The Net Tightens Around Van Niekerk

He threatens to sue NBFIRA over ‘leaked’ letter containing charges against him NBFIRA expected to give verdict on van Niekerk’s charges Van Niekerk and his lawyers avoid The Business Weekly & Review questions Van Niekerk brought in for hearing at NBFIRA last Friday The Non-Bank Financial Institutions Regulatory Authority (NBFIRA) is expected to give a verdict in a matter in which it had written a letter to controversial former GetBucks CEO David van Niekerk, asking him to show cause why he should not be declared not fit and proper to be a key person or controller of a non-bank financial institution (NBFI) following the mismanagement and collapse of Blue Financial Services under his captaincy. [ihc-hide-content ihc_mb_type="show" ihc_mb_who="1,3,2,4" ihc_mb_template="3" ] But the matter is complicated because van Niekerk is said to be threatening to sue NBFIRA for ‘leaking’ information about charges against him. The Business Weekly & Review has established that as a matter of fact, van Niekerk was brought into the offices of the regulatory authority last Friday where a hearing was conducted to decide the fate of the controversial businessman. This publication wrote an inquiry to van Niekerk’s attorney, Craig Assheton-Smith, a Director at Assheton-Smith Ginsberg Incorporated, asking if indeed his client was called in for a hearing. His response: “Our client has responded to the letter and was afforded a hearing by NBFIRA. Given that the matter is confidential our client is not at liberty to provide you with further information in relation thereto.” Public knowledge However, van Niekerk’s lawyer seems to be concerned by the fact that the matter was reported by this publication and that it seems that the charges which NBFIRA threatened to lay against him had become public knowledge. “The letter of 27 September 2022 addressed by NBFIRA to our client was reported on by you and Kitso Dickson in the Friday 28 October 2022 – 3 November 2022 edition of The Business Weekly and Review and it is stated in the said article that your publication has seen the letter and the contents thereof are described in the article in great detail despite same being confidential,” Assheton-Smith said in response to this publication. What The Business Weekly & Review has further established is that after the article was published, van Niekerk threatened to sue NBFIRA for the “leakage of information”, although a lawsuit is yet to be filed. The Business Weekly & Review asked the attorney whether or not van Niekerk was planning to sue NBFIRA and for what reasons. “No legal action has been brought by our client against NBFIRA,” Assheton-Smith responded. The Business Weekly & Review also sent questions to Boa Ntebele, Head of Communications and International Affairs at NBFIRA, seeking to know about the charges and whether the hearing had occurred as well as the expected date of the verdict. NBFIRA decisions Further, this publication wanted to establish if van Niekerk had indeed threatened to sue NBFIRA and for what reasons. This publication also wanted to know if the lawsuit threat could affect NBFIRA decisions in dealing with matters that affect, involve or implicate van Niekerk. The Business Weekly & Review spoke to Boa Ntebele, Head of Communications and International Affairs at NBFIRA who responded that the Regulatory Authority obtains its mandate and powers from the NBFIRA Act and implements them impartially, without fear and always independently. “The Regulatory Authority regards all information and correspondence with regulated entities and key controllers as confidential, in line with the NBFIRA Act 2016 and, therefore, refrains from responding to your questions regarding its official correspondence with Mr. David van Niekerk.,” she added further. The Charges The former CEO of Blue Employee Benefits Botswana, David van Niekerk, is facing multiple counts in charges that flow from his mangled reputation at the defunct company. NBFIRA questioned how he conducted himself in a manner that the regulator says is inconsistent with the requirements of a key person or a fit and proper person who is a controller of a non-bank financial institution (NBFI). The Authority states that during van Niekerk’s tenure as a controller of Blue Botswana, he conducted himself in a manner inconsistent with the requirements of a key person or fit and proper person who is a controller of an NBFI. Accordingly, the Authority has preferred seven counts of charges against him. According to the NBFIRA Fit and Proper Rule 1.1, financial services laws require persons intending to become controllers and/or key persons of prudentially regulated non-bank financial institutions to be fit and proper and to demonstrate the qualities and traits that will allow a controller, or director to perform the duties and carry out the responsibilities of his or her position with the regulated entity. Rule 6 states that the assessment by the regulatory authority of whether a person is of good character shall include whether the person has engaged in any business