By Deon Basson This email address is being protected from spambots. You need JavaScript enabled to view it.  
  
PIC Investment Holdings and PIC Syndications, the competitors of Sharemax, began marketing their latest scheme in the past few weeks without investors having access to a full prospectus – as required by SA’s Companies Act. 

Marketing seminars were held. A report where the public’s attention is drawn to the latest investment opportunity – and which quoted a PIC spokesperson – appeared last Sunday in Finance Week stablemate Sake-Rapport.

The scheme is also promoted on PIC’s Web site.  The new public company offering the shares is Highveld Syndication No 12, run by two directors – Johan Coetzee and Christoffel Frederick Landman – both 27. But the real brain behind the scheme is Jan Jonathan Durand Botha (44), involved in property syndication schemes for many years. 

The company register says that Botha is not or has not been a director of any company that raised money from the public, though he’s a director of PIC Holdings and PIC Syndications, from which Highveld Syndication No 12 is now being marketed.  Botha is a brother of Willie Botha, a Sharemax director. Their property syndications were previously in one camp but later their interests diverged. 

Following the report in Sake-Rapport, I called at PIC in Pretoria for a prospectus. A marketing consultant said the prospectus would only be printed in two weeks’ time. 

Landman later confirmed this, but said that a certificate revealed the prospectus has already been registered. He also confirmed that marketing of the shares had started on the basis of a pro forma prospectus, which is also on the Web site. 

Landman said that the full prospectus would only appear on the Web site last Thursday (after FW went to press). Essential information is not provided in the pro forma prospectus or the preliminary prospectus (as it’s described on the Web site). 

The PIC situation is similar to events at Sharemax earlier in the year, when shares in the Comaro Crossing scheme were advertised via e-mail and marketers were encouraged to begin marketing, even though the prospectus wasn’t available. 

SA’s Companies Act is clear on offers to the public. Section 145 prohibits anyone from making an offer to the public for the subscription for shares unless it’s accompanied by a prospectus complying with the Act. 

According to Section 157(1) every newspaper or other advertisement offering or calling attention to an offer or an intended offer of shares in a company is deemed to be a prospectus issued by the person responsible for publishing or disseminating the advertisement.

On its Web site PIC says: “We are proud to announce our new syndication. Syndication value R112m. Initial income yield 10,02%. Average escalation 7,4%. . .” – after which the reader is referred to the incomplete preliminary prospectus.  Important information required by the Companies Act is missing, including profit estimates, a full report by the auditors, details of expenditure, important contracts and the litigation statement.  Interestingly enough, the prospectus mentions two other entities – Property Investment Consultants Syndications and Property Investment Consultants Admin CC – as the marketing agents and management agents respectively.

There are no references to them in the companies register. 

In 1998, Durand and Willie Botha were involved in the marketing of shares in Oude Molen Properties No 4 under the banner of DW Promotions, trading as Asset Management. Its marketing document gave the name as 321 Middle Street, Brooklyn Ltd, but it later emerged that no such company was registered.  Though the underlying property in Brooklyn was syndicated for R5,5m it was valued at only R1,6m less than a year later. Investors suffered considerable capital losses, and Oude Molen Properties No 4 was liquidated.  Durand Botha conveniently shifts the fiduciary and legal responsibility for Highveld Syndication No 12 to Coetzee and Landman, but is still spokesman for the scheme. All this has a familiar ring. 

Oude Molen didn’t register a prospectus in 1998. A deeds search showed that an entity JR 94 Inv (Pty) Ltd (of which there’s no record now) bought the property in 1998 for R3m and then almost immediately sold it to Oude Molen No 4 for R5,5m. 

Several other entities in the Botha camp also marketed shares without a prospectus at the time.  Last year, the Financial Services Board ordered Sharemax to stop marketing investments via a trust structure.

Ironically, PIC criticises this structure on its Web site.