Controversial former ASA boss ordered to repay R522?mln to investors

2014-03-19 00:00

THE controversial former big boss of Athletics South Africa (ASA), Frik Vermaak, and a fellow director will have to repay R522 million that was misappropriated in a failed investment scheme in which they were involved.

Vermaak and Gerhard van Zyl were ordered by the high court in Pretoria on Monday to repay the money to investors.

The two, who had been summoned in their personal capacities by the curators of Corporate Money Managers (CMM) to repay the monies, did not oppose the matter.

It is the second biggest claim yet in South Africa to be granted against directors in their personal capacity.

The curators are also going ahead with a criminal case against Vermaak and some of the other directors who have been involved with CMM. They are being charged with alleged fraud, theft and the contravention of numerous acts, says Henk Strydom, who is one of CMM’s curators.

Vermaak and Van Zyl are only two of the 19 directors who had been summoned to return money to CMM’s investors. Five others have not reached a settlement with the curators and will — as happened to Vermaak and Van Zyl — still appear in court for an order to be made against them.

CMM’s directors are being held jointly and separately liable for the loss of R1,1 billion suffered by investors in the string of intricate transactions which were conducted by about 26 companies.

The curators allege that the directors who were involved in the companies used investors’ money for their own benefit.

Vermaak got involved with CMM while he was CEO of Allegro Bridging, a subsidiary of the listed African Dawn company.

Allegro used funds from a CMM investors’ trust to provide financing for dubious property transactions, property developments, or for loans to companies which had been in financial difficulties. This eventually led to losses for investors because the chances had been slim that the loans would ever be repaid.

Despite this, 11 companies of which Vermaak had been the CEO or a director levied management fees, and instead divided the “interests” which should have been derived by investors, between the directors. The losses suffered were concealed by issuing worthless debentures between associated companies.

Allegro’s involvement with CMM was revealed after CMM was placed under curatorship in April 2009.

Vermaak was appointed as executive head of ASA in December 2011. Instead of serving seven years in this position, he was suspended after seven months as a result of widespread mismanagement, dishonesty and poor work performance.

The court case against the directors of CMM and associated companies started on Monday and has been placed on the court roll until May 29.

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