Cape Town - An independent review has found no evidence of executive misconduct or breaches of governance rules and policies by real estate investment trust (REIT) Resilient [JSE:RES], its executives and the Siyakha Trusts.
Resilient had commissioned the review - led by former auditor general Shauket Fakie and assisted by forensic specialist adv. Tony Ferreira - to look into what the company called "extensive negative allegations and commentaries" contained in publicly circulated reports, which questioned the integrity of transactions and movements in listed shares in Resilient and listed companies in which Resilient is invested.
A research note by 36ONE Asset Management, for instance, claimed that "high valuation of the companies … arose from insider-directed and insider-related transactions in group companies’ shares to deliberately inflate share prices and volumes traded". The company was also accused of artificially inflating its income and net asset value by 36ONE.
Resilient's share price slumped in February despite statements by the REIT claiming investors have nothing to fear.
At 12:34 on Wednesday, Resilient shares were trading at R66.22, up 2% on the day.
In a shareholder announcement Resilient said the independent review found no evidence of any market manipulation or insider trading.
But Cy Jacobs, founder of 36ONE Asset Management, told Fin24 by phone on Wednesday morning that Fakie's review is basically meaningless, because he did not have access to the required trading data that investigations by the JSE and the Financial Sector Conduct Authority (FSCA) have for their investigations into the matter.
"We have not changed our views about the Resilient group of companies," said Jacobs.
Resilient said on Wednesday that its board is mindful of the limitations of the independent review which does not have regulatory powers.
"These limitations include not having access to the full set of records of transactions in Resilient shares on the JSE in order to identify potential insider trading or share price manipulation, and not having the power to compel all parties who may possess relevant information to provide testimony or produce documents," Resilient said.
"However, the board has done all it can to facilitate an appropriately thorough review within these limitations. The board will make the material reviewed and the report provided to it available to the regulators with the objective of assisting with any regulatory investigation. On completion of the regulatory process it is the board’s intention to report publicly."
Resilient said certain allegations against it and its executives, originally derived from "an anonymous email campaign" going back to 2009, periodically resurface.
"At the time, these allegations were investigated by Resilient, by an independent reviewer appointed by Resilient, and by the authorities, and were found not to be substantiated. Mr Fakie has not considered it necessary to reconsider these allegations," said Resilient.
Fakie, meanwhile, has recommended that the board strengthen the perceived independence of the Siyakha Trusts and of risks regarding collective share activity relating to executives.
"The board is studying the recommendations and is committed to taking all steps necessary to restore market confidence in the company and its executives," said Resilient.
"The Resilient board will continue to co-operate fully with any regulatory processes or investigations and will update shareholders regularly."
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