Mungo Soggot
An illegal investment company that preyed on elderly people has been taken over by the Reserve Bank, amid reports that the collapsed scheme’s mastermind has fled to Beirut with tens of millions of rands.
The scheme, Proplace, promised many of its customers a monthly income. Many of them depended on this, after investing their life savings in the company.
The investors pumped about R160-million into Proplace, which could become one of South Africa’s most damaging investment scams since Masterbond.
The man behind Proplace, Tony Manachi, met representatives from accountants Deloitte & Touche on April 2 after the Registrar of Banks – the banking regulatory body attached to the Reserve Bank – dispatched the accountants to investigate complaints from aggrieved investors who had not received their monthly pay-outs.
At the meeting Manachi, a racehorse enthusiast, informed Deloittes and his lawyers that he was flying to Beirut that night and would return in two weeks. It was the last time he was seen in South Africa.
Deloitte’s initial investigation showed that Proplace took money illegally after failing to obtain a licence from the Registrar of Banks. On May 28 Deloittes was appointed to repay investors’ money and conduct a forensic audit into Proplace’s and Manachi’s accounts.
It ordered Proplace to repay investors and is currently investigating laying charges against Proplace employees.
Deloitte & Touche attorney Marius Alberts refused to comment on rumours within Proplace that Manachi siphoned off about R70-million of the money. Manachi recently promised to return and pay over the missing money.
Deloitte & Touche says Proplace took investors’ money and put it into second- hand endowment policies on their behalf.
It says many of the premiums paid to investors were bagged from the proceeds of mature policies and from new investors’ start-up deposits. Investors either paid in all their savings and received a monthly income, or opted to receive a lump-sum after a few years.
“Our investigations have revealed numerous assets into which unlawfully obtained monies have been converted. These assets will be realised for the benefit of investors,” the company said.
Alberts says Deloitte & Touche has accounted for about 30% of the money invested, but hopes to find more after following the trail from the accounts.
Deloitte’s has warned investors – many of whom have visited Proplace’s offices in search of their money – that the firm has so far been unable to find sufficient assets to cover R160-million.
If this remains the case, Proplace customers will get only a portion of what they invested.
Proplace solicited most of its clients on the telephone. Investments ranged from R2 000 to R2-million per investor.
The Registrar of Banks was alerted to Proplace’s activities last year. It launched an investigation after the executor of a deceased investor’s will blew the whistle on the scheme’s collapse.
Alberts says he hopes the investigation and audit will be completed in the next few weeks.
However, the efforts of Deloittes to reclaim the money could be severely hampered if much of it has been taken out of the country.
Manachi’s lawyers were unavailable at the time of going to press.