Resilient cleared of damning allegations

Nothing untoward in share dealings – Fakie.
Resilient investigation clears the company of wrongdoing. Picture: Supplied

An independent investigation commissioned by Resilient has cleared the property group’s key directors and related parties of any misconduct relating to insider trading and share price manipulation. 

The findings of the investigation – led by former Auditor-General Shauket Fakie and released minutes before the market close on Tuesday – exonerates Resilient from scathing allegations contained in reports by asset manager 36ONE, stockbroker Navigare and independent sell-side research house Arqaam Capital.

Resilient has been accused of using a complex web of cross-shareholdings in sister companies Fortress, Nepi Rockcastle and Greenbay Properties together with the purchase of a substantial volume of shares by directors and related parties to unlawfully influence share prices, create the illusion of liquidity and artificially increase the net asset values (NAV) of the four companies’ shares.

Read: What is the Resilient stable accused of?

In addition, the authors of the reports had further accused Resilient of extending loans to its black economic empowerment vehicles like the Siyakha Education Trusts in order to charge artificially high interest rates that boosted earnings to Resilient.   

However, Fakie’s six week-long investigation has found no evidence of any wrongdoing relating to the allegations contained in the three industry reports.

The investigation’s main findings are: “there is no evidence of executive misconduct and/or breaches of applicable governance rules and policies by Resilient, its executives and the Siyakha Trusts; there is no evidence of any market manipulation; and there is no evidence of any insider trading.”

Fakie did shed some light on the questionable share trading in the Resilient stable by four companies owned and directed by one Hendrik Oberholzer.

Read: The mystery man with R1 billion in the Resilient stable

According to the findings of Resilient’s own probe, “Mr Fakie was informed by Mr H Oberholzer that an entity associated with Mr R Hafner is the financier of the four “Oberholzer K-companies” referred to in the reports. The ultimate beneficiary of the Hafner-associated entity is his family trust.”

Fakie had undertaken to meet with 36ONE Asset Management. This meeting did not happen.

36ONE did provide a short statement in reply to the release of the report:

“The report conclusions are surprising and inconsistent with our report and the reports of other asset managers. One must bear in mind that the scope of his mandate was limited and he did not have access to the trade data that the JSE and FSCA [Financial Sector Conduct Authority]. In addition, no investigation was done on property transactions by related parties.

No explanation is given why these companies trade at such premiums to NAV and are an aberration in comparison to their peers locally and internationally.

We have not changed our views. We were not interviewed. We offered to engage but we were told that there was no time to meet with us as he [Fakie] was under pressure to deliver his report. We are confident that the truth will come out.”

Given the severe allegations levelled against Resilient and its directors since January 2018 – which have wiped more than R100 billion off the value of Resilient and its three sister companies – some market watchers expected the independent review to be a whitewash as the scope of the investigation was limited in the first place.

An analyst, who didn’t want to be named, said the integrity of the investigation would be questioned as its scope was initially set by Resilient and Fakie, and its capacity to review individual share trades wouldn’t be thorough enough.

In fact, Resilient admitted to the latter, saying Fakie and independent advocate Tony Ferreira did not have access to the full set of records of Resilient’s JSE share transactions in order “to identify potential insider trading or share price manipulation, and not having the power to compel all parties who may possess relevant information to provide testimony or produce documents”.

“However, the board has done all it can to facilitate an appropriately thorough review within these limitations,” Resilient said.

The investigation relied largely on documentation provided by Resilient, interviews with its executives and associates, the Siyakha Education Trusts, and interviews with the sister property group’s executives.

Despite Resilient and its directors being cleared of any wrongdoing, two investigations are underway by the FSCA (formerly known as the Financial Services Board) and the JSE, which will both probe the trading of the company’s shares since the start of 2018.

The FSCA and JSE investigations are borne out of several parties expressing concerns about the share price volatility of the Resilient companies and whether there were suspicious trades.

All eyes are on whether the findings of the FSCA and JSE investigation will corroborate that of Fakie’s, as both market regulators will rely on – although not exclusively – the same documentation used by Fakie in their own investigations. 

If Resilient is found guilty of market abuse, market manipulation or insider trading, it might face a capped (up to R1 million for insider trading based on the profits of the company investigated) or uncapped administrative fine or a criminal investigation by the National Prosecuting Authority (NPA). 

If the matter is referred to the NPA, Resilient directors could each face a penalty of R15 million or imprisonment of up to ten years. 

Resilient shares finished 2.3% higher to R69.44 on Tuesday.


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I very much doubt that the outcome of the Fakie Investigation of Resilient will even remotely satisfy market concerns and restore confidence in the shares of the company and it’s three closely linked sister companies. This song and dance is far from over. Instead of the board promptly and convincingly addressing and resolving the pressing issues, it rather seems that they are window dressing in the hope that cosmetic responses to market jitters will be sufficient. It won’t.

Whose report/word would be enough for most of the market?

