The owner of Cape Point Vineyards, Sybrand Van Der Spuy, told the insolvency inquiry into JSE-listed group Pinnacle Point in Cape Town on Tuesday that he and 120 other investors paid R500 000 each to become a platinum club member, which gave them exclusive use of a motorised yacht and complimentary food and beverages at the group’s luxury resorts.
But Van Der Spuy said he was unaware until much later that the R60-million earned from platinum club membership was then transferred from Pinnacle Point Platinum to Pinnacle Point Resorts and some of its other companies, and was believed to have been used as working capital.
Yet the agreement with platinum club members was they could redeem their investment in full if desired, as they purchased shares when they bought into the plan.
But the movement of the funds to Pinnacle’s other companies resulted in the group not being able to honour its obligations, Van der Spuy told the inquiry.
The lure of platinum club membership was certainly understandable, if you had the cash to spare. The membership gave those who bought in R20 000 spend each year on food and beverages, while friends were able to play golf for free if they were teeing off together. And the members also got exclusive use of the motorised yacht.
“And what has happened to your platinum membership?,” asked Advocate Gavin Woodland, who is leading the questioning at the inquiry.
“There is nothing left of it,” said Van Der Spuy, looking noticeably tired after two days on the stand.
Cape Point Vineyards in Noordhoek was the first to apply to the Western Cape High Court for a newly launched business rescue application, in this case to assist struggling Pinnacle Point.
But after further investigations, Cape Point Vineyards applied for the liquidation of Pinnacle Point, as he discovered it was like a “bubble” with no substance, he told the inquiry.
Nothing but ‘a Ponzi scheme’
Van Der Spuy paid more than R5-million to buy minority shares in the company, earning him a 1% share in Pinnacle Point. But he told the inquiry he felt misled when he found out that he bought the shares belonging to one of his golfing buddies, David Mostert, who was the person who recommended he buy into the venture. Mostert will take to the stand on Friday this week to tell his side of the story.
Van Der Spuy said he was as furious about his suspended shares as he was about falling for the platinum club membership scheme.
“To my mind, this was nothing else than a Ponzi scheme,” said Van Der Spuy. “They were selling an investment or instrument to people. They transferred R60-million to another company and utilised it for whatever they wanted.”
By April 2010, Stefan Braun, a director of Pinnacle Point Resorts, sent out an email to insiders stating that the company was prepared to sell its properties at a discount.
The platinum club membership scheme required R2.4-million annually to sustain its food operation and looked certain to collapse.
The members formed an association to raise their concern about the ongoing sustainability of the membership, but nothing could be done to save their investments.
Last year liquidator Pieter Van Zyl went to court to cancel the agreements with the platinum card members when Pinnacle Point Resorts was being wound up, the inquiry heard.
Van Der Spuy said he believed all those who bought into the scheme were deceived.
“If you look at the balance sheet, they have an obligation that can be called at a moment’s notice to redeem this membership. There was zero possibility that they could repay,” said Van Der Spuy. “Surely the financial statements should have been qualified.”
Now even the yacht has been reposessed by Absa, and the dream of a good life for all involved has gone.