Financial probe lashes investors’ would-be friend
Man behind King rescue ‘inept’
THE MAN tasked with finding an international investor to rescue King Financial Holdings previously worked for the company and was described in a report included in court papers as unable to hold a management position in a corporate environment.
A sequestration order was granted in the Cape High Court this week for Adrian King, founder and director of King Financial Holdings. The company went into provisional liquidation last month but the final liquidation hearing has been postponed twice.
The company is believed to have had 10 000 investors who together invested more than R600 million in companies set up and directed by the three King brothers of Wellington, Adrian, Stephen and Paul.
The King Financial Holdings liquidation case was yesterday postponed to Monday, but in papers filed with the court it is stated that Pierre Groenewald has taken on the task of finding an international investor willing to put R500m into the company.
A contract between Groenewald and the King company indicates that he was initially employed by the company on a contract basis as “co-ordinator: projects” for one month in March 2008 at a salary of R10 000.
Last December, Groenewald signed off on the company’s financial statements as chief financial officer. The statements showed a profit of R53.3m. The Financial Services Board, which started investigating the company in December, found it to be “commercially and technically insolvent”.
Furthermore, an analysis by a company called Phoenix Developments in March – in order to “ascertain the most cost-effective software system for each business unit” following a restructure – found Groenewald to be lacking in the skills required to manage the finance department.
In its recommendations, Phoenix suggested that “Pierre Groenewald be replaced as head of finance by someone who can introduce the necessary discipline and procedures required in a corporate financial division. Based on the information which I have obtained, it is dubious whether Pierre possesses the ability to hold a management position in a corporate environment”.
The analysis, conducted by Professor Kenneth MacGregor, was done by interviewing several staff members. It found that while Groenewald “claimed there was a plan to ensure that audits meet the deadline… it is doubtful if a plan does exist”.
In his interviews, Groenewald remarked that the reason he was in finance and not in a product planning or corporate strategy function was because “this is where they put me”.
He also said he was “not interested in bookkeeping but numbers”.
MacGregor’s report also said the company relied excessively on Excel spreadsheets using complex formulae that many members of the finance department could not understand. It also stated that there were no “books” for two of the companies, including King Financial Services.
Meanwhile, a group of investors met this week to sign a document requesting a speedy conclusion to the matter.
Liquidator Rynette Pieters, of Independent Trustees, circulated a document to shareholders this week explaining the complex situation.
“Investors would appear to hold shares in and have loan claims against King Holdings and many of its subsidiary companies,” the document said.
The liquidators were trying to determine in which companies investors held interests.
“It is at this stage impossible to comment on the prospects of a return to investors. In any event, certain investors may be better invested than others,” Pieters said.
She said claim forms would be circulated to investors within the next month and a telephone line had been established to deal with investor queries.
Investors can call 021 864 2136 if they have queries about their investments.