NPA decides not to freeze Nova’s assets

AfriForum says decision is ‘irrational’ and ‘incongruous’.
Former state prosecutor Gerrie Nel, representing AfriForum, maintains that an asset forfeiture intervention is required since other safeguards have failed investors ‘dismally’. Image: Phill Magakoe, Reuters

The National Prosecuting Authority (NPA) has decided not to freeze the assets of the Nova PropGrow Group, the rescue vehicle of the failed Sharemax property investment scheme.

The decision follows civil rights movement AfriForum asking the NPA in June to seize Nova’s assets on the basis of the South African Reserve Bank’s 2010 finding that Sharemax had contravened the Banks Act.

AfriForum said this was a criminal offence, meaning that Sharemax had acquired the properties with the proceeds of crime.

The Reserve Bank’s finding triggered Sharemax’s collapse. Nova was then established through a Section 311 Scheme of Arrangement (SoA) to take ownership of the properties and to repay investors. AfriForum contends that the SoA does not remit Sharemax’s contravention of the Banks Act, and that Nova acquired assets that were procured with proceeds of crime.

AfriForum labelled the NPA’s decision not to freeze Nova’s assets “irrational and incongruous” and asked Shamila Batohi, national director of public prosecutions, to take it on review.

AfriForum asks NPA to freeze Nova’s assets
Nova: Insolvent, or in a sound financial position?

NPA’s letter to AfriForum

Moneyweb is in possession of a letter the NPA sent to AfriForum in response to the request to freeze Nova’s assets.

In the letter Advocate Rodney de Kock, deputy national director of public prosecutions, motivated the NPA’s decision. He also acknowledged that the Hawks had handed the case to the Gauteng division of the Director of Public Prosecutions for a prosecution decision and that Nova, through its attorneys, submitted “representations” in response to AfriForum’s action. (Moneyweb has not had sight of this letter and has asked the attorneys for a copy. At the time of publication, it had not been forthcoming. However, Nova issued a press release in response to the AfriForum claims shortly after the original announcement, which can be read here.)

De Kock stated that the court sanctioned the SoA and that the Reserve Bank supported the scheme. “As a result of this there appears to be no ‘illegality’ as the companies and their underlying assets taken over by Nova complied with the Banks Act and can therefore not be regarded as assets acquired from the proceeds of crime.”

He added that Nova continues to sell properties and “they have already sold a large number of the properties”.

De Kock also said that if the NPA froze the assets, the NPA would merely assume the functions of Nova.

“The purpose of Nova is to compensate the investors who lost their money. The purpose of any possible asset forfeiture intervention, at this stage, will be exactly the same,” said De Kock.

“The NPA/AFU [Asset Forfeiture Unit] will therefore be assuming the functions of Nova at great expense to itself.”

AfriForum’s response

In response, Advocate Gerrie Nel, head of the AfriForum Private Prosecution Unit, wrote directly to Batohi and called for a review of the NPA’s decision not to freeze Nova’s assets.

“The entire Sharemax investment scheme was declared illegal following proven transgressions of the Banks Act … During 2012 all the property-owning companies promoted by Sharemax were transferred to and became part of Nova Properties. The Nova scheme cannot absolve the contravention of the Banks Act by Sharemax,” he wrote.

“We feel strongly and consider this an aspect that perhaps did not get the attention it deserves and we, therefore, reiterate that if the original funds were procured through criminal conduct it remains proceeds until restitution is made to the victims.”

Nel said AfriForum’s argument “may seem crude, but the principle is stark that the Reserve Bank cannot condone criminal conduct or affect the reality that assets were procured with the proceeds of crime.”

Further, De Kock’s argument that the freezing of Nova’s assets would result in the NPA and AFU assuming the functions of Nova “escapes us”, said Nel.

“The NPA is obliged and equipped through the AFU to take action concerning the proceeds of crime. We argue that a Chapter 6 asset forfeiture intervention is required in the interests of justice and protecting the rights of the investors since the other safeguards have failed them dismally to this point,” Nel wrote.

Nel also criticised the delay in the decision to prosecute.

“An inference is possible that the delay to prosecute the directors of Sharemax is not only inexplicable but may contribute to the dissemination of assets by the board members of Nova which may, in turn, deprive the investors of their investment funds for an extended time.”



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SA law is specially designed to afford the guilty all opportunities of evading/minimising sanction.
Witness, for example, the taxi driver who jumped a red light, hit a car, killed three persons in the car, and was fined R10,000.
And then we wonder why the crime rate is so high!

This is scary. Put a guy in a coffin, get 12 years in jail. Kill 3 people and a R10 000 fine. How is this justice?

I have stated publicly and do so again – AfriForum is barking up the wrong tree and following a flawed strategy with this modis operandi. Go read the Scheme of Arrangement and the Reserve Bank Act – specifically their duty in instances like this matter. AfriForum’s strategy should rather be to hold the Reserve Bank liable for prematurely abandoning their fiduciary duties and for approving such a flawed and detrimental Scheme of Arrangement / for not strongly opposing such poor Scheme of Arrangement – as they were duty bound to do. That’s the only plausible and high probability strategy for positive results at this late stage of this unfortunate and costly saga. Thereafter they can claim back all misappropriated funds from all current and previous directors and shareholders of Nova (including the unsubstantiated and absurdly over- charged bonuses they so richly pocketed from monies due to the property investors / debenture holders.

The important letter to obtain, would be what Connie Myburg and his lawyer friends wrote to NPA.
Connie seems well connected – OR NPA just looking for a way out where those suffering are not the usual people

Afriforum is trying hard. It is one thing though to operate in the generalised political sphere of human rights, municipal failures and government corruption, but another world of trying to rise on behalf of a young lady in a man’s hotel room against Zimbabwean state relations and tribal connections in Africa power tradition, to act in a Botswana/South Africa spat with same tribal-power angle about alleged Motsepe involvement in money transfers and to enter a corporate financial private sector mess like Nova/Sharemax. This time around comfortable so sit back and watch how it plays out. Good luck Afriforum, but do give it a bit of thought to perhaps sticking to what you are generally good at.

End of comments.




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