Right of reply: Where is Hans Klopper? Right here

Former Orthotouch director and BRP of the Highveld Syndication companies replies to Moneyweb article.
Hans Klopper. Image: Supplied

Moneyweb published two articles in March which identify the individuals who were the key decision-makers at Orthotouch before the company was put into business rescue late last year. The second article identifies seven developments or events which may warrant an independent investigation. The articles can be accessed here:

Where is Hans Klopper?

Seven reasons why the tragic conclusion of the HS schemes should be investigated

Subsequent to the publication of the articles, Hans Klopper, a former director of Orthotouch, the business rescue practitioner of the HS companies and a key Orthotouch decision-maker, sent a lengthy statement to former HS investors and other stakeholders.

The full response is published below as a right of reply:

 

Where is Hans Klopper? Right here.

A number of articles appeared on the Moneyweb website during the past months and more recently on 4 and 5 March 2020 relating to the affairs of the Highveld Syndicate (HS) Companies and Orthotouch, as well as on the role that other key players and I held in the restructuring process of the HS Companies since September 2011.

It is then important to give some context to my role as a business rescue practitioner. To paraphrase and expand upon a Moneyweb reader’s comment recently, ‘in most jurisdictions of the world restructuring professionals and more particularly South Africa, where the legislature created the concept of a “business rescue practitioner”, the business rescue practitioner arrives at the scene of a “commercial accident” after the event. Akin to the paramedic who arrives at the scene after the fact being blamed for the motor vehicle accident. Or like the doctor who is, after the event, blamed for the condition of the patient who took arsenic.’ It is critical to frame the role of the business rescue practitioner in this way so as to strongly emphasise the role of the business rescue practitioner in relation to the business’s reality.

It is important to emphasise that I was appointed by the HS Companies’ Board of directors in terms of the Companies Act as the business rescue practitioner to the HS companies as a complete stranger. As such, I played no role in the creation of the state of affairs that existed at the commencement of the business rescue proceedings in relation to any of the HS companies. I furthermore had no control over the circumstances that caused further financial hardship to unfold thereafter as a consequence of which there was a further deterioration in the financial position of the HS companies.

When I commenced business rescue proceedings on 7 September 2011, I could not change the financial position that already prevailed – being that the aggregate value of the assets owned by and to which the HS companies had rights amounted to only circa R2,6 billion; while the aggregate claims by the investors in the HS companies amounted to circa R4,8 billion. In addition, to the almost R4,8 billion owing to the HS investors it also transpired during late 2013 (which I was unaware of at the time when the business rescue plan was proposed in December 2011) that a number of the properties forming part of the Orthotouch portfolio were also subject to encumbrances to Investec in an aggregate amount of circa R531,3 m and RMB in an amount of circa R756,1m respectively.

These were contingent liabilities not foreseen in 2011 as all such cross guarantees were not necessarily known. Taking these unforeseen liabilities into consideration the total debt was therefore circa R6.087,4 billion.

As a responsible business rescue practitioner, the duty that I took upon myself was to restructure the HS companies’ financial affairs in a manner that would place them in a better position than what they would have had should the HS companies been placed in immediate liquidation. Some six months before my involvement, there existed an initial proposal by Orthotouch which lapsed before I was appointed because of certain conditions precedent contained therein not being fulfilled. At that time, there were threats of liquidation, and an actual liquidation application against one of the HS companies (HS19) was launched. The statement in the Moneyweb article of 5 March 2020 that claimed investors rejected the initial Orthotouch proposal is entirely false and inaccurate as investors played no role at that stage during March 2011 because discussions that took place then were between Orthotouch and the HS Companies’ Board and did not involve investors.

Just days after my appointment as business rescue practitioner in September 2011 (6 months after the initial Orthotouch proposal lapsed), an amended Orthotouch proposal was submitted to me, which formed the basis of the business rescue plan published on 30 November 2011. This amended proposal was independently proposed upon my engagement with some of the role-players and was not drafted by me.

I arrived at the scene of the HS companies’ “commercial accident” in September 2011 long after the approximately 18 300 parties who had invested in the HS companies (“HS investors or investors”) had made their investments in the HS companies. I have no financial interest in the matter other than being paid for my services rendered. In this respect I have in fact – since 2014 – not been paid in full and payment of my fees for ongoing work since then remains in arrears. I have since 2016, and until my resignation as a director of Orthotouch in October 2018, not been paid in full for my duties as a director of Orthotouch either.

I have at all times acted in good faith in developing a business rescue plan as is required in terms of the Companies Act in conjunction with experts in property related matters and having consulted legal advice. I did so under extremely tight timelines. The business rescue plan was however entirely based on the September 2011 Orthotouch proposal which was authored and proposed by other parties and in respect over which I had no say. This was not entirely strange as the Act provides that the business rescue practitioner must “develop” a business rescue plan with “engagement” from affected persons. The business rescue practitioner can therefore not act on his own and publish a business rescue plan that is entirely out of sync with the wishes of affected persons.

It also needs to be emphasised that business rescue practitioners do not always arrive at the scene of a “commercial accident” as experts in the particular field of business of the company being rescued. They take on assignments or appointments in multiple business spheres and do not always have the technical and operational expertise relating to that business sector upon their appointment. In the years after 2011, my appointments as business rescue practitioner related to the affairs of companies involved in multiple areas such as retail, mining, agriculture, construction and, like in the case of the HS companies, the business of property syndication.

In order to carry out their duties, business rescue practitioners need to rely heavily, in making their assumptions and forecasts, on the knowledge of industry specialists with the necessary operational experience in that sphere of business. Without such assistance the business rescue practitioner’s work may be doomed for failure from the outset of taking on the assignment. Such industry specialists sometimes get it wrong as well.

With the benefit of hindsight, critics will always have a field day. In this instance I relied on the advice and knowhow of people such as Nic Georgiou, property lawyers and property investment specialists who are renowned for their ability to build up substantial, successful commercial property portfolios over many years. I acted with the reasonable  belief that what the experts said could be achieved was, in fact, achievable. I verified the rationale of their views as presented to me with members of the creditors committee who were, from what I was able to ascertain, also astute businesspeople and investors in their own right and they did not gainsay nor dispute any of the specialists’ predictions or assumptions. I had just 43 days, not weeks and months, to make judgement calls and when I did, I did so with utmost good faith and on the understanding that I had been properly advised. I had to, like the thousands of investors who voted for the proposed business rescue plan, make the assumption that the business rescue plan could work despite the parlous state of the South African economy post 2011.

