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‘Belvedere’ update: The Strategic Growth Fund has no recoverable assets

Investors will only receive back a fraction of their money.

The Strategic Growth Fund, which was at the centre of the allegations around the so-called “Belvedere Group” has no assets that can be recovered. Any investors who were left in the fund should therefore accept that they will only get back the small portion of their money that was held in cash.

This is the conclusion reached by Alan John Roberts and James Robert Toynton of Grant Thornton, the Joint Administrative Managers (JAMs) of the Global Mutual Fund, the white label fund under which the Strategic Growth Fund was run.

In a final report to the Royal Court of Guernsey, a copy of which Moneyweb has obtained, the JAMs estimate that the total book losses to investors in the Strategic Growth Fund will be in the region of $72 million (R956 million). The report however states that the JAMs were not fully able to investigate the causes of the total failure of the fund. They do not find that anything fraudulent or illegal took place.

The losses are almost entirely attributable to private equity and property investments in South Africa. The Strategic Growth Fund held exposure to these assets through its investments into sub-funds in Mauritius that were managed by Belvedere Management, and BKOne. All of these entities are currently in liquidation.

Read: The world’s greatest Ponzi scheme that never was

“The JAMs consider that there is no prospect of any realisation of assets at the sub-fund level that would exceed the costs and liabilities of those sub-funds, and as such there will be no assets recovered for the fund and no distribution to creditors or investors,” the report states.

As Grant Thornton notes, the Strategic Growth Fund was initially invested in a range of mutual funds, similar to unit trusts, run by managers such as JP Morgan and Investec. However, between September 2008 and December 2010 the fund sold out of these funds and instead invested predominantly into private equity assets. There is however no indication that these investments were in contravention of the fund’s mandate.

Valuations

Critically, the report also does not provide an independent valuation of the fund’s assets either at the time that it was suspended in February 2013 or when the JAMs took it over in March 2015. It only notes reported values at the latter date.

It is therefore not able to make a finding as to whether the value was lost before or after these events took place. In other words, there is no conclusion as to whether previous valuations of the private equity assets were correct or not.

The fund managers

The JAMs also note that the investors in the Strategic Growth Fund were all introduced by advisory firm deVere. In a previous report they stated that this has been confirmed by deVere itself, and that approximately 272 clients of the firm had been invested.

Grant Thornton adds that the discretionary manager of the fund was United Asset Management (UAM), which is “understood to be owned by deVere”. Cobus Kellermann was employed by UAM and was the fund manager at the time that the investments in the fund were changed, but he has consistently maintained that he did not make investment decisions alone. He says that there was an investment committee in place that included deVere staff.

Kellermann and David Cosgrove were the subjects of an investigation by the Guernsey Financial Services Commission that centred on the Strategic Growth Fund. That investigation was however closed last year and no action was taken against them.

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The heading should be “deVere update”. deVere consultants pushed their clients into this fund. Was there proper disclosure that UAM was owned by deVere itself… No.

Individuals who invested with Belvedere directly, were their funds placed into SGF and did they lose money… No.

So who lost money, deVere clients who were sold QROPS solutions and then recommended to place their funds into SGF due to the commissions being paid to the deVere consultant/Salesman.

Cobus Kellermann and David Cosgrove set out ALL the facts on a website http://www.belvederetruth.com some three years ago. It was sent to each and every interested party (journalists and regulators). To date not a single fact has been challenged or disproved to the best of my knowledge. Why is Alec Hogg and David Marchant quiet all of a sudden?

Herman Pretorius shot Julian Williams when he realized that Williams used fancy accounting, and company structures, to steal the money from the “Relative Value Arbitrage Fund”, which was a ponzi-scheme. Like Marcus Jooste, Williams was a brilliant accountant. He knew all along that Pretorius was running a ponzi-scheme, so he invented a way to channel the assets of the ponzi-scheme into his own pockets. Pretorius was under enormous pressure to keep his ponzi-scheme from collapsing. He had to find alternative investment opportunities because his clients wanted “diversification”. They were over-exposed to the RVAF, and they asked Pretorius for alternative opportunities. (The clients were eventually well diversified in about ten different opportunities within the same ponzi-scheme.)

This is where Williams came into the picture. He was the one with the ideas and the plans. Pretorius wasn’t very bright, but he had the gift of the gab and he had the contacts at the golf-clubs all over the Western Cape. He had access to a pool of money to the value of more than R2 billion. A lot of this money came from businessmen who had undeclared cash to invest. Abante Capital was built on “hot money”. Investors stole from the taxman, and Pretorius stole from them. Williams then decided to steal from Pretorius.

