Metsi Pepa Developers dodge probe into fraud allegations - Property | Moneyweb

Metsi Pepa Developers dodge probe into fraud allegations

An increasing number of investors in the failed Metsi Pepa development near Potchefstroom in the North West province are contemplating criminal and civil charges against developers Nicola and Jaco Prinsloo. This after the couple sold the sprawling farmland earmarked for the development to government, allegedly for R39m, according to documents obtained from a deed search in the Pretoria office.

In return, they are offering investors 40c in the rand with a promise of further funds should their planned legal action against what they call “the professional team” be successful. The team comprises, among others, the engineers, architects and town planners that were employed to work on the project and who have been blamed for its failure.

According to records in the Deeds Office, the farm consisted of nine demarcated areas, seven of which were sold to the Department of Rural Development for the total sum of R39m. These properties were bought on June 27 2011 and were registered on August 29 2011. Another demarcated area was sold to an entity listed as MI Chiboo Farming (Pty) Ltd. According to the title deeds, this area was sold for R4m on September 13 2010 and was registered on March 10 2011.

There is a segment of the farm for which no deed of sale can immediately be traced.

Moneyweb has sent a detailed list of questions to the Prinsloos and their attorney Johan Botha of Botha Geldenhuys Incorporated asking them to confirm the sales reflected by the Deeds Office. They declined the opportunity to comment, saying only: “Should we not comment on the contents of your e-mail of aforesaid date, must it not be construed [sic] as an acknowledgement of the particulars