In late November 2011, the time when the business rescue plan that I developed was published, upon engagement with affected persons it was expertly calculated that the probable dividend which creditors would receive on liquidation ranged from approximately 60 cents in the rand (in respect of HS 17 and HS 18) to approximately 35 cents in the rand (HS 15 and HS 16) to 17 cents in the rand (HS 22) to less than 5 cents in the rand (HS 19, HS 20 and HS 21). The probable dividend in respect of HS 19 to HS 22 was based on the assumption that the liquidators would pursue Bosman & Visser (Pty) Limited and would be 20% successful in those claims (an optimistic outcome, given the complexities of the claims). A roughly calculated average dividend of some 15 cents in the rand was predicted for the HS investors to receive under liquidation. However, taking the contingent liabilities (which were not known in 2011) into consideration the liquidation dividend would have been around 10 cents in the rand (if not less). In addition, when taking on appointments as a business rescue practitioner, I act in utmost good faith and with the view of ensuring the best possible outcome for the affected parties and also with the aim of placing the affected parties in a better position than they would have been in under circumstances if the worst case scenario, being the possible liquidation of the company, materialised.

However, probably the most important element of any successful business rescue process is the ability of the business rescue practitioner to procure and secure the availability of “new money” in the form of what is known as post-commencement finance in terms of section 135 of the Companies Act. This has often been described as the “life blood” of a successful restructuring.

The underlying basis of the success of the Orthotouch proposal and the business rescue plan was at all times based on the procurement of “new money”. In this regard I relied on the experience of experts – a team of advisors who knew what the banks’ lending criteria were – and who consisted of the appointed creditors’ committee, Nic Georgiou and property lawyers who told me at the time that the banks in South Africa would ordinarily have no difficulty with lending money against the property portfolios in the nature of what was available under the business rescue regime to the banks as security. Not only was I completely taken by surprise by the attitude of the commercial banks – but so were the property experts by whom I was advised. An approved loan of some R200m was cancelled, without explanation, five days before the business rescue plan was due to be published. Bearing in mind that the forecasts and the calculation of the likely success of the business rescue depended on this “new money”, it was a huge blow. The role-players however felt that loans would still be obtained after the adoption of the business rescue plan from January 2012 onwards, but despite my best efforts, this never materialised. Other than the funds procured from Zephan Properties (Pty) Limited (“Zephan”) during the process, the procurement of post commencement funding proved to be impossible and attempts to procure such finance was, at all times, either sabotaged or scuppered for reasons still unknown to me.

This issue was critical and pivotal in the process. It led to the process evolving over time to a gradual winding down by selling of assets at market-related prices, which the business rescue plan allowed for. This process had to be embarked upon as opposed to growing a portfolio, which was the initial  intention as is clear from the business rescue plan, and was a direct consequence of the denial of the “life blood” of “new money” to me and the Board of Orthotouch.

In cases such as the HS companies where commercial trouble appeared on the horizon and where formal insolvency related proceedings, such as business rescue, commence and become a reality, emotions run high. The business rescue practitioner is required to manage and balance the interests of all affected persons while the so-called commercial ‘vultures’ such as liquidators and auctioneers circle. Diverse personalities and interests require extraordinary people skills and leadership from the business rescue practitioner.

Invariably groups with divergent interests “creep out of the woodwork”. Lawyers who pretend to have the interest of “poor investors” at heart and brokers and financial advisors who sold the initial syndication investments to thousands of investors stir matters up by promoting expensive litigation, hurling insults at former management (and the business rescue practitioner) and making outrageous statements about “fraud and criminal activity”. This case of the HS companies became a toxic mix of all of the above.

A business rescue plan for the HS Companies, based on the amended Orthotouch proposal, was adopted on 14 December 2011. As a consequence of the adoption of the business rescue plan, the HS Investors’ rights were restructured in that they would only receive their monthly interest payments from the HS Companies, and the HS Companies, in turn, would only receive the monthly payments from Orthotouch (Pty) Limited, a company that was meant to take transfer of the properties.

The members of the creditors’ committee proposed that I was to serve on the board of directors of Orthotouch and accordingly the business rescue plan provided for this. Because of the inability to fund the business with “new money” the payment of interest on time became a problem and started falling into arrears. The arrear interest payments became a growing concern for me and the rest of the Orthotouch board of directors during the early part of 2014.

Discussions on how to alleviate the position ensued amongst all of the role players. These discussions involved the board of directors, internal legal advisers, a number of attorneys and junior and senior counsel. During June 2014, one of the options presented, as per the legal and commercial advice sought from the legal team, highlighted to the Orthotouch board that a restructuring of Orthtouch’s affairs was necessary, and that this could be achieved by proposing a scheme of arrangement in terms of section 155 of the Act. The first rough draft of a possible document was jointly produced by the board of directors of Orthotouch with continuous input from the legal team.

After notice convening the meeting to consider the scheme of arrangement to be held 12 November 2014 had already gone out on 17 October 2014, an application for leave to institute a “class-action” was launched by attorney Jacques Theron (“Theron”) on behalf of few applicants who alleged to represent a group of investors. This group later became known as the ‘Highveld Syndication Action Group (HSAG)’.

The meeting of creditors to consider the proposed scheme of arrangement on 12 November 2014 took place under the auspices and chairmanship of Derek Cohen. The investors present and voting had voted in favour of the scheme of arrangement and the scheme was sanctioned by an order of the High Court of South Africa on 26 November 2014.

During March 2015 an application was launched by a number of investors, again represented by Theron, for the setting aside of the scheme of arrangement – this application is still pending. I will go into more detail on this later on in this communication, as it relates to Moneyweb’s concern about the business rescue process of the HS Companies still being “alive”.

The legal effect of the sanctioned scheme of arrangement is that the HS Companies 19 to 22 have no assets in the face of the scheme of arrangement nor do they have any liabilities since they own nothing and they have nothing (per Justice Rogers obiter in the matter of Ferdinand Deon Van Zyl v Highveld Syndication No 20 Limited and two others, case number 971/2017 in the Western Cape Division, Cape Town).

