Bail for Ponzi accused

2020-04-30 14:00
A pamphlet of the X-Traderes Market.

A pamphlet of the X-Traderes Market. (Supplied)

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Businessman Sandile Clever Sibiya, of Supreme National Stockholdings (SNS Holdings), was on Wednesday granted R100 000 bail on appeal by the Pietermaritzburg high court.

Last month he was denied bail by the local magistrate’s court, while his wife Nomalizo Prudence Sibiya was granted R50 000 bail.

The couple, who allegedly defrauded investors of over R500 million, face 14 counts of fraud, and counts of contravening the Bank Act and the Financial Advisory and Intermediary Services Act for allegedly operating like a bank and a financial advisory service.

His advocate, Louis Barnard, took the court through the evidence heard at the bail application. The investigating officer had told the court that the promoters of a typical Ponzi scheme generally promise “unrealistic high financial returns” that are not available through traditional investments. The promoter raises money from new investors to make those payments.

A Ponzi scheme, added Barnard, is a fraudulent financial activity in which the perpetrator promises consistent, above market guaranteed returns on an investment. However, in reality it simply involves paying early investors out of the payments from new investors, in essence “robbing Peter to pay Paul”.

Thus, it can’t be suggested the couple operated such a scheme because they used the monies received to set up a successful business which still would have been operating and paying partners, if its dealings were not interfered with.

The couple bought more than 80 trucks, which each had the capacity to earn a gross income of R1 million a month. They also employed more than 60 people and for the 2019 financial year, they paid SARS R2,266 116,27. Therefore, it can’t be said that Sibiya and his wife “stole from Peter to pay Paul”.

It was only when they were advised that their way of doing business may be in contravention of the Bank Act that they had to restructure it, which caused a cash flow problem.

Also, the couple operated the business project not in a “reckless fashion” but on legal advice and on contracts drafted by legal experts.

“It is therefore submitted that the fraud charges levelled against the appellant [Sibiya] is non-existent and will in all likelihood be withdrawn at some stage.”

The charges are enough to drive Sibiya to flee and leave behind his wife, two young children, business and properties.

Barnard said Sibiya has not done anything to justify a finding that he poses a flight risk.

For the state, advocate Sandra Sene­kal, said bail is opposed because Sibiya is considered a flight risk and would interfere with state witnesses.

She said the couple’s two properties, in Pietermaritzburg and Sandton, appear to be neglected. Senekal added that Sibiya faces serious white collar crimes which may, if he is convicted, result in a substantial term of imprisonment.

Read more on:    pietermaritzburg  |  sandile clever sibiya
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