ELAB­O­RATE STRUC­TURES PUT IN PLACE TO OB­SCURE THE FLOW OF MONEY

Weekend Argus (Saturday Edition) - - GOODPASTIMES - SEE COL­UMN ON PAGE 3

claim to the prop­erty and con­tinue col­lect­ing rent.

When Per­sonal Fi­nance re­vealed in Au­gust that fi­nan­cial ser­vices com­pany Dy­namic Wealth was de­mand­ing that Absa make good on any losses on R230 mil­lion it had chan­nelled into CMF, Absa re­jected the claim.

Rus­son said Absa had “ful­filled the func­tion of clear­ing agent and the func­tion of cus­to­dian”.

Dy­namic Wealth, mean­while, is also fac­ing an FSB ap­pli­ca­tion to place it and var­i­ous of its en­ti­ties un­der cu­ra­tor­ship, based on its in­vestor clubs and in­vest­ment port­fo­lios that the FSB be­lieves are un­reg­is­tered col­lec­tive in­vest­ment schemes.

It was from one of th­ese port­fo­lios that Dy­namic Wealth in­vested R230 mil­lion in CMF.

At the time, Rus­son said Absa ap­proved all the as­sets when they were in­cluded in the CMF port­fo­lio. In do­ing this, Absa re­lied on the Cisca-re­quired credit rat­ings of the in­stru­ments, which were pro­vided by an ap­proved rat­ing agency, namely Global Credit Rat­ings.

In­cluded in the at­tach­ments to Van Rom­burgh’s re­port is an agenda for a meet­ing on June 25, 2008 be­tween CMM and Absa Cap­i­tal In­vestor Ser­vices. The agenda re­flects ques­tions about non-credit rated prom­is­sory note is­suers, in­clud­ing Thun­der­struck; the pay­ment of prom­is­sory notes into in­cor­rect bank ac­counts; and prob­lems with iden­ti­fy­ing in­stru­ments that were is­sued for with­drawals from the cash as­sets held by Absa on be­half of in­vestors.

In the wake of the CMM re­port, Chanetsa says while the FSB seeks to put mea­sures in place “to pro­tect in­vestors’ in­ter­ests, it is im­pos­si­ble for us to an­tic­i­pate all pos­si­ble con­tra­ven­tions or at­tempted cir­cum­ven­tions of our mea­sures.

“For in­stance, there is of­ten a grey area be­tween in­spired in­dus­try in­no­va­tion and sub­tle cir­cum­ven­tion. We are con­strained to strike a bal­ance be­tween a proac­tive as against a re­ac­tive ap­proach.”

He gave the as­sur­ance that new mea­sures are now be­ing in­tro­duced, in­clud­ing a move to limit the pro­lif­er­a­tion of white la­bel funds. Con­sid­er­a­tion is also be­ing given to bring­ing credit rat­ing agen­cies into the reg­u­la­tory net and mak­ing in­creased use of on-site vis­its to fund man­agers and their third par­ties be­fore and af­ter ap­proval.

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