Carmol under investigation by Reserve Bank

Diesel distributor promising 96% returns.

JOHANNESBURG – Petroleum company, Carmol Distributors’ operations have been suspended pending an investigation by the South African Reserve Bank (Sarb) in terms of the Banks Act, according to a note published by attorneys acting for Carmol.

Investors have been told not to make any further payments and no new investors are being recruited. “Investor returns have also been suspended and Carmol can unfortunately not make payments of the monthly returns on investment, until such time as the investigation is finalised and the matter resolved,” the letter from Ayoob Kaka Attorneys reads.

According to the Business Times, Carmol has R450 million invested in it from 2 500 investors.

Professional services firm EY has been appointed as investigator and a dedicated telephone line set up to take investor calls: 011 772 4100. The investigators are compiling a list of investors and the value of their investment, according to Ayoob Kaka.

EY could not provide comment on the matter, since its investigation is pending, and Sarb had not responded to an emailed request for comment by the time of publication.

Investigations of this nature can take several months, as the recent SuraPure Drinks debacle reveals. The Sarb appointed EY as inspectors on October 14 2014 to investigate SuraPure’s business activities – an investigation that is still ongoing. Moneyweb first wrote about SuraPure in March 2014.

What is Carmol?

According to a Carmol contract, investments are made for a minimum period of 12 months and relate to “diesel transactions and storage of diesel product”. Average monthly returns are said to be a minimum of 6% to 8% monthly – or 72% to 96% a year.

Yunus Moolla is listed as the representative of Carmol Distributors in the contract.

Moneyweb first wrote about Moolla and Carmol in October 2013, when Moolla told us that the business sold and distributed petroleum products. Information around who it was selling and distributing products to, however, was not forthcoming for reasons relating to alleged “trade secrets”.

In terms of the Consumer Protection Act (CPA), an investment that offers interest rates of 20% and above the Sarb-regulated repo rate – currently 5.75% – is a multiplication scheme (aka Ponzi scheme) and people are not permitted to promote or join them.

Ayoob Kaka did not respond to Moneyweb’s questions, referring all queries to EY.

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