Michal Calitz/Impact Financial Consultants ordered to repay R10 m

THE AMOUNT financial adviser Michal Calitz and/or Impact Financial Consultants must repay investors who on his advice invested in the Relative Value Arbitrage Fund (RVAF) has increased to more than R10 million.

This follows two further determinations by the ombud for financial services providers (Fais) Noluntu Bam against Calitz and/or Impact Financial Consultants.

To date, Bam has issued 16 determinations against Calitz and/or Impact Financial Consul- tants related to advice given to clients to invest in RVAF, which is in liquidation. The fund collapsed after the fund’s manager and trustee Herman Pretorius committed suicide in July last year after shooting dead his business partner.

Bam this week ordered Calitz and/or Impact Financial Consultants to repay Martha Carstens the R1 649 500 she invested in RVAF. There is a R800 000 jurisdictional limit on the value of the orders the Fais ombud may issue.

Bam said the investments by Carstens comprised smaller amounts spread over a number of years and accordingly comprised separate and distinct causes of action on their own.

Carstens made 22 investments in RVAF between August 2008 and May 2012. Calitz argued the loss did not arise out of any risks taken but was directly attributable to one person’s fraud.

In another determination published last week, Bam ordered Calitz and/or Impact Financial Consultants to repay Erika Kruger R800 000.

Kruger invested R900 000 in the MAT Abante UK Relative Value Arbitrage Fund.

She was led to believe it was a safe investment with excellent growth prospects and distinctly separate company but after Pretorius’ death learnt it was controlled by Pretorius and therefore part of his estate.

Kruger agreed to forego the amount of her investment exceeding the R800 000 jurisdictional limit of the Fais ombud’s office.

She made the investment in what she believed was an international investment after the sale of her immovable property in August 2010.

Bam said there was no evidence the funds were ever invested offshore or in a separate fund or entity.

She said the application form and bank account details into which Kruger was to deposit the funds were identical to the documents used in all other RVAF matters before her office.

Bam said Kruger deposited the funds into the South African bank account of RVAF on the basis of the instructions and forms provided by Calitz.

She said the Abante Group profile brochure provided to her office by Calitz reflected that the MAT Abante UK was domiciled in Guernsey in the Channel Islands; the client administration was performed by MAT Securities and the fund administration by a South African administration company based in Johannesburg; the Royal Bank of Scotland performed the custodian function; and all payments must be made out to MAT Securities.

Bam said her office would not expect to see the funds deposited into a South African bank account, much less the exact same account used for RVAF. “The breach of the basic principle of separation of funds in inexcusable,” she said.

Calitz said Kruger specifically requested that monies be invested with MAT Worldwide.

Bam said Calitz wished to attribute the loss to one person’s fraud yet it was his actions in contravening the most basic elements of the Fais Act that led to Kruger investing in this investment.

She said no adviser would have recommended this product as a suitable component of any investment portfolio had they exercised the required due skill, care and diligence.