Super Alloys was the vehicle invented by Wiliams to siphon the funds out of the RVAF. Firstly he paid a 10% commission to Pretorius to get his client-base to invest in Super Alloys. The IDC was also dragged into the scheme on the pretense of the catchphrase “Mining and Minerals Beneficiation”. This is how the IDC became an investor in a ponzi-scheme. Williams had the following problem. In order to motivate his investors to invest new funds into Super Alloys he had to promise them a dividend that is at least equal to the return he promised in the Ponzi-scheme(RVAF), otherwise the investors would not invest in Super Alloys. The problem was that Super Alloys never turned a profit, and could not pay any dividends.

Now this is where it gets interesting. Williams convinced Pretorius to lend the funds to Super Alloys to enable Super Alloys to pay a 20% dividend to the investors. This is beautiful because the investors in the ponzi-scheme basically funded their dividend from Super Alloys out of their funds at the RVAF! The investors used their own money, to pay the dividend to themselves.

Williams had shares in Super Alloys, and with an accounting entry and a transfer of money he sold his shares in Super Alloys back to the company, in exchange for the all the cash in the company. The cash was a loan from RVAF of course. When the next dividend payout was due, there was no funds in Super Alloys to pay the dividend. Investors had bills to pay and the came down hard on Pretorius, who promised them the dividends.

When Pretorius eventually realized that he was taken for a ride by Williams, and that Williams used Super Alloys to steal the funds out of the RVAF, he took his revolver, got in his car, drove to Williams’s office, and shot him.

Cobus Kellerman invested in BKOne, the listed entity that housed Super Alloys, but he got out in time by trading with himself. He sold his holdings in BKOne to another fund he managed, that was based in Mauritius. He was both buyer and seller at the same time. He got rid of the mess by offloading the sinking BKOne onto another fund he had control over.

The moral of the story? Beware of brilliant accountants…….and listed ponzi-schemes.

The first coherent explanation of the “Relative Value Arbitrage Fund” that I have read.

Well done Sir. Deserved to have been an article on its own.

Excellent S. Amazing story.True that fact is stranger than fiction.

Quidditas and LuluAlert, thank you. I forgot to mention where another big chunk of the money went. A large part of the investments made by about 3000 individuals, most of them from rural communities in the Western Cape, went into the black hole of derivatives trading. I cannot remember the exact amount of derivatives contracts in Wesizwe that were bought by Pretorius, but the position was large enough to sink the RVAF.

Pretorius told investors that he was developing Wesizwe, the platinum mine near Rustenburg, and that they should also invest. Most of them grabbed this opportunity to diversify into mining, although they had no prior experience of owning shares. They did not have any knowledge of mining either. They trusted Pretorius because he was a “guru” and able to spot the “best opportunities”.

As it pans out, Pretorius was not involved in the development of Wesizwe. Williams did the development. Pretorius was merely a broker, who received a 10% commission from Williams to sell Wesizwe. Pretorius saw the Wesizwe venture as his lucky brake, to turn the ponzi-scheme into a legitimate investment operation. The share-price went from R2 to R15 in 12 months. He believed, and he told everybody, that the price will soon reach R25. He advised clients, who never traded derivatives before, to bond their properties and to buy derivative contracts on Wesizwe. Many did.

As the share-price crashed from R15 to R0.43, the margin calls streamed in. There were many sellers but no buyers. Every contract represents 100 shares. Investors lost R1000 for every R100 they had on margin. One can say that they lost ten times their initial investment. The position held by the RVAF was so big that the door was too small for him to exit. He had no option but to pay the margin calls out of the funds of his investors in the RVAF, and hope and pray that the price goes back up.

We can say that the RVAF disappeared down the mine shaft at Wesizwe.

Some of the funds of the RVAF were distributed to people who needed a regular income. The biggest chunks went into “dividend payments” from Super Alloys and the margin calls on the futures positions. Who made the money on the other side of the derivatives trade? Derivatives is a zero-sum game, for every loser there is a winner. Those margin calls went into the account of the guy who sold the contracts to Pretorius and his clients. Who is this person? I have got no idea, but have my suspicions.

don’t stop now …….. !!!

Please tell more. I had no idea you are such an interesting font of information. look forward to the next instalment.

My views:
I traded derivatives (selling) at a Corporate Treasury (Bank) for many moons. Our clients were mostly Triple A Companies for more than 20 years.
During our presentations, I hardly ever met a CEO, COO, MD, FD, CFO and Treasurer (mostly CA’s – with or without a CFA etc qualification), that had a ”cooking clue’’, what the risks/rewards in the most basic vanilla derivative were!
That is why the Western Areas toxic hedge methinks, was sold to a Brett Kebble so easily (JCI) by a consortium of Banks (Investec, Hypo Munich and AIG). This now infamous gold naked hedge, destroyed JCI, and it took Investec many years (with the help of KPMG’s Chinese Bookkeeping)), to try and save JCI from bankruptcy (which methinks that they were!). In this case Investec just couldn’t afford JCI to go belly up, as they would have lost billions, methinks.

