Finance scheme falls foul of Act

CHOICE LIFESTYLE: RESERVE BANK CONFIRMS MATTER NOW WITH THE NPA

No evidence that Free Agape Enterprises or Choice Lifestyle were involved in any legitimate business.

The South African Reserve Bank (Sarb) has confirmed that controversial bridging finance scheme, Choice Lifestyle Change, was acting in contravention of the Banks Act. The scheme, which collapsed in December last year following the death of its director, Maarten Stapelberg, had been offering members returns of up to 16% per month.

“The investigation into Choice Lifestyle was finalised, with the final report by EY (temporary inspectors) concluding that the entity contravened the Banks Act,” Sarb spokesperson Ziyanda Mthsali said.

But the Reserve Bank will not be in a position to take the matter any further itself.

“In view of the fact that there are limited or no funds available, the operator is deceased, and that business rescue proceedings have been initiated, any further action by this office would have been superfluous,” Mtshali said.

“In addition to the matter having been reported to the National Prosecuting Authority (NPA), we have instructed EY to report the contravention of the Banks Act and have closed the matter.”

The Financial Sector Conduct Authority (FSCA – previously the Financial Services Board) has confirmed that it too referred the matter to the NPA. This followed information it had received that Choice Lifestyle was operating as a financial services provider without being licensed to do so.

The NPA did not respond for comment, but Moneyweb has established that the asset forfeiture unit is looking at the matter. The business rescue practitioner involved in the matter, Herman Bester, has also met with the NPA to attempt to trace transactions and secure assets.

Bester is an independent practitioner who was appointed by the executrix of Stapelberg’s estate to establish whether Free Agape Enterprises – Choice Lifestyle’s parent company – could be saved from liquidation. However, his investigations into the company have found no evidence that Free Agape Enterprises or Choice Lifestyle were involved in any legitimate business at all.

He has identified as many as 11 bank accounts in Stapelberg’s name, but none had balances of more than R80 000. This is despite Stapelberg’s associate in Pholokwane, Wouter Botha, having revealed to Choice Lifestyle members that the scheme had received R370 million in deposits.

Bester is now trying to establish where the money went, and what assets may be recovered.

“Through the NPA, I should be able to get the Financial Intelligence Centre (FIC) to assist with the investigation into specific bank transactions and other aspects of the investigation in general,” Bester told Moneyweb.

“We have prepared a list of suspicious payments out of investor funds, including ATM withdrawals of R750 000, and payments for building materials and furniture.

“The details of these transactions will be determined with the assistance of the FIC, thanks to the involvement of the NPA,” Bester said.