JOHANNESBURG – SuraPure Drinks – the fraudulent drinks retailer that owes 18 000 investors in the region of R87 million – has yet to repay any of those investors more than six months after it was instructed to do so.
And information from Reserve Bank-appointed repayment administrators, KPMG is not forthcoming, according to a person familiar with the matter.
“We handed over all our documents to KPMG, including bank records, accounting records, details from the SuraPure online platform, and we’ve not heard another peep. There have been no updates and no information from anyone,” Steven Ambrose, owner of Strategy Worx Consulting, tells Moneyweb.
Ambrose is a chartered accountant who undertook an extensive investigation into SuraPure’s business affairs on behalf of business rescue practitioners (BRPs), First City Administrators.
SuraPure was placed into business rescue in April 2014. Provided for in the Companies Act, business rescue entails a third party taking control of a financially distressed company with the hopes of rehabilitating it.
Based on their findings, Ambrose and the BRPs suggested in August that SuraPure be wound up in business rescue or liquidated after concluding that was no prospect of the business being rescued or restructured.
Critically, Ambrose found that SuraPure’s liabilities (money owed to investors) outweighed its assets by millions of rands and that it was far from matching online stock orders of R184 million with physical stock sales of at most R5.7 million.
Investors in SuraPure could either resell physical stock themselves, mostly bottled water and juices, or allow SuraPure to resell stock on their behalf, in which case they were promised a 120% return in 60 days. The vast majority of investors seem to have opted for the latter option and have since March last year (when SuraPure’s account was frozen by FNB) been on tenterhooks over their investment into what has since emerged to be a fraudulent scheme.
Although SuraPure remains under business rescue, and legally in the control of BRP Harry Kaplan, it is still being investigated by KPMG. “We’ve been asked by the Sarb not to liquidate the company pending the investigation by KPMG,” Ambrose adds.
SuraPure contravened the Banks Act
In October 2014, the Sarb announced that an EY investigation revealed that SuraPure Drinks, together with its director Cornelius van der Merwe and his related companies, NaxaInvest and NaxaPhase, as well as one Liesel Oosthuizen, had contravened the Banks Act.
The Registrar ordered these companies, under the collective banner SuraPure, to repay investors, appointing KPMG as the repayment administrators.
“KPMG is currently compiling a list of investors of SuraPure and has set-up a dedicated telephone line through which investors can submit their details,” a Sarb statement said at the time.
More than six months later, KPMG confirms that 1 362 investors have phoned the helpline with information, while fewer still have submitted documentation to support that information.
First City Administrators, meanwhile, has stored 10 000 claim forms, according to Ambrose.
Moneyweb called the KPMG hotline and was told by a call-centre agent, “We are still waiting for the Reserve Bank to tell us when to repay people. They will inform us when they are ready to repay… We are waiting for them [the Sarb] to tell us how much is going to be paid.”
When asked what the delay is and where the matter now stands, KPMG director, Déan Friedman comments, “The solution that may be pursued is currently under consideration. The time of any repayment administration process is determined by the complexity of the matter, the amount of work necessitated by the circumstances and events of the matter and various inter-dependencies that need to settle.”
Friedman says that KPMG has gathered “further and other information” on SuraPure – over and above the information submitted by the BRPs and EY. Between EY and us I think they [the Sarb] had an 80% view of everything. It just seems that it shouldn’t take them as long as it has. There’s just no urgency,” says Ambrose.
The repayment process for the Defencex ponzi kicked off in March this year, about 11 months after the Sarb appointed PwC as repayment administrators.
Attorneys acting for SuraPure’s Van der Merwe confirm that he is in contact with KPMG. The attorneys, who prefer to remain anonymous, have filed a leave to appeal the ruling that SuraPure contravened the Banks Act and wait for the application to be heard in the South Gauteng High Court.
The Sarb did not respond to an emailed request for comment or a voice message.