Sensei, interestingly, if you look at the Joint Official Liquidator’s First Report into Brighton SPC which housed the Kijani Commodity Fund in the Caymans. The fund’s sole debtor Kijani Resources of Gilbraltar advanced a number of loans itself to BKOne companies.

Cobus Kellermann appears to be a common thread in a number “unrelated” funds dabbling in obscure private South African companies like Advanced Alloys and Highlands Trout, companies I believe are now all worthless.

Please clarify because there is just too much detail here. Did Kellerman do anything wrong or not? Is he the crook that Alec Hogg made him out to be?

Alec’s website receives a lot of sponsorship from Carrick Wealth – all Ex deVere who jumped ship as it was sinking with this story. So guess where his opinion lies.

‘’Money (read Ponzi) is honey, my little sonny.
A rich man’s joke is always funny’’

To me, the moral of this story is that these ‘’wheeler dealers’’ did not possess the wealth, it possessed them!
Methinks my old friend ‘’Alec Hogg’’ will have to start preparing for his allegations against Cobus Kellerman as this issue is starting to look as ‘’clear as mud’’.
My already very grim view of these so-called fund managers took another dive and lots of them are nothing more than very well ‘’educated idiots’’, who are only in it for the money, methinks!

Charles Winshaw?

Is this the same Charles Winshaw whom worked at deVere for 3.5 years and has now set up his own IFA business, http://www.charleswinshaw.com/ operating out of a serviced office?

@searcher6 @One and Only

No. Never heard of him.

Tell me, do all ex-deVere staff go and setup their own thing and duplicate the deVere model? A lot of QROPS and QNUPS structures being offered at these companies with “Professional, international advisors” managing it from SA.

As soon as I see a company advertising QROPS services, it’s best to run for the hills!

Erm…according to the Paul Yabsley (GFSC) affidavit, which is pubic information as well as the website: http://www.belvederetruth.com it is confirmed that Kellermann left in the beginning of 2012 – that is six years ago now, but so many “issues” blamed on him. deVere just trying to hide their fees and mis-selling if you ask me.

The more I read, the more I wonder- is Kellerman a crook, and if he is, why not say so.
As someone one wrote, its as clear as mud.
what is clear, is that these ‘fund managers’ have the small man by the balls, and have no compunction in squeezing a bit harder.
After all, 10 years on , Porrit and Bennett are still playing games with and running rings around the venerable Judge Spilg, Tannenbaum is happily ensconced in Aussie, and Bobroff(in a different context, but also a crook) has been recommended to the Bar in Australia, as honourable and upstanding.

Erm, it has been proven (via affidavit) that Kellermann left at the beginning of 2012. That is six years ago!

Welcome back Green Beret !

”Fighting soldiers from the sky
Fearless men who jump and die
Men who mean just what they say
The brave men of the Green Beret”

When Pretorius shot Williams it was a case of two sociopaths netting each other out. Someone below called Williams brilliant, that he was not. What he was was a liar of Kebble-esque proportions. Pretorius was a Bible-bashing pied piper for the Afrikaans platteland volk who took their packages in the 90’s and used other peoples money to look good. He was just swindled by a better liar and a better crook in the form of Williams. Their deaths saved us a decades long Porrit style rear guard action. Justice was done.

I am one of the 272 DeVere clients who invested. So I lost my pension money!

I just read the JAM final report. Interesting to say the least, particularly about DeVere and their inaccurate fact sheets!

Does anyone have any good suggestions about using legal means to recover the money for the 272 clients impacted?

For example I was thinking there is a strong case for DeVere being guilty of mis-selling.

Section 65 of the Collective Schemes Control (“CIS”) Act is what governs marketing and “solicitation” within the Republic of SA. It has been noted (before) that deVere started this mis-information campaign in order to hide conflicts, fees and mis-selling…

I too am one of the 272 deVere clients who was invested in this (my case is maybe more frustrating as my deVere “Adviser” purchased shares in this on my behalf in mid-February 2013, just days before the fund stopped trading unbeknownst to me.

I too am looking for legal means to recover my initial investment. I have contacted the bank that was offering the fund (in Feb 2013, even though deVere itself apparently advised customers to withdraw in 2011) and what governance, or lack thereof, they had.

I don’t know if there is already a group of affected parties out there, but if there is, please let me know so that I can at least commiserate with others in my position.

If you were advised in SA you should contact the FAIS Ombudsman. They’ve fielded a ton of complaints against deVere over the years. You should especially focus your complaint on the bad advice given and the fact that you were advised on an unregulated product, which is breach of an adviser’s license in SA. Also point out to Ombudsman that the FSB (now FSCA) were warned repeatedly about the miss-selling of the SGF by deVere since early 2010. Concerns were also raised then about the mismanagement of assets in the SGF.

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