10 000 set to lose sav­ings

Di­rec­tor kills him­self as com­pany goes un­der

Weekend Argus (Saturday Edition) - - FRONT PAGE - BIANCA CAPAZORIO

UP TO 10 000 peo­ple, many of them pen­sion­ers, stand to lose their sav­ings and in­vest­ments in Welling­ton-based King Fi­nan­cial Hold­ings which has lost R600 mil­lion of in­vestors’ money.

A Fi­nan­cial Ser­vices Board re­port said the money was lost, and the com­pany’s ac­tions had been “ir­re­spon­si­ble to say the least”.

Yes­ter­day was a tough day for the King fam­ily. Not only was the ap­pli­ca­tion for the liq­ui­da­tion of their com­pany, King Hold­ings, heard in the Cape High Court, but they also buried their brother, Paul King, 49, whose death this week has been at­trib­uted to sui­cide as a re­sult of the com­pany’s fi­nan­cial trou­bles.

It has been re­ported his body was found in a gas-filled car.

Lee-Ann Millin, a re­tired woman who in­vested R2.3m with King Hold­ings, said on three oc­ca­sions div­i­dends had not been paid on her in­vest­ment.

She met the com­pany just be­fore a pro­vi­sional liq­ui­da­tion or­der was granted last month, with the in­ten­tion of with­draw­ing her money, which she said now amounted to R3m. She was not paid and she has not re­ceived div­i­dends for the past two months.

“A lot of peo­ple in­vested in King, around 10 000, but when you think about how many peo­ple are in each fam­ily, up to 40 000 peo­ple could ac­tu­ally be af­fected. We have no idea where we stand and I un­der­stand that one of the direc­tors com­mit­ted sui­cide this week. I’m sorry for that, but a lot of in­vestors prob­a­bly also want to com­mit sui­cide now, too. It’s just too ter­ri­ble.”

The com­pany was placed un­der pro­vi­sional liq­ui­da­tion last month fol­low­ing an in­ves­ti­ga­tion by the Fi­nan­cial Ser­vices Board.

The board’s re­port stated that some in­vestors had been per­suaded to take out ad­di­tional mortgages to buy more shares in the com­pany, which the FSB de­clared “com­mer­cially and tech­ni­cally in­sol­vent”, leav­ing in­vestors in “fi­nan­cial dire straits”.

The action in the High Court yes­ter­day would have al­lowed the com­pany to ar­gue why the pro­vi­sional liq­ui­da­tion or­der, brought by EY Zera and five oth­ers, should not be made per­ma­nent.

Judge An­dre Blig­nault, how­ever, post­poned the ap­pli­ca­tion un­til next week.

Week­end Ar­gus has learned that the ap­pli­ca­tion was post­poned be­cause of an in­ter­ven­ing ap­pli­ca­tion filed early yes­ter­day stat­ing that a pos­si­ble buyer had been found for the com­pany.

Ear­lier in the day, sev­eral smaller sub­sidiaries of the main hold­ing com­pany, King Hold­ings, were also placed un­der pro­vi­sional liq­ui­da­tion.

Up to 10 000 peo­ple stand to lose their sav­ings and in­vest­ments in the com­pany, many of them pen­sion­ers.

Dr Paul King, who qual­i­fied as a vet­eri­nar­ian, was yes­ter­day de­scribed by his brother Adrian as “highly in­tel­li­gent” and a “good guy”. King said his brother had taken the fail­ure of the com­pany very se­ri­ously.

“He was very suc­cess­ful. The busi­ness drama and the fact that he started los­ing con­trol was just too much for him, he couldn’t han­dle it.”

King said his brother had at­tempted sui­cide two weeks ear­lier and had been in a clinic since then, but was re­leased last week­end. He was found dead in his car near the fam­ily’s farm on Mon­day.

He was cre­mated yes­ter­day and the fam­ily held a pri­vate ser­vice in their home. King is sur­vived by his wife and four chil­dren.

Adrian King said they had not op­posed the liq­ui­da­tions of the smaller com­pa­nies, Edrei Prop­erty In­vest­ments Alto, Kingvest and RZT Zelpy, brought in the High Court yes­ter­day. The Edrei liq­ui­da­tion re­quest was brought by Ned­bank, while liq­uida­tor Rynette Peters brought the other applications. Pro­vi­sional liq­ui­da­tions have al­ready been made by Ned­bank for an amount of R140m and by construction group WBHO for R30m.

Adrian King con­firmed yes­ter­day that they had been ap­proached by prospec­tive buy­ers for the hold­ing com­pany, King Hold­ings, which for­merly traded as Biz Africa. De­spite the trou­bles, there was still “good value” there.

The King Group was es­tab­lished by Adrian King in 1996, at first of­fer­ing ad­vice on in­sur­ance prod­ucts. In 1997, Stephen King joined the com­pany and Paul King joined in 2002.

The com­pany started of­fer­ing in­vest­ments in com­mer­cial and res­i­den­tial prop­er­ties to their clients. Their first share of­fer­ing was made in 2004, and in 2008, when the group started ex­pe­ri­enc­ing cash flow prob­lems, they in­vited their share­hold­ers in sub­sidiary com­pa­nies to con­vert their shares to shares in King Hold­ings.

The com­pany has more than 90 smaller sub­sidiaries, which the FSB said in their re­port were in­dis­tin­guish­able from one an­other.

“The King group of com­pa­nies all op­er­ated from the same premises and were run by the same in­di­vid­u­als. The King broth­ers stated that they treated all the com­pa­nies as one.”

In some cases, clients were told they could earn up to 30% in­ter­est an­nu­ally on their in­vest­ments. The FSB re­port states that in­vestors were told their in­vest­ments were se­cured.

How­ever, they could find no ev­i­dence of se­cured bonds dur­ing their in­ves­ti­ga­tion.

The re­port stated that clients’ money had been “mis­ap­pro­pri­ated” and that they had been mis­led as to the safety of their in­vest­ments.

Other ir­reg­u­lar­i­ties in­di­cated in the re­port were that shares had been sold without a prospec­tus, and be­fore the com­pany was made pub­lic. In ad­di­tion, more shares were sold than was pre­vi­ously in­di­cated to in­vestors and the com­pany could not pro­duce au­dited fi­nan­cial re­ports.

ADRIAN KING: Op­posed the liq­ui­da­tions of the smaller firms.

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