I will now deal with some of the allegations in the most recent articles that appeared in Moneyweb: 4 MARCH – “WHERE IS HANS KLOPPER?”

1.1. The author of the article referred to an “obligatory meeting” on November 2019, pursuant to the business rescue proceedings of Orthotouch. It was indeed the first meeting of creditors in terms of the Companies Act and my absence, and that of others at this meeting, was queried.

My response:

1.1.1. It was a meeting of creditors of Orthotouch. I am not the business rescue practitioner of Orthotouch. The implied suggestion by the author that my presence was required is therefore completely unfounded and inaccurate.
1.2. The Moneyweb article then referred to a “Section 417 report made damning recommendations following the conduct of Klopper and Myburgh in the business rescue and liquidation process of an unrelated company, Harrison & White”.

My response:

1.2.1. This related to another case where I was the business rescue practitioner of a company known as Harrison & White.
1.2.2. “New money” that was promised for its rescue did not materialise and an application for its liquidation was launched by its bankers. During the period from the launching of the liquidation application for Harrison & White’s liquidation and while certain movable assets were under the control of its directors, some of the assets were, without my knowledge, sold by the directors in order to fund legal fees.
1.2.3. An enquiry in terms of sections 417 and 418 of the Companies Act 61 of 1973 was held into the affairs of Harrison & White and retired Judge Bertelsmann was the Commissioner. I testified under oath at the enquiry on 23 July 2018 for approximately one hour. On 7 May 2019, the Commissioner submitted a report to the Master.
1.2.4. The enquiry was private, and the report was meant to be kept confidential in terms of section 417(2) of the Act. However, it was leaked to and therefore illegally obtained by Moneyweb, who published an article based on the report on 29 August 2019. The article and the report upon which it was based was littered with factual inaccuracies. The Commissioner had grouped everybody involved in the company’s management together, myself included, even though my involvement was completely different (I was a business rescue practitioner who sat in a remote office while the directors were the ones on-site who perpetrated the selling of assets) to that of the erstwhile managers and directors. Then, with the same brush, he tarred us all. This is once again inaccurate and untrue.
1.2.5. My memorandum dated 25 September 2019, and which is again contained in a link in the article sets out that the report and the article are factually incorrect in many material respects and the Commissioner’s recommendations are neither fair nor
justified.
1.2.6. I was not present, and was not permitted to be present, during the enquiry other than when I testified. I testified willingly and cooperatively and, in an effort, to assist the liquidators and the Commissioner in the winding-up process. I left the enquiry
believing that I had done so and did not contemplate for a moment that I would be (unjustifiably) one of the targets of the report.
1.2.7. I have been advised by senior counsel that I am unable to review the report at this stage, inter alia, due to the report being confidential and not having any direct legal consequences. If, however, the circumstances allow I will apply for the review of the
report as a matter of urgency.
1.3. It is stated in the article that my “conduct” needs to be investigated as I was “the point man for arguably the most disastrous business rescue process ever in South Africa”.

My response:

1.3.1. In 2011, the HS investors faced the very real possibility of the HS Companies being liquidated. If that had happened, it is now estimated that investors would, at best, have received an average of some 10 cents in the rand.
1.3.2. It should be noted that in business rescues and liquidations of similar schemes, investors have either received nothing or substantially less than 5 cents in the rand. HS Investors have received a dividend of substantially more than 10 cents in the rand of their claims over the course of the HS business rescue.
1.3.3. Accordingly, if compared to what would have happened under liquidation and in comparison to similar proceedings carried out in respect of other failed property schemes, the only reference points against which we can measure the “success” of this process, it is clear that the author’s description of the HS business rescue as the “most disastrous business rescue process ever in South Africa” is blatantly wrong and is an unfair and deliberately misleading characterisation. I am under no illusion that this is scant consolation for investors – many of whom have lost the majority of their life savings. But to blame this loss on the business rescue process is irresponsible and simply untrue. Their investments had already been “lost” in 2011 when I arrived on the scene. Furthermore, it is an inaccurate representation of the business rescue process as outlined above.
1.4. The article states that the business rescue process of the HS companies was probably the first significant such process in South Africa since the new Companies Act was promulgated four months earlier, in May 2011, and questioned why it is also the country’s longest-running business rescue process.

My response:

1.4.1. It is correct that this was probably the first significant business rescue process in South Africa since the new Companies Act was promulgated.
1.4.2. As explained above, some parties had launched a court application in March 2015 to set the Orthotouch scheme of arrangement aside.
1.4.3. As at today, the setting aside application is still not finalised and therefore I am, by virtue of the express terms of the scheme of arrangement, not legally entitled to place the HS Companies in liquidation and that is the reason why the business rescue process is still ongoing.
1.4.4. I agree that my appointment as business rescue practitioner did provide “some comfort at the time” and ought to continue to provide some comfort as it did in many other cases that I am involved in. I also agree and submit that I am still “widely regarded as one of the specialists in this field”.

5 MARCH 2020 – ARTICLE IN MONEYWEB – “SEVEN REASONS ORTHOTOUCH’S DISMAL FAILURE
MUST BE INVESTIGATED”

1.5. Much of what is contained in the Moneyweb article of 5 March “Seven reasons Orthotouch’s dismal failure must be investigated” already form the subject matter of pending litigation and almost all of the allegations are untested and sub judice.
1.6. The first aspect that Moneyweb states that must be investigated is the non-transfer of properties to the HS companies which appears to relate to the fact that HS 19 to HS 22 had not taken transfer of some 42 properties which “Georgiou, or entities related to him, sold to HS investors”.
1.7. It was also suggested that I “failed or neglected” to do this because it was “too costly”.

