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Standard Bank has closed Nova’s bank accounts

Charles Rembe quits as director and chairman of the Nova audit committee.

Standard Bank closed the bank accounts of the Nova Property Group, the rescue vehicle of the failed Sharemax investment scheme, late last year.

Moneyweb has seen the minutes of a Nova board meeting held in November last year. It was disclosed that two Standard Bank representatives visited Nova in July and informed it that the bank was “no longer interested in doing business with NPG [Nova Property Group] and all NPG accounts will be closed on 3 September 2018”.

The deadline was later extended to mid-December.

It is not clear why Standard Bank, which has been Nova’s bank for many years, decided to terminate the relationship.

It is also apparent from the minutes that Nova commenced with the drafting of legal papers to stop the termination of the relationship. “Nova is presently preparing an urgent application to court, if Nova so decides, to stop the bank from closing Nova accounts and that they have no legal basis to do so, or to get a declarator to give Nova 24 months to migrate Nova’s circa 160 bank accounts to another bank,” the minutes read.

The minutes also state that Nova was already investigating the option to move the accounts to Absa.

Moneyweb has learnt that the group managed to migrate its accounts to Absa before the closure of the Standard Bank accounts.

Ross Linstrom, spokesperson for Standard Bank, did not confirm or deny the closure of Nova’s accounts. In an emailed statement, he said: “Standard Bank declines to comment based on client confidentiality be it current or previous clients.”

This is not the first incident of banks not wanting to do business with the Nova Group. In 2014 Absa and Grindrod Bank refused to provide funding to Nova, citing potential reputational risk. At the time, Nova lashed out at media coverage and blamed the creation of the perceived reputational risk on continued negative reporting.

Read: Absa, Grindrod Bank reject funding to Nova

No response from Nova board

Moneyweb emailed questions related to the closure of the bank accounts and other developments to Dominique Haese and Connie Myburgh, Nova’s CEO and executive chairman, as well as to the company’s non-executive directors: advocate Jan Smit, Nigel Adriaanse, Jane Phiri and Lazarus Mbethe last week.

Haese and Myburgh did not respond, while Smit acknowledged receipt of the questions on behalf of the non-executive directors but declined to respond, citing Nova’s policy of refusing to engage with Moneyweb.

Moneyweb also sent questions to the two court-appointed receivers of the Section 311 Scheme of Arrangement. They are attorney Hans Klopper of auditing group BDO and Myburgh. The receivers are tasked to ensure that the 19 000 debenture holders are repaid their original Sharemax investments in terms of the scheme.

Myburgh did not respond to these questions. Klopper acknowledged receipt of the questions but declined to provide answers. He wrote: “As previously stated, due to the nature of business at BDO, it is irregular to, nor do we, discuss any of our matters.”

Resignation of Charles Rembe

Moneyweb can also confirm the resignation of Charles Rembe from the Nova board. Rembe was the chairman of the audit committee. He confirmed his resignation to Moneyweb but declined to provide reasons for it.

Rembe’s resignation occurred during the audit process of Nova’s 2019 financial statements. Nova’s financial year ended on February 28, 2019, and the audit process should be well on its way, but Moneyweb was unable to establish whether there is any link between the two events.

Nova’s 2018 financial statements were qualified by Nexia SAB&T, the group’s auditor. Nexia questioned whether the company could continue to operate as a going concern.

Despite Rembe’s resignation on April 15, his name has been removed from the Nova website, his resignation does not reflect on a WinDeed company report accessed on May 24. The report still lists Rembe as an ‘active’ director. This may however be due to delays in updating the CIPC database.

Rembe was appointed to the Nova board in 2017 after Moneyweb sent a letter to auditing group BDO in November 2016, stating that the composition of Nova’s audit committee was in contravention of the Companies Act. BDO, which was the auditor at the time, then filed a reportable irregularity with the Independent Regulatory Board for Auditors (Irba) regarding the composition of the audit committee. Several non-executive directors, including Rembe, were subsequently appointed, which rectified the situation.

Auction of another five properties continues

Nova also seems set to continue with the auctioning off of five properties from the portfolio on Thursday (May 30).

