Magnus Heystek appears to have created an eyebrow-raising conflict of interest in a property deal involving a family trust of which he is a trustee. Mungo Soggot and Belinda Beresford report
High-profile financial adviser Magnus Heystek engineered a questionable R1,5-million property deal in which a family trust he oversees bought into land used for his corporate headquarters.
The property, from which Heystek used to run his personal finance empire, is a prime plot in the plush Johannesburg suburb of Saxonwold. The impressive grounds were sold as two separate but almost identically sized stands. Both pieces of land were part of the same deal, but the prices differed dramatically.
The one plot, which includes a palatial mansion, was acquired by Heystek for R650 000. The other, an empty plot which simply forms part of the grounds, was sold to the Berman Family Trust for R850 000.
Heystek, who became a trustee in January 1995, presided over the simultaneous sale of both stands in June 1995. Heystek’s fellow trustees said this week they had not known of the substantial price differential in the Saxonwold property deal.
There is no visible separation between the Berman Family Trust land in Saxonwold and that bought by Heystek. The combined property nestles behind a high white wall. It used to sport Heystek’s name in gleaming gold letters on a section that adjoined Jan Smuts Avenue and which fronted the trust’s portion of the property.
After the property deal was executed, Heystek arranged to rent the trust land for R2 000 a month, significantly below the market price.
Heystek is one of three trustees for the Berman Family Trust, set up in 1995 by Monica Berman, with herself, her then husband, Clive, and her two young children as beneficiaries. Monica Berman, who died last December, was introduced to Heystek by Clive Berman in 1995. Apart from becoming a trustee, Heystek also secured joint signing power and power of attorney in January 1995 over R21-million Monica Berman inherited on her 40th birthday. Some of this money was used to feed the Berman Family Trust. Trustees have a duty to serve the interests of the beneficiaries of their trusts, without profiting themselves.
The Saxonwold property was bought from the Di Pasquales – who are close friends of the Heysteks. It is understood Patrizia di Pasquale teamed up with Anne Heystek to form the interior decorating operation, Casa Deco, which did the interior decorating at Monica Berman’s new family house in Linksfield in 1996.
Patrizia di Pasquale refused to give any comment to the Mail & Guardian this week, apart from confirming that the Heysteks were “close friends”.
When asked to comment last week about the apparent conflicts of interest created by the transaction, Heystek conceded that the “that the situation was never ideal”. This week he refused to answer any questions put to him by the M&G.
Heystek broached the subject of the Saxonwold property in an affidavit he filed earlier this month. The affidavit was filed in support of successful interdict applications Heystek and his fellow trustees lodged against Clive Berman and a controversial amateur litigator, Lionel Reichenberg.
Reichenberg, who has been declared a vexatious litigant, helped Clive Berman file charges against the trustees in connection with their handling of the Berman Family Trust. But the charges relating to the property transaction did not mention the price differential of the two plots. The M&G has independently confirmed the facts surrounding the Saxonwold property.
In Heystek’s interdict affidavit, he said he had “intended purchasing the adjoining vacant land [the plot eventually bought by the trust] as it had frontage to Jan Smuts Avenue and was regarded by me at the time as having prospects of being used as office accommodation with the requisite permission of the local authority.
“I mentioned my intentions to the said Berman [he does not specify which] who expressed an interest in participating in my investment. It was subsequently agreed that I would purchase the property with the house and that Mrs Berman would purchase the vacant stand on behalf of the trust. I duly purchased the one property and the second property was purchased for the sum of R850 000 from a Mr [Guissepe] di Pasquale.” The affidavit does not mention the price of Heystek’s plot with the house.
Heystek said “[Mrs] Berman was fully aware of the aforementioned transactions and to an extent had participated in the discussions leading up to the conclusion of both sales. In fact, it was at the request of Mrs Berman that the immovable property purchased by her be transferred into the name of the Berman Family Trust and that the purchase price be regarded as a contribution by her in the form of loan to the trust.”
Heystek said elsewhere in his affidavit that Monica Berman was a woman “inclined to squander money”.
He said in an interview last week that the property had had to go into the trust because, after his initial discussions with Clive Berman, the Bermans divorced. In a will last year that made the three trustees executors of her estate, Monica Berman disinherited her husband. Clive Berman is the legal guardian of their under-age children. He has been battling to see a breakdown of the trust’s books. The trustees were afforded very strong powers in both the trust deed and the will.
Both Heystek’s fellow trustees confirmed this week they did not know of the details of the Saxonwold transactions. Anne-Marie Wentzel, a psychologist, said: “I didn’t know about the prices.” Leonard Singer, an attorney, said: “We were not involved in the purchase of the house.” Asked to comment on the failure of the affidavit to broach the price discrepancy of the two plots, Singer said again: “We weren’t involved in that purchase.” The Berman Family Trust unequivocally states that “any decision of the trustees shall be by way of a majority vote”.
The estate agent who initially handled the transaction this week said she fell out with Heystek. “He was not going to deal with me because I asked too many questions about the trust.” The estate agent’s boss was subsequently called in to wrap up the sale. He confirmed to the M&G that Heystek handled both plot transactions.
Meanwhile, Heystek also refused to comment on the award to his wife of a lucrative contract to decorate Monica Berman’s luxury Linksfield property. According to the builder who did the renovations, Anne Heystek was the project manager. The builder also confirmed a separate source’s allegation that a company jointly owned by Anne Heystek and Patrizia di Pasquale – wife of the man from whom Heystek bought the Saxonwold property – did the interior decorating.
Heystek regularly appears on radio and writes newspaper columns. According to the Financial Services Board, which regulates the financial services industry, Heystek was not registered as a financial adviser until he sold his business to Citadel Investment Services last year. Any financial adviser who actually handles money has to be registered with the board. The board said Heystek’s position was unclear under the then regulations.