My response:

1.7.1. The flow of funds in the investment saga have been explained on numerous occasions in the business rescue plan, correspondence and in Court papers.
1.7.2. There is no evidence to suggest that “Georgiou” or entities related to him” ever sold properties to the HS investors.
1.7.3. Zephan and other entities at all times sold properties to Bosman & Visser. Bosman & Visser sold properties to the HS Companies.
1.7.4. I investigated this issue and it was clear that there was a dispute. The dispute was however between Bosman & Visser and Zephan. I did upon perusal of the HS Companies’ records, see the relevant auditor’s certificate and the contemporaneous legal demands in relation to this dispute, proving that the dispute was real.
1.7.5. Bosman & Visser claimed that it had paid Zephan the full purchase price for the properties, while Zephan claimed that an amount of more than R880 million was still owing. Zephan would not give transfer of the properties to Bosman & Visser, who could accordingly, not give transfer of those properties to the HS companies. As the dispute was between entities outside of the HS Companies, I was neither able nor legally allowed to investigate and decide on the merits of the dispute.
1.7.6. The proposed business rescue plan that was published on 30 November 2011 was adopted by more than 99% of investors present and voting on 14 December 2011. This business rescue plan provided that all the properties, including those forming the subject matter of the dispute between Bosman & Visser and Zephan involving the 42 properties that had not been transferred, would an accrue to Orthotouch. This obviated the need to investigate the dispute (despite the dispute not being within the ambit of my authority because of the dispute being at Bosman & Visser level),  which therefore became moot. There was therefore no “failure or neglect” of any nature on my side.
1.7.7. I never said that an investigation would be “too costly”. What I stated in my 2011 business rescue plan and the meeting of creditors on 14 December 2011 was that it would be costly for the HS 19 – HS 22 companies to litigate against Bosman & Visser.
1.8. The second aspect that Moneyweb states that must be investigated is the “sale of the 42 properties to third parties” and that “these transactions also resulted in significant accounting losses at Orthotouch and have never been explained to investors”.

My response:

1.8.1. As was explained above, pursuant to the inability of Orthotouch to find any new funding, being the so-called “lifeblood”, and as the business rescue plan permitted it, the strategy to realise assets for the benefit of investors evolved.
1.8.2. During the process of entering into transactions in relation to the implementation of the business rescue plan, the values at which transactions were entered into the records of the various Deeds Offices were incorrectly recorded and this led to a distorted picture to parties who searched the deeds offices’ records. This will however be the subject matter of a further independent report which will be published by the newly appointed business rescue practitioner of Orthotouch.
1.8.3. The transactions were for value.
1.9. The third aspect that Moneyweb states that must be investigated is the “The sale of 31 properties to Accelerate”

My response:

1.9.1. On 12 December 2012 I sent a circular to the HS investors in which the proposed listing of Accelerate, and Orthotouch’s participation therein, was recorded.
1.9.2. The details of the Accelerate listing was at all times in the public domain and I was provided with written legal advice that the transaction was in line with the provisions of the adopted business rescue plan, which advice I accepted. The transaction appeared to be reasonable and plausible (see more detail below).
1.9.3. On 4 December 2015, the same applicants who were involved in the ‘setting-aside’ application, launched an application out of the Free State High Court, Bloemfontein, under case number 5771/2015 for an order interdicting the Michael Family Trust from “alienating, selling or transferring or dealing directly or indirectly with any other shares” that the Michael Family Trust held in Accelerate, pending the final determination of the proposed class action and pending the application for the setting aside of the scheme of arrangement. The application was dismissed with costs.
1.9.4. The information now relied upon by Moneyweb was therefore before the High Court of South Africa under case number 5771/2015 and the High Court dismissed this application in 2015.
1.9.5. As referred to in the pre-listing statement, Accelerate would acquire a number of properties in the Orthotouch portfolio.
1.9.6. It was common cause that the properties were acquired by Accelerate at market related prices, following the valuation thereof by Johannesburg Stock Exchange approved valuators.
1.9.7. The pre-listing statement made provision for a conditional deferred payment payable to Orthotouch in respect of the thirty properties mentioned above, which would be calculated in terms of a pre-determined formula. The maximum conditional deferred payment payable would be R177 698,297.00.
1.9.8. Furthermore, in terms of the Eshowe Mall transaction, Accelerate purchased the Eshowe letting enterprise and land from Orthotouch for a purchase consideration of R47 258,149.00.
1.9.9. The pre-listing statement also made provision for a conditional deferred payment payable to Orthotouch in respect of the Eshowe Mall transaction, to be calculated in terms of a pre-determined formula. The maximum conditional deferred payment in respect of the Eshowe Mall transaction would be R3,328,594.00.
1.9.10. In the premises Accelerate incurred liabilities and potential liabilities in the total amount of R1,551,725,431.00 calculated as follows:
1.9.10.1. R1,323,440,540.00 in respect of the thirty properties listed above;
1.9.10.2. R177,698,297.00 in respect of the maximum conditional deferred payment in respect of the thirty properties;
1.9.10.3. R47,258,149.00 in respect of the Eshowe Mall transaction;
1.9.10.4. R3,328,445.00 in respect of the maximum conditional deferred payment in respect of the Eshowe Mall.
1.9.11. The indebtedness of R1,551,725,431.00 was extinguished by:
1.9.11.1. Accelerate paying a total amount of R1,317,482,422.66 towards settling the outstanding mortgage loans in respect of the properties bought from Orthotouch. (it was pointed out to me and the Orthotouch Board that each property did not necessarily have a separate mortgage loan account, there were nine mortgage loan accounts collectively covering the properties bought by Accelerate.) The amount of R1,317,482,422.66 is comprised of the following payments:

1.9.11.1.1. R147,121,010.00 to RMB in respect of the full purchase of the Leaping Frog Shopping Centre;
1.9.11.1.2. R48,832,608.00 to Investec bond account 223068/011 towards Tyger Manor Shopping Centre;
1.9.11.1.3. R22,979,381.00 to Investec bond account 223431/015 in respect of the Mill House property.
1.9.11.1.4. R489,571,830.66 to Investec bond account 210705/005.
1.9.11.1.5. A further R608,977,493.00 payment to RMB.
1.9.11.1.6. Accelerate paying a cash amount of R30,000,000.00 to Orthotouch in respect of the renounced shares, for which the amount was calculated in accordance with the, then, listed share price.
1.9.11.1.7. Accelerate paying an amount of R28,500,000.00 into an Investec mortgage loan account.
1.9.12. In the premises, a total amount of R1,375,982,322.66 was paid to Orthotouch in respect of the purchase price of the thirty properties and Eshowe Mall.
1.9.13. Insofar as the maximum deferred payments totalling R181,026,742.00 are concerned, the Trust made the following payments to bond accounts in respect of properties of which Orthotouch is the owner, but which have not been sold to Accelerate:
1.9.13.1. R68,805,742.54 to Investec bond account 090096/026.
1.9.13.2. R68,273,366.17 to Investec bond account 090062/034.
1.9.13.3. R32,872,956.76 to Investec bond account 218370/007.
1.9.13.4. R161,611,172.63 to Investec bond account 218369/038.
1.9.14. These payments enabled Orthotouch to take unencumbered beneficial ownership of the properties over which the bonds were registered, as catered for in the business rescue plan.
1.9.15. It is therefore evident that Orthotouch in fact received a total of R1,707,545,560.76, which is an amount of R157,795,614.76 in excess of what it was entitled to receive in respect of the sale of the properties and the maximum deferred payment. Insofar as overpayments were made, these form the subject matter of loan accounts between the respective entities.
1.9.16. This was also the subject matter of an application launched during January 2017 in terms of section 165 of the Companies Act for leave for one investor to sue me for the losses incurred by all investors in HS 20. This was the matter of Ferdinand Deon Van Zyl v Highveld Syndication No 20 Limited and Two Others, case number 971/2017 in the Western Cape Division, Cape Town referred to above.
1.9.17. The application was heard in 2018 and the applicant withdrew his application at the hearing of the matter and tendered the costs of the application.
1.9.18. It is not clear how Moneyweb arrived at the conclusion that there were accounting losses for Orthotouch, but it is possibly attributable to them relying on Deeds searches that contain incorrectly recorded values.
1.10. The fourth aspect that Moneyweb states that must be investigated is “Conflicts of interest”

My response:

1.10.1. It is incorrect to state that I was appointed to the Orthotouch board “shortly” after my appointment as the business rescue practitioner of the HS Companies.
1.10.2. My appointment to the Orthotouch board was explained above and is, in fact, pursuant to the adoption of and in terms of the adopted business rescue plan and did not take place “shortly” after my appointment as business rescue practitioner.
1.10.3. I have at all times fulfilled my duties diligently and with the investors’ interests at heart and thereby staved off a massive collapse and a consequent liquidation.
1.11. The fifth aspect that Moneyweb states that must be investigated is the “Sale of properties to the Delta Property Group”

My response:

Briefly, the Delta litigation relates to a claim for the balance of the purchase price in respect of the Delta Property deal. The claim relates to a penalty in terms whereof the purchase price for the properties would increase in the event of Delta not honouring their obligations in terms of the Sale Agreements. The claim amount totals R210,300,040.49.

A copy of the summons is attached as appendix A.

1.12. The sixth aspect that Moneyweb states that must be investigated is the “Why are the HS companies not in liquidation”

My response:

1.12.1. This is explained above. It is the delay being caused by the setting aside application of the Orthotouch scheme of arrangement that delayed the ultimate final winding up of the HS Companies.

1.13. The seventh aspect that Moneyweb states that must be investigated is that I “approached Jacques du Toit to become BRP of Zephan and Orthotouch”

My response:

1.13.1. The minutes of the meeting of creditors tell a different story. I never “approached” Jacques du Toit.
1.13.2. I was but one of a number of parties who mentioned to attorney Mario Kyriacou that Jacques Du Toit should be considered.
As was mentioned above, the business rescue practitioner cannot act on his own in developing a business rescue plan without engaging with affected persons. This is a requirement of the Companies Act.

Lastly, it would now appear that Moneyweb pleads for Orthotouch to be placed in liquidation and to deprive investors from a final opportunity to recoup more of their losses. This is deplorable because liquidation will deprive the investors from the last 20-25% of their investments and will bring zero into their pockets.

However, in the event that I ever have to testify at any enquiry into the affairs of Orthotouch I will do so without any fear and would gladly submit myself to and welcome any investigation.

Yours faithfully,

J F KLOPPER

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My understanding is that in most cases the ”driver of the vehicle” that causes or allows the ”commercial accident” needs to have the ”keys” taken away by the business rescue practitioner who can sell/restructure such that competent drivers take the vehicle forward or offer best value for what is left.

Agree

I hope Hans pays his team of lawyers who prepared this “response” well. They deserve it – but still unconvinced.

As for Myburg – well – he is a special case!!

When does Hans disclose how much he has earned in running these matters into the ground – but claiming fees payment every month?

Investor 47 Who are you trying to convince or rather buls@#t?? Hans knew the core of this scam was the DISPUTE Proof was given by the trust attorney that ALL money was paid so why did Nic not transfer the properties which was fully paid by the Highveld co investors. Why was the bonds not paid by Nic Georgio Hans said when he arrived at the accident scene blood was flowing that had to be stopped.So if he the genie could not intervene with the dispute WHY NOT GET HELP FOR THE SAKE OF INVESTORS WHOM HE IS SUPPOSE TO REPRESENT!!! Clearly he must have smelled a rat….the banks did Find out where is the R4.6b before structuring a plan Present the proof of your specialists report. Hopefully they were not part of the Georgio stable

Did you read the article objectively?

He did say: ‘However, in the event that I ever have to testify at any enquiry into the affairs of Orthotouch I will do so without any fear and would gladly submit myself to and welcome any investigation.’

Also read what he said about Bertelsman’s report.

What I am reading is someone who has nothing to hide and is willing to testify without fear. Doesn’t that say something about the man.

Clueless -Zuma said the same thing, I suppose that makes him innocent. When their day in court arrives these types do everything in their power to delay, obstruct and avoid proceedings. The shame is we have such an inept legal process to address this tactic that they never get to face the music.

Investor 47… why don’t you state your real name? Why hide behind a nom de plume?

Investor47, I am reading this in a completely different way to you.

I read a desperate attempt to clear the name HANS KLOPPER.

There has most probably been a huge amount of pressure from BDO (where KLOPPER is A MANAGING PARTNER & NATIONAL HEAD OF BUSINESS RESTRUCTURING) to try and clear the Bad Press he has received.