Seems like this report is good enough.
Fortress B up over 7%
Resiliant up over 4%
Greenbay up over 5%
Nepirockcastle up over 1.5%

Supersunbird – an investigation by a highly rated, experienced and independent market analyst group, nominated by the asset managers who raised the concerns in the first place. The results of such investigation into the affairs of Resilient and it’s sister companies, whatever it may be, will be accepted as a true and independent reflection of the actual reality of this group. Fakie may be an auditor, but is not experienced in the dealings of a diverse structured, listed property entity and the scope of his investigation was too limited.

Dayview – the early jump is quickly fading again. It’s too early to judge market acceptance.

Well France they all ended up yesterday and are a little higher today.

The share price tumbled over a high cliff since January 2018. Sporadic tiny movements in the share price barely moves the needle and does’t suggest investor comfort. It is still nothing to get excited about, though I do hope Resilient will get it’s act together rather sooner than later. Until then, market confidence will however continue to elude them.

The Resilient cult following is already taking valuations back to the unjustifiably high norm – buyer beware. There will be more pain in the near future as the secular decline in retail property continues it’s march!

This is like Deja Vu ….all sounding familiar folks??
I don’t think SA investors have any futher appetite for artificial boosts to a public company’s value just to enrich its major shareholders. Put in the time, the history and the long term commitment before you can be trusted with other people’s money. The fundamentals of this company don’t warrant the current share price, in my opinion.

Ok, Fakie did not find wrongdoing.
However, did Resilient extend loans to its black economic empowerment vehicles like the Siyakha Education Trusts?
If there was such loans then what was the interest rates charged?
And, what was/is the percentage contribution of these charges to the earnings of Resilient?

“directors and related parties of any misconduct relating to insider trading and share price manipulation”……. but surely the Oberholser Hafner deal must be investigated further?

Steinhoff number 2 – Invest at your own peril…

Where’s Cy Jacobs?

No smoke without fire! Never has there been more truth in this saying than now – interesting times for investors!

Is a report independent if it is commissioned by the entity in question? As 36ONE says “the scope of his mandate (as set out by resilient from what I understand) was limited and he did not have access to the trade data.”

As investors who do we rely on to make truly independent investigations into matters such as these? It should be the responsibility of the FSCA and JSE to do a full forensic audit with no limitations to their scope and access to information. If 36ONE believe that they have uncovered misconduct then both the FSCA and JSE should look into the findings of 36ONE alongside their own investigation and make a final ruling having explored the different angles.

Don’t ignore the whistle blowers!!!

Both parties mentioned are conducting independent investigations – the more important one is by the JSE as it has access to transactions and they are date time stamped so insider trading and questionable BEE deals will be time lined

These short sellers prosper over the misery they cause to others

Look at Viceroy and Capitec

Where is Cy lJacobs now?

Much worst are these short sellers who release lies into the market, causing panic and losses for investors.

While they sit behind their desks watching the carnage of their exaggerations.

EOH, Capitec, etc ect

The JSE should investigate these criminal organisations like 36one that distort things to make a quick buck

EOH seems to be in trouble if you look at their financials The Resilient Group’s investigation is not over, and I will wait for more detail on Capitec before I believe management.

‘’He writes like an Pakistani who has learned English when he was twelve years old in order to become a Chartered Accountant’’ John Osborne (1929-1994)

Haha, methinks this could just be the tip of the iceberg and another type of ‘’Arms deal Commission’’ cover-up etc., at the expense of Resilient….
Furthermore, methinks the auditing profession can well do without incompetent auditors – people like KPMG – that over time left lots of non-compliant audits in their wake at companies like Leaderguard (FX Spot and Forward scam), the SARS – Gordhan report, the GUPTAS ( who were stealing Vrede milk cows and paying for the Sun City wedding etc.).
The cherry on KPMG’s cake must be how they managed to be the forensic accountant and auditor for JCI (the thief) and for the major beneficiaries of the crime (Investec and their cronies).
So far I lost faith in the NPA, IRBA FSB, JSE etc.(with regards to KPMG)…as KPMG did not insist that JCI comply with the Companies Act by publishing annual financial statements in accordance with International Financial Standard (IFRS) .Why did KPMG to date consent to JCI’s non-compliance and not report it to the IRBS as an irregularity? Why did KPMG not resign as auditors of Randgold (the victim) when it became clear in March 2006 that Randgold had been plundered by its client, JCI (the thief?). So far the biggest unprosecuted fraud in South Africa!
Methinks it’s only because they were protecting JCI from being liquidated because this would have been a-too-ghastly-to contemplate outcome for Investec!

It is interesting that people think the likes of 36One are tantamount to ‘whistleblowers’ and big savior’s to the little guys. You should all be far less naive and spend time understanding what each party’s vested interests are to better understand why certain things are presented the way they are presented. It is clear management’s vested interest is in ensuring that they are proven to be innocent so they commission a report to be put together in the quickest possible time – we may argue that the scope should be far wider (myself included) but you also have to sit back and think about exactly what that entails and how such an investigation could be carried out. The fact is that to widen the scope you need access to data that the company itself doesn’t have access to – only the JSE has granular trade access which they only provide to the FSB.