Nova has apparently not communicated its intention to dispose of the properties to debenture holders, and that may well create uncertainty as to how the proceeds to are intended to be spent.  

Nova’s 2018 (qualified) financial statements revealed significant cash flow problems.

Read: Nova teetering on the verge of insolvency

When Nova was formed in 2012, it inherited 28 properties valued at R1.9 billion from Sharemax. In Nova’s 2018 financial statements, only 19 properties valued at R2.2 billion are listed in the portfolio.

According to Moneyweb’s calculations, only 11 properties valued at around R1.9 billion will remain in the portfolio if the five properties are auctioned off and the other properties that were previously earmarked for disposal are indeed sold.

Two of the properties remaining in the portfolio are the half-built Villa Retail Park and Zambezi Mall in Pretoria. They are collectively valued at R950 million, which would represent nearly 50% of the total value of the remaining portfolio.

Forensic auditor André Prakke believes the sales should not be allowed to continue. “Given Nova’s financial state and possible insolvency, it is an ideal opportunity to approach a court to put the company into business rescue,” he says. “This can ensure that properties are not needlessly sold, while a business rescue practitioner can also take control of the company.”

Details of the auction can be found here.

Nova has previously suspended correspondence with Moneyweb. The response below was sent to Moneyweb in November 2016.

Dear Mr van Niekerk,

It is regrettable that our efforts in engaging Moneyweb openly, constructively and in a bona vide fashion has not been reciprocated. In response Moneyweb has chosen to publish articles without prior reference to us, and in breach of your undertaking to allow us to see and comment on the articles first, which articles twist the facts, articulate a number of inaccuracies and untruths and seek to slander and defame the Nova Group and its directorate. We are considering our position and our rights in this regard are reserved.

It has become clear to us that any information that is provided by us to Moneyweb, will be twisted and used out of context for the purpose of further negative reporting of and concerning the Nova Group and its directorate and given that no further productive purpose would be served in engaging with Moneyweb, the Nova Group has decided to break off all forms of communication with Moneyweb. We will accordingly no longer respond to questions Moneyweb pose to us, requests for commentary on proposed articles or for that matter to any articles that Moneyweb might publish, subject of course to a reservation of the right to deal with any matter Moneyweb might publish, in a court of law.

Please ensure, should you elect to publish anything further regarding the Nova Group and any of its functionaries, that you include in such publication our above position, verbatim.

Yours faithfully,

Dominique Haese

CEO Nova Property Group

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COMMENTS   21

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This that the bank accounts are going to be closed for the reasons stated in the article one has to question why the auditors did not reflect on this when they signed there audit report on the 18th December 2018. Maybe an oversight or was it just not disclosed this is a material issue.

Very good question.
But, knowing Myburg, I suspect there was a fair amount of bullying involved why it took this long.
As for urgent application to court – I think Mr Myburg would be wasting shareholder’s money.
I hope Adv Jan Smit and other no-exec board members have been clear on warning the CE and exec board and now resigned
This company is not going to survive much longer in this form.
My view – – – I may be right – – but my mother in law reminds me I am always wrong.

It should be the investor going to Court they are being the ones losing money and then nominate their own persons as business Rescue Practitioners.

C’mon Mr Prakke, every business wants a tame auditor.

One does not pay them vast fortunes merely to have them stiff one.

Maybe that’s the problem

One wonders in cases like these and Orthotouch why Carte Blanche is not helping the destitute pensioners????

These guys are running circles around the Guptas. They have been financial leppers for the last decade, why does it take the bank so long to close their accounts? Anyway, no local bank will touch them now. They will have to follow the Guptas and Zuma to a bank in Dubai.

Mr Prakke’s advice seems to be well respected by Moneyweb.
His advice/statements as an expert witness during a case in the High Court of KZN, Case Mo 4827/2013 was, however, not well received by the judge. For ease of reference the following synopsis:

In the High Court of South Africa Kwazul0-Natal Division, Pietermaritzburg
Case Mo: 4827/2013

In the matter between:

Shane Alan Symonds and Johanna Aletta Symons (Plaintiffs)

And

The Rob Roy Investments cc t/a Assetsure (Defendant)

Before Judge Ploos van Amstel

Judgement delivered on 10 December 2018

Expert witness statements by Mr Prakke and Mr Throssel (an investment manager) for the plaintiffs.