practices which are deceitful, oppressive or otherwise improper (whether unlawful or not), or which otherwise discredit his/her professional conduct. Key person The NBFIRA Act states that key person means the chief executive officer, directors, chief financial officer, company secretary, compliance officer, the internal auditor of a company or any person carrying out similar functions. NBFIRA states that in May 2008, a share agreement was signed between Blue Botswana and Nedfin Limited, Nedfin being a Zambian financial services company. The crux of the agreement was for acquisition of Nedfin’s entire share capital at the price of $9 million. According to a letter, it appears that van Niekerk had further represented to the Board that the acquisition would be funded through a loan from Standard Chartered Bank. Thus, on 21 April 2008, the Board of Blue, by way of a resolution, stated that the acquisition of Nedfin would proceed and van Niekerk was authorised to sign all relevant documents on behalf of Blue for a loan not in excess of $9.5 million. Addendum Under this acquisition agreement, van Niekerk is said to have signed on behalf of the purchaser, Blue Botswana. However, an addendum dated 6 June 2008 that included the amendment of the purchase price in the sum of $3,457,259.00 in excess of the initial purchase price was made. According to NBFIRA, this addendum was signed by van Niekerk but was done without relevant authorisation of the Board. It resulted in prejudice to Blue because the price was substantially in excess of the maximum set by the Board in its resolution. According to the particulars of Statement of Offence of Count 2, on 25 March 2021, Blue South Africa was placed under business rescue due to the fact that while van Niekerk was CEO, he - together with his executives - had tampered with the accounts and the reporting thereof in the ledgers. In Count 3, around August 2010, the former Financial Director of Blue South Africa, Grant Chittenden, presented a letter to the Board of Directors in which allegations of irregularities and misconduct were set out against van Niekerk. According to the NBFIRA letter, the Board found van Niekerk’s explanations lacking and consequently initiated an investigation against him. Subsequent to the investigation, a case was registered with the South African Police Service, as well as a forensic investigation conducted in August 2011 while another expert probe was conducted around November 2018. The letter says the 2018 expert report uncovered the fact that van Niekerk and his executive circle had deliberately and intentionally hidden the non-payment of debts to his benefit and kept dual ledgers. Above R20m Count 4 states that with regard to the USD9 million share agreement between Blue Botswana and Nedfin Limited of Zambia signed on 8 May 2008, the practice was that when a transaction is being processes, a due diligence report is to be done, either internally or externally. NBFIRA says for the due diligence report to be done internally, it has to be of the sum of R20,000,000.00 or less while anything above is to be done externally. The fact that the Nedfin transaction was above R20,000,000.00 and that an external due diligence would therefore be required was discussed in a Blue Board meeting on 30 January 2008. However, inspite of this, van Niekerk is said to have failed to ensure that this practice was followed. In Count 5, NBFIRA states that Nedfin, the Zambian financial services company, was owned by the Jonck family, which was represented by Johannes Hendrikus Jonck, a former co-worker of van Niekerk. “Therefore, while you signed the agreement and its addendum on behalf of Blue Botswana, JH Jonck signed on behalf of Nedfin, which brought the purchase price to a total $12,457,259.00. “You had represented to the Board that Standard Chartered Zambia was likely to finance $9,000,000.00 for the acquisition. However, the acquisition was ultimately financed by African Holdings, a company in which you are a guarantor member, and African Banking Corporation. “African Holdings specifically paid for the additional amount reflected in the addendum,” reads the letter that further states that van Niekerk failed, neglected or refused to disclose the fact that he was a guarantor member of AH, and as such stood to benefit from this transaction. Moreover, NBFIRA says, he failed to disclose his relationship with JH Jonck to the Board. On 25 March 2021, Blue was placed under business rescue due to the fact that while van Niekerk was CEO, he - together with his executives - had tampered with the accounts and the reporting thereof in the ledgers. NBFIRA says the misrepresentation orchestrated by van Niekerk resulted in Blue not recovering several outstanding debts, which are now sought by Blue and its appointed business rescue practitioner against van Niekerk in an ongoing matter at the Gauteng Division of the High Court of South Africa [/ihc-hide-content].

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The Net Tightens Around Van Niekerk

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