Despite what 36One say they themselves do not have access to this data either and based their conclusions on similar information that was available to Mr Fakie. One should also understand the positioning of each party in this matter – the only innocent bystanders are the shareholders…36One is profiting from share price collapse with short positions they have admitted to and management obviously have to gain from them remaining in place. Personally I support more work being done on this matter but I wish the regulators would move more quickly as the ones with access to the required data to widen the scope and settle the matter and observers and the press would be more objective.

You took the words out my mouth.

Why does nobody question what does Cy Jacobs and 36one have to benefit from the whole fiasco?

Unfortunately there are many imbeciles who think Viceroy, 36one etc. are looking out for “investors”

The reality is that these short and distort companies are only concerned about making a quick buck. They do not care that their exaggerations will cause many innocent investors huge losses.

I 100% agree that dishonest behavior and unethical behavior needs to be exposed. But these guys have ulterior motives.

If impropriety is suspected of 36One then maybe the JSE should have the legislative right to hold profits made on their trading in an escrow account until all facts are available

grahamcr – It will be very damaging to the reputation of 360-One or any other reputable asset manager to raise a red flag on any big listed company for unscrupulous business tactics, without grounded analysis and motivation. The concerns raised are mostly public accessible information such as the relatively high cross-shareholding in other listed Reits (very unusual for a listed property company); the interest bearing loans to an empowerment trust for the purpose to buy shares in the same lender company (there are cleaner and more acceptable ways to structure an empowerment deal); questionable high valuations of investment assets and substantially higher income performance compared to the their peers (financial statements). Then there are also the questionable, very high and concentrated stake-holding of the Oberholzer & Hafner companies (very unusual) and the alleged share purchases to artificially inflate share prices (it is questionable if this allegation holds water). These matters have not been fully addressed, properly explained or sufficiently disclosed as yet. It is therefor unlikely that 360-One is guilty of corporate mischief as suggested.

France you make valid points however I think you give 36One and others too much credit. Just like Jooste did what he did I don’t think it is beyond the realms of possibility that others would distort facts in the interests of serving themselves. When you stand to make billions…not millions….billions from short positions one has to surely look at the whole story much more circumspectly. Looking at the points you raise which come from their report – the cross holding point was in fact well known and understood in the market, these businesses had to start somewhere and Resilient provided the initial seed capital for them to then grow – Growthpoint has GOZ Australia and this new thing, Redefine has Redefine international, Echo Pine and others; the empowerment aspect certainly could have been handled better but in reality there is no perfect way of facilitating BEE and getting ownership statistics up to levels suitable for BEE credentials in SA – they could’ve done better here but as I understand the Trust bought shares mainly via specific share issues and not in the market pushing up prices, I don’t think high valuations are accurate given that both companies have sold physical assets in the past at or above their book values and their assets are well known to the industry at large and have never been commented as being overvalued themselves in the financials. The Hafner point is relevant but again it is very difficult for a company to regulate its shareholders so regardless of personal relationships alleged or not if the Company states it does not provide information or control the so called Hafner companies then what more is it than a very rich person (lucky him) having a material interest in the company. Agree if Hafner was buying and selling aggressively constantly and churning for profit it may be seen as more suspicious but as I understand this is a person that has had a material stake for a long time and in fact bought more over the years but hardly sold down so he himself has also lost significant value. I just feel that if you stand to make billions by shorting a share on the back of a very nervous environment post Steinhof that you cannot be considered a ‘whistle blower’ and may end up being the most guilty party in the whole story. I maintain the best thing that can happen is those with the granular data (JSE, FSB) conduct an investigation both of the allegations and the short campaign because if the allegations are not found to be completely correct in all regards then 36One is guilty of market manipulation themselves and should be held to account just like Resilient should be held to account for anything deemed to be manipulation on their part. In my mind the pressure that we should be applying here as a market and journalists is in fact on the regulators – to say an investigation will take many months or years is simply unacceptable…it means that they simply don’t answer to anyone while they leave the market essentially unregulated!

Frankie F. – Your points and concerns make sense and are noted.

The JSE has a responsibility to protect investors.

There is a culture now of “Short and Distort” in the market where people make accusations, blatantly lie at times, misinterpret things etc. just to cause a share price to crash so they can benefit.

And the result is that innocent shareholders are left with huge losses.

The JSE should investigate these “short and distort” operations like 36one, Viceroy, Mergence etc.

The culture of releasing unverified, untested allegations into the market has made investing on the JSE miserable.

I guess will wait for FSCA and JSE to conclude their investigations, 360ONE cannot be trusted, as their motives is unknown (of course except the obvious one, making big profits)

Cy Jacobs has a massive agenda here. After Steinhoff, the JSE investor market has changed. Short sellers are taking massive advantage of this to the detriment of the investor public. His interview on 702 tonight was awful, clutching at straws to make his short position work. Always be aware of agendas. Cy is all about money – he boasts about it at every opportunity. He needs to see this short position through to the end or 36One is shot as an asset manager.

End of comments.





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