from Adam’s Rib (US 1949)

Ask anybody (like my 93-year-old mother), that lost money what they think of this so-called ”a nullity” argument.

The interpretation of the law just amazes me – it is impossible to make anything foolproof because fools are so ingenious?

Maritz has not done his homework if he disputes that Sharemax investors were not predominantly pensioners and lay persons.
Like all lawyers his basic strategy is to confuse and obfuscate.

You only have to be in the financial marketing industry to realise that no investor made direct investments. All of them invested on advice of their financial advisors. So to imply that old people invested without any advice and knowledge is not true

Very very interesting….

I suspect that this case will be going to the high court where justice will hopefully prevail.

what happened to picvest orthutouch

dont they also had auditors checking the books

auditing is probably the biggest fraud scam ever invented by mankind.

Jacques Pauw wrote an article in 2010 in the afrikaans sundaypaper “Rapport” in which he stated that Sharemax investors might loose all their money.

This was not true but the Monday after this article nobody invested further in the Villa project. We all know what happened after that. All the blame was placed on the directors by the media.

Well, see this interesting article in today’s “Maroela Media” about this very same Jacques Pauw:
https://maroelamedia.co.za/nuus/sa-nuus/jacques-pauw-verlee-jammer-na-voorval-by-va/

While there were no findings of any wrongdoing against the directors. Even the findings of the SARB against the directors were retracted in 2012. Makes me wonder…..

Going back to the past:
Question what happened yo all these role players…….Capicol …..GD Irons etc…

Board refuses to back Villa rescue plan
By Roy Cokayne Time of article published Jan 17, 2011

The fate of The Villa, the partially completed R3.5 billion retail development east of Pretoria, is likely to become clear by the end of this month.

The Villa is syndicated by Sharemax Investments and funded by about 8 000 investors, most of them pensioners.

Former Sharemax Investments managing director Willie Botha proposed a rescue plan to the board of The Villa in December in an attempt to prevent investors losing hundreds of millions of rand, but it did not receive the board’s unanimous backing.

Construction of The Villa came to a grinding halt in September last year when funds from Sharemax to Capicol, the developer, dried up after the registrar of banks notified Sharemax that its funding model was contravening the Banks Act.

GD Irons Construction, the contractor, has a lien of more than R150 million over The Villa for work completed for which the company has not been paid.

Botha said last week that GD Irons did not want to liquidate The Villa but owed subcontractors about R60m and time was running out to save the project.

Botha’s rescue plan proposes raising R100m from current investors, which amounts to a further R12 000 from each of them, to remove the liquidation risk and allow for a deal to be done for the transfer of the property into the investor company.

Investors, with the assistance of property companies, could then look at ways to make the property viable, sell it under normal circumstances or raise finance to complete the project.

Dominique Haese, an executive director of The Villa, said a letter the board wanted to send to investors about the rescue plan stated it was subject to certain procedures, including obtaining agreement from Capicol. However, she said, the registrar of banks refused to allow the board to mail it because he did not believe it was factually accurate.

Dawie Roodt, the chairman and chief economist of the Efficient Group and an independent director of The Villa, confirmed on Friday that he was opposed to the rescue plan because “companies under statutory management are not allowed to trade with the assets of the company without the approval of the Reserve Bank”, and too many unanswered questions remained.

Roodt said it was the responsibility of the board to look at all alternative options available to prevent The Villa from going into liquidation.

GD Irons Construction managing director Geoff Irons said he was not prepared to waive the lien until the debt was settled but was willing not to institute legal action against Capicol now if his company received R100m of the amount owed. He stressed the R100m was desperately needed and he wanted payment by the end of this month to enable his company to settle debts with its creditors and subcontractors.

Irons said in the interests of the company and its subcontractors, his company at some point would have to institute liquidation proceedings if payment was not received.

Capicol chief executive Paul Kyriacou said on Friday Capicol would “never transfer the property” until it was paid and questioned Botha’s rescue plan.

Kyriacou said raising R100m might stop The Villa from being liquidated, but investors were not being told the reality, because he estimated it would cost an additional R700m to R800m to get the project back on track after all the delays. – Business Report

SHARE THIS ARTICLE: 2011

The main problem that the directors had was that the inflo of investments stopped immediately after Jacques Pauw wrote the damning article in Rapport. The fact that Pauw ignored to say in that same article that Sharemax was alowed to carry on with the project after they changed the investment instrument to comply with the SARB interpretation of the commercial notice was crucial. I suppose Pauw will claim that he did not know that part and that is why he can not enjoy a drink at the completed Villa Mall….

End of comments.

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