Pinnacle Point appeared solvent, inquiry hears

The director of Cape Point Vineyards, Sybrand Van Der Spuy, told the insolvency inquiry into JSE-listed luxury property group Pinnacle Point in Cape Town on Monday that he had believed the group was solvent when he became a minority shareholder.

However, his relationship with some directors soured when he later came to believe he had been misled, he explained.

While it is hoped the inquiry will unravel the mystery of why R250-million of misappropriated clothing workers’ pension fund money was sunk into this risky investment, the chances of any recovery from Pinnacle Point Holdings were “zero,” according to Van Der Spuy.

Van Der Spuy said he had been drawn to the venture by Pinnacle Point director, David Mostert, as they played golf together.

“He said to me: here is a very good investment,” said Van Der Spuy.

The other Pinnacle Point director Van Der Spuy discussed his investment with was Mervyn Key, who was implicated in fraud charges following Tollgate’s liquidation in 1992. An attorney, Key was found not guilty of all charges of fraud and theft involving R28.6-million relating to Tollgate.

Van Der Spuy told the inquiry that Key is now living in Australia, and has assets there.

A qualified chartered accountant, Van Der Spuy explained to the inquiry how he had examined the share proposal and financial records before he invested his money.

Seemed solvent
On the surface it had looked like a “very solvent company,” he said.

Van Der Spuy said he had been told he could buy the shares from Pinnacle Point Holdings in Pinnacle Point Group, but he had not rushed in.

When he took a trip in Mostert’s helicopter to one of Pinnacle Point’s developments, he looked through the share proposal again.
Van Der Spuy said he later asked for and examined the financial records of Pinnacle Point Holdings.

Satisfied with what he saw, he invested in the company and acquired his first tranche of shares in February 2010. But he later started delving into what he believed were questionable business practices at the group.

Cape Point Vineyards, which was part of the application for the liquidation of the group, has called for an investigation in the affairs of all the directors and their subsequent prosecution if any wrongdoing is discovered. The wine estate owns 1% of Pinnacle.

Pinnacle Point was placed in final liquidation on November last year after six of its subsidiaries were liquidated that month but the order came while the group owed creditors hundreds of millions of rands.

Getting to the bottom of it
So far, seven people, including former directors and shareholders, have been subpoenaed to appear in the first round of the inquiry. The hearings are being held in the plush offices of top law firm Edward Nathan Sonnenbergs (ENS) in the city and the inquiry will try to get to the bottom of the group’s transactions, including those that saw Pinnacle Point’s subsidiaries being lent more than R200-million by banks.

The company was involved in developing golf estates and luxury resorts in the country, and it had ambitious plans for developments in Nigeria and the Seychelles, the inquiry heard.

The inquiry will further explore how the company’s shares suffered from a share trading debacle involving single stock futures and banks. As a result, Absa is suing Nedbank for R773-million for losses it said it suffered after taking an exposure to Pinnacle Point.

Keeping a close watch on the proceedings on Monday was Southern African Clothing and Textile Workers Union (Sactwu) general secretary, Andre Kriel, who is hoping to recover money for workers.

Unwitting clothing workers became the majority shareholders in the group when millions of rands from their pension funds were invested in this venture without their knowledge.

Kriel has said the union is particularly interested in what role the banks had played in the demise of the Pinnacle Point Group.

Glynnis Underhill

Glynnis Underhill

Glynnis Underhill has been in journalism for more years than she cares to remember. She loves a good story as much now as she did when she first started. The only difference is today she hopes she is giving something back to the country. Read more from Glynnis Underhill

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