Pinnacle investors should assess trend
PINNACLE’s share price recovered slightly on Tuesday after a catastrophic plunge on Monday as news emerged that the company had been mentioned in a charge sheet in which a senior South African National Defence Force (SANDF) member is accused of fraud.
This is the second time in two years that the company has been drawn into such allegations.
Although Pinnacle should be commended for informing the market about the circumstances in good time, there is no doubt that its reputation will take a knock.
Management is adamant that the company did nothing wrong, but investors would be wise to be concerned over what appears to be a recurring trend. The SANDF’s Gen Leon Eggers is alleged to have given Pinnacle’s subsidiary, Pinnacle Africa, preferential treatment in the procurement of services.
Its subsidiary, Pinnacle says, networks with its customers and invites them to entertainment and other events at its expense. This is not done in exchange for favours, says the company. But maybe there is too fine a fine line there. A serious review of client-service provider networking relationships is needed.
Although the market can be fickle, fraud is still serious — whether the company manages to recover the lost market cap or not.
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APITEC, the country’s fastest-growing big bank, has posted another set of excellent results.
In the six months to August 31, an additional 648,000 new clients signed up to what one banking advisory group described, with Trump-like hyperbole, as the best bank in the world.
Of course, given all that’s going on at Deutsche Bank, and with Wells Fargo being described as the best bank, it may not be the sort of title to spark worldwide envy.
But whatever the verdict about its operational performance may be, Capitec shareholders will be pleased with the little note tucked away in the bottom of the results narrative. It seems the National Credit Regulator has withdrawn its action against Capitec.
Back in February the regulator alleged that Capitec had contravened the National Credit Act and referred the matter to the National Consumer Tribunal.
Capitec provides no reason for the withdrawal. The note says there are no more referrals pending between Capitec and the regulator, which will be a considerable relief to management and shareholders, given the vigour with which it acted in a case against Lewis.
However, that relief may be premature, given the legal action instituted by Summit Financial Partners over Capitec’s controversial alleged multi-loan practices. The interim results contained no mention of this litigation. Neels Blom edits Company Comment (blomn@bdlive.co.za)
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