To top it all I see a ‘sympathy card’ or rather ‘feel sorry for me card’ ;( was thrown into the “long winded” and “entirely void of real answers” explanation. He states that he has not been paid in full for his duties as Director of Orthotouch or paid in full for his services as BRP.

Ag shame…

Anyway, Mr Klopper, you will still have another chance to explain in Court.

Bottom Line.

Investors who accept what people write (or rather the lawyers write) are always valued at the JSE.

Remember Jooste Wiese ? Promised to “tell it all” until they get into the forum and then the bargaining by lawyers start.

As a lawyer, I understand these issues – – – – hide – release a denial in controlled circumstances – promise – promise – then hope it all gets forgotten – OR your lawyers take over and you tell the world “on legal advice taken, I will not answer this, at this stage – then obfuscate.

Have fun……

Investor47. If Hans Klopper did the correct thing in the 1st place by doing what was expected of him as an astute Business Rescuer then he would have done his utmost for the INVESTORS. He would not see this matter as a bloody accident. If he really felt THAT about this case why did he not Liquidate the HS Companies in the 1st place. I can tell you what I think…at that time all the role players – Him included saw this lucrative moneymaking machine – but to the detriment of the investors.
So YES he will say ‘However, in the event that I ever have to testify at any enquiry into the affairs of Orthotouch I will do so without any fear and would gladly submit myself to and welcome any investigation.’ HE HAS NO CHOICE. The HSAG and other investors are still in litigation and they all will have to answer eventually but not because they want to THEY WILL HAVE TO.

If you can get your head around
‘the universe could and plausibly did arise from a deeper nothing—involving the absence of space itself’,
then this one is child’s play

Mr Klopper explained what was expected from him but omitted to mention what happened to the R4.6 billion Rand. He arrived at the accident scene when everything was there and nine years later he wonders what happened to everything.

He accounts to the cent in his explanation above. If you deduct the figures that he mentions above from the R4.6 billion, there is still a lot to account for.

Maybe he should start doing just that!?

The Honourable Mr Justice Eberhard Bertelsmann exposed him in an hour in the damning Harrison & White 417 Inquiry Report. Imagine what would happen in a proper criminal investigation!

Good points Tony.

These guys think they are dealing with idiots – – – keep up the good work, Tony and Ryk

Thank You Tony and Ryk for asking WHAT HAPPENED TO THE R4.6 BILLION. I agree if he says that there was “to only circa R2,6 billion” why not give that to us?

Warren Buffett said if a company is in serious financial problems, you can change management as you wish, the company will still fail. This is what happened here, a bankrupt company which failed to the very end. irrespective of the business rescuer. Ryk I am not sure if you/your family/friends have invested in this company?

Hachmet I think you need to read up more about this matter. The HS Syndications were not bankrupt!! If they were, why did we not go into liquidation at that moment. No my friend there was buildings with worth R4.6 Billion of investors money.. And Ryk’s articles have shown exactly what has transpired with those buildings.. THIS COMPANY WAS NOT BANKRUPT

Sunnette, I presume you lost a lot. A company in financial distress (“bankrupt”) seldom survives, all investors will big in this case like all other similar cases (Steinhof, African Bank, etc.).

I have lived with the case of the Highveld Syndication companies as an affected person since 2011. I have also seen Tony Beamish’s comments about the R4.6 billion that has to be accounted for. I have also seen the comments of “comlawyer” about the fact that 99% of creditors and the creditors’ committee having been fully aware of the “course of action chosen by Hans”. What should be noted is that the business rescue plan published on 30 November 2011 and which was adopted on 14 December 2011 afforded the investors/creditors the opportunity to decide for themselves whether to pursue the confrontational litigation route or to accept the proposed business rescue plan. Tony Beamish ignores this very important issue. He was not around at the time but we queried it with the BRP at the time. We got legal advice and it was made clear to us that a decision to vote for the business rescue plan meant a “settlement” of the claims of some R4.8 billion. This was ventilated at the meeting of creditors on 14 December 2011 and at that meeting more than 99% of the investors who were present or represented voted for the BR plan. It was therefore our decision and not a “course of action chosen by Hans”. We were all disappointed that when it became evident in 2014 the rescue plan was under pressure. We also them realised that one could not then “opt out” and now revert to the litigation route that we voted against. What was also important was that Zephan had been paying our interest (although fell in arrear in 2014) since 2011 and upon reading the scheme of arrangement documents in Orthotouch one realises that Zephan had paid hundreds of millions to Orthotouch to pay the investors’ interest. More importantly, the newly appointed business rescue plan of Jacques du Toit published his business rescue plan last week and he analysed the property transactions since before 2011 to dated and he explains what he found his investigations. Everything is there ! We should maybe focus on his findings as he came in as a newcomer and independently in late 2019 and casted a fresh eye on everything?

“I have no financial interest in the matter other than being paid for my services rendered. In this respect I have in fact – since 2014 – not been paid in full and payment of my fees for ongoing work since then remains in arrears. I have since 2016, and until my resignation as a director of Orthotouch in October 2018, not been paid in full for my duties as a director of Orthotouch either.”

WOW!! Luckilly for you Hans Klopper whatever you got paid must’ve been enough for you not to take Nic Georgiou/Orthotouch to court over OUTSTANDING PAYMENTS.
Unfortunatedly us the poor investors struggling to get back our investmenets we had to resort to litigation and we obviously will stay with the class action

I sincerely hope Ryk van Niekerk and all the other detractors will have the courage and grace to extend an apology to Hans Klopper.

Taking on any business rescue task is onerous and in the hands of a real expert (Hans is internationally recognised as an expert) the process can be managed more effectively.

Many have lost money in various schemes and investors in HS would have lost everything if it was not for Hans’s tireless efforts

Really??? Are you SERIOUS????

DETRACTORS?? This was a word used by ORTHOTOUCH (and those involved since the beginning of the end…2011.

I’m still not sure who these DETRACTORS are??

Seeing as you are in the know Investor47, maybe you can enlighten me??

Investor 47..who are you? Do you not have a proper name? Why making statements under a assumed name by trying to convince any of us to apologize to Hans Klopper aka HK as we know him. This little storybook that he has just published has got many flaws in. Are you perhaps Hans Klopper himself I wonder?

Do I spy with my little eye… a hidden threat here?
Gogga maak vir baba bang?

I don’t think Mr Klopper understands Ryk’s articles. Investors bought 80 properties for R4.6 billion. If the properties were overvalued, so be it. They still owned 80 unencumbered properties.
Unfortunately, not a single property was transferred to Orthotouch.
Today there’s nothing left. All have been sold.
In my book, this equates to the scandalous looting of assets.
Can you perhaps help me understand better?

Thanks for making such important points, succinctly.

You probably already know it, but my advice is not to hold your breath expecting an answer from Klopper.

Excellent questions – – no answers forthcoming

Mr Klopper, can you elaborate on this statement?

“It is not clear how Moneyweb arrived at the conclusion that there were accounting losses for Orthotouch, but it is possibly attributable to them relying on Deeds searches that contain incorrectly recorded values.”

“being that the aggregate value of the assets owned by and to which the HS companies had rights amounted to only circa R2,6 billion; while the aggregate claims by the investors in the HS companies amounted to circa R4,8 billion. In addition, to the almost R4,8 billion owing to the HS investors it also transpired during late 2013 (which I was unaware of at the time when the business rescue plan was proposed in December 2011 that a number of the properties forming part of the Orthotouch portfolio were also subject to encumbrances to Investec in an aggregate amount of circa R531,3 m and RMB in an amount of circa R756,1m respectively.”

MR HANS KLOPPER being the Bussiness rescuer was it not your job to make sure at that time in 2011 that there was no money owed to anybody on any of those buildings?

Why did it take you till 2013 to find that out I wonder!!

Why was the bond not paid to Investec on purchasing of the buidings by Orthotouch?

“In order to carry out their duties, business rescue practitioners need to rely heavily, in making their assumptions and forecasts, on the knowledge of industry specialists with the necessary operational experience in that sphere of business. Without such assistance the business rescue practitioner’s work may be doomed for failure from the outset of taking on the assignment. Such industry specialists sometimes get it wrong as well.”

You are so right Mr Hans Klopper regarding your last statement “sometimes get it wrong as well” That could happen but in this case I see it not as the old saying goes “s..t happens” I see it as deliberately walking all over us the investors!!!

Dear Hans Klopper herewith EXTRACTS from your circular referred to in your “affidavid/letter” to Ryk

I will place my questions to you in CAPITAL LETTERS!

8. In terms of the Revised Business Plan recently approved by the Board, Orthotouch will participate in a strategic decision by the Georgiou Group to list a property portfolio of
approximately R7,6 billion on the on the Johannesburg Stock Exchange. The commercial property portfolio includes Fourways Mall (one of the country’s premier commercial developments in Northern Johannesburg) and approximately R2.9 billion of the Orthotouch properties. This listing is due to take place in April 2013. The rationale for Orthotouch to participate in such a transaction is that Orthotouch will acquire liquid (tradable) shares, which will have the effect of the Highveld Syndication companies effectively becoming proportional owners in a liquid, JSE listed and tradable, share portfolio.
WHERE DID YOU MENTION ACCELERATE IN THIS PARAGRAPH/DOCUMENT? I DON’T SEE IT!!

9. As a result of this transaction, a substantial portion of Orthotouch’s assets will be converted into shares in the listed entity, which will be highly regulated – the JSE being widely regarded to be one of the top regulated Stock Exchanges in the world.
REFERRING TO ‘ORTHOTOUCH’S ASSETS’ PROOF TO ME WHERE AND WHICH BUILDIINGS WAS TRANSFERREDTO ORTHOTOUCH IN 1 YEAR AFTER THE ADOPTION OF THE BRP WHICH I MUST ADD WAS ONE OF YOUR DUTIES TO OVERSEE THAT IT HAPPENED?

12. The balance of the Orthotouch assets, consisting mainly of development properties, will be retained within Orthotouch and transfer to Orthotouch will be regulated as a matter adjunct to the formal listing process. These properties will be unencumbered and the growth potential will be pursued actively to further enhance the value to be derived for the benefit of investors
WHICH BUILDINGS ARE YOU REFERRING TO IN THIS PARAGRAPH? AS FAR AS I KNOW YOU ALSO DID NOT OVERSEE THAT WHATEVER YOU WERE TALKING ABOUT IN THIS PARAGRAPH HAPPENED!!

YOUR STATEMENT TO RYK DOES NOT REFLECT THE TRUTH I SEE.
It seems that Accelerate was mentioned in a letter by Cas de Villiers Pretoria 6 March 2013(Got it from a friend – never received it myself) “The sale of a part of the company’s Portfolio into the proposed listing of Accelerator Property Fund will create positive cash flow both to ensure regular payments and the increase in capital. As far as I can establish, great strides have been made to realize this. Obviously, the more the listing becomes a reality, the more concerted the efforts of the instigators to sabotage the process”.
UP TILL NOT SO LONG AGO ACCELERATE WAS THE TOP LISTED COMPANY ON THE JSE. WHY MR HANS KLOPPER HAS US THE INVESTORS BEEN ON THE SHORT END OF THIS? OUR INTEREST HAS STOPPED SINCE JULY 2018. PLEASE EXPLAIN?

Oh now the Deed office get the blame What next Pkse this was ranmsacking from the start Liquidate and get behind this looting mess

There has certainly not been enough emphasis placed on finding the real criminals in this case. I do not doubt for a second that when the BRP arrived at the “scene of the accident” that the investors money had already been looted. When the BRP arrived the claims of HS investors were R4,8 billion but net assets were only approx R 1,3 billion.
So at best Investors could hope to get 27% of their investment back. Of course this will have been further reduced by legal and BRP fees over time.

So the question is: how was the missing R3.5 billion stolen and by whom? This needs to be investigated and can only be done by looking at the time before BRP started.

Certainly there was an abuse of the BRP process as this just delayed a proper investigation into the looting. The BRP should have only concentrated on finding out where the missing money went, that would have been more useful than dragging the process out and only recovering a small % of investor money.

It’s clear that there was foul play. I don’t think the business rescue practitioner is to blame though. In hindsight it’s easy to say that he should have found the stolen money and maybe he should have, but it’s also possible that it could have been futile and wasted more money.