1. Investment in The Villa is an “above average” investment risk and “higher than high”.

2. Criticized obligation to pay interest to investors before there was a rental income stream. This could only mean that the interest was paid out of invested capital.

3. The vacancy factor budgeted for was too low.

4. The projected rental per square meter was too high.

5. The syndication structure was illegal and that it contravened the Banks Act of 1990.

6. Upfront commission and other expenses were too high.

7. The public companies involved were insolvent.

8. The projected returns were not feasible.

9. The prospectus omitted material information.

10. The defendant (Financial advisor) should have performed a due diligence investigation and explained the cost of the units to the plaintiff (investor).

11. The defendant failed to act in accordance with his professional obligations and the requirements of FAIS. 1. The Sharemax scheme did not fail because of (p 15, par 55)

a. high commissions paid to those who sold the investment; or

b. the companies concerned were unlisted; or

c. of the interest paid to investors from the outset; or

d. the scheme ran out of investors; or

e. the rental income turned out to be inadequate; or

f. a lack of transparency.

FINDINGS BY JUDGE

2. None of the risks mentioned by the expert witnesses for the plaintiffs can be said to be the cause of the loss to the plaintiffs. (p16, par 58)

3. The cause of the loss was the intervention by the Reserve Bank and not any breach on the part of the Financial Advisor.

4. Interest paid to the investors was generated by the funds in the attorney’s trust account, together with the funds advanced to Capicol in terms of the sale of business agreement, on which it paid interest.

5. Evidence does not justify a finding that the commission of 6% compromised the Financial Advisor’s independence.

Did Monewyweb report on this case?

Reading this I can only assume you are very cozy with Connie and his lady, or you came second in a dispute with Mr Prakke.

Either way, you focus on Prakke – I would rather focus on Nova and the lovely people running it.

…MY THOUGHTS EXACTLY !

@VARKIE10, i’m not entirely sure what you are trying to say here???

Varkie10, you must surely be a Connie troll.
Why don’t you respond to the closure of the bank accounts?
And why don’t you reveal your name? If you have something critical to say of Moneyweb and Andre Prakke, at least have the b@lls to do it under your own name.
Pathetic.

LOL, WELL SAID JAMES…
However, just like Connie Myburgh and Dominque Haese will always refrain from commenting, I bet VARKIE WILL NOT REVEAL HIS NAME!

Hmm, I rather suspect you were varking lucky with this judgement. Case ongoing in appeal or another form at all?

SO, HANS KLOPPER is the “Receiver” for Nova?
HANS KLOPPER was also Business Rescue Practitioner for ORTHOTOUCH, which BRP failed!
If Nova is put into Business Rescue, debenture holders should be aware the ORTHOTOUCH BRP FAILED.
There are some common names in these failed Property Syndication’s that keep cropping up.
CONNIE MYBURGH, HANS KLOPPER …and they are in the Judicial Profession…???

Ryk, your efforts are very necessary and valued by those who suffer from these events.

Well DOne! Hope you keep it up and Vivienne K’s warnings are top of your agenda.

And take a deep look into who the properties are being sold at a deep discount to… Connie Myburgh would most likely be the buyer through a few SPV’s. Where the hell are the regulators, Hawks and NPA?

It’s an on going scenario and that question of “where are the regulators?” etc etc keeps coming up…
It can only mean that they are turning a blind eye??

My experience with Regulators show that they adopt ostrich pose – hoping the problem will resolve itself without them having to sort it out and get some black marks.

Case – recently a top FSB official was so anxious to take a job in Switzerland – the saXum insurance debacle played out with major losses for insured’s and suppliers. Now the Liquidators and Attorneys are scooping up the leftovers – – – – -all to be avoided if FSB stepped in early.

Or they are incapable and incompetent.

Agreed …… The likes of all these directors Connie Myburgh and Nic Georgiou should surely have raised more than a few eyebrows by now. Judiciary NPA and not forgetting the Hawks and SARS ??????

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