Read the Harrison and White report – there are many similarities regarding the conduct of Klopper and Myburgh.

where do you get those figures from?

Mr Myburgh
My post relates to all BRP’s
See also the article in De Rebus of 1 December 2016 regarding reasonable fees.

Crimson Red you are spot on I emphasized this matter from the beginning.INVESTIGATE THE DISPUTE!!!! That was the beginning of the end There was no dispute because Eugene Kruger the trust attorney confirmed that!!!!! Role players were dragging g feet and playing for time by implementing the BRP and Hans knew this but cash is king Time is of great essence for thieves

Ryk, should stakeholders not now apply for Klopper to be removed as BRP in this case AND lose his accreditation to act in any further cases?
and
Myburg and his lady friend Haese to be declared dilinquent?

After reading this article, the best I can deduce is that Hans Klopper had good intentions and probably was not bought off by Nic Georgiou as it has often seemed. However, to my mind he still seems to have been asleep at the wheel, probably incompetent and apparently unable to see the wood from the trees.

The PRIMARY issue at the heart of this saga seems to be that money was paid for properties but the properties were never handed over. This would render any business transaction of any asset immediately insolent. So the entire deal was insolvent from the very start for this very simple reason. All of the last 9 years financial gymnastics have at best simply been efforts to try and solve this original problem, at worst been efforts to delay the inevitable insolvency and hold the guilty parties to account.

So why does Hans Klopper never try and rectify this original problem? Why does he seem blind to it and it’s huge importance at the heart of the whole saga? If this problem could be fixed, the entire problem could be very materially fixed. Over the last 9 years, this original problem was never fully addressed by Klopper and like his reply above is barely mentioned:

1.7.4. I investigated this issue and it was clear that there was a dispute. The dispute was however between Bosman & Visser and Zephan. I did upon perusal of the HS Companies’ records, see the relevant auditor’s certificate and the contemporaneous legal demands in relation to this dispute, proving that the dispute was real.
1.7.5. Bosman & Visser claimed that it had paid Zephan the full purchase price for the properties, while Zephan claimed that an amount of more than R880 million was still owing. Zephan would not give transfer of the properties to Bosman & Visser, who could accordingly, not give transfer of those properties to the HS companies. As the dispute was between entities outside of the HS Companies, I was neither able nor legally allowed to investigate and decide on the merits of the dispute.

Is that all? ‘I was neither able nor legally allowed to investigate and decide on the merits of the dispute.’ REALLY?! Are you trying to fool the investors or yourself Hans? Talk about not being able to see the wood from the trees. Sure, the apparent ‘dispute’ was between two third parties Zephan and Bosman & Visser, but the fact that Zephan had not handed over the assets fully paid for by investors was ‘commercial accident’ number one to be sorted out! That is EXACTLY what you should have begun fixing on day one of your role as business rescue practitioner.

Using your analogy, Doctor Klopper arrives on the scene of the ‘commercial accident’ and the patient is bleeding prefusely from the jugular because a serious commercial crime has been committed against the patient. There is an obvious way to fix this one. HAND OVER OWNERSHIP OF THE ASSETS THAT HAVE BEEN PAID FOR. Does Klopper do this? No, he tells himself and the patient that this is someone else’s business and he spends the next years ‘peeing into the wind’. Trying to fix the unfixable and largely just being part of the problem. His actions adding some sort of legitimacy to the crime that has been committed: Money was paid for assets, assets were not handed over. It is surely at heart that simple. WHAT DID YOU DO TO FIX THIS HANS?

The Highveld Syndicates were insolvent from the moment that funds were paid but assets not received. Nothing will fix this problem until the assets handed over or the money returned. WHY DID YOU NOT FIX THIS HANS?

If you had identified the obvious problem on day one; made rectifying it your primary objective; managed to achieve this and have the assets handed over or money returned; the entire problem would have largely been solved. That would have been a rescue job you could have been proud of. Thousands of investors would today have a far different opinion of you than we currently do.

Lastly, I would like to thank Ryk van Niekerk for his great work in trying to fight for the thousands of investors who have been victims of this fraud. It is sad that the various legal and financial systems and professionals and professional bodies have so clearly failed to hold the perpetrators of this crime to account. We can hope that Karma is a reality. For the last decade it seems that the media is the last and only line in the sand .. Thank you Ryk!

Rob Gee
On behalf of Mother (and now deceased Father)

I think this is a fair comment. I know Hans personally and have no doubt that he had good intentions, but in hindsight he possibly did not make the right decisions. Hans has been involved with some very successful “miracle” rescues that did not seem at all likely but I am sure he would say that this is not the way he would have wanted this case to turn out. Business rescue is a risky business and one decision can end up in the practitioner being seen as the villain by thousands, as has turned out in this case. That is part of the profession and he did sign up for it. At the same time however there are no guarantees that had the BRP pursued Bosman & Visser that it would have brought any value for investors and from what I have seen, the creditors committee (and 99% of all creditors) seemed to be fully in favour of the course of action that was chosen by Hans as it seemed to have been the best option at the time – as I said, there was no guarantee that litigating against B&V would have achieved anything other than draining the pot for investors further. If the money had been stolen it is highly likely that it would have been gone by the time any findings were made against B&V or any other guilty parties.

I really feel for investors in this case but I think they should focus their energies on the parties who were really to blame. Funnily enough the brokers who sold the original deals to investors (with huge commissions) seem to be avoiding all scrutiny.

Mr Klopper, when you do your follow-up right of reply, please clarify the following that were published in the Business Rescue Plan of Orthotouch on 30 March 2020:

“The properties were the sold at inflated prices from Bosman Visser to the HS Companies.
The HS Companies inflated the value of the properties as proposed to the investors in terms of the prospectus’ well knowing that such value is nowhere near the actual market value of such properties.

The liquidation would have been more beneficial for the investors.

I can hardly get my mind around it: you received remuneration as director of Orthotouch? And you received your [exorbitant] fees as BRP?

CIPC should place a limit on a RBP’s fees and force practitioners to tax their accounts in the Magistrates court on a monthly basis, for the actual work done.

My understanding is that common law fees are illegal in SA. Is a fixed monthly fee for unspecified work not a common law agreement?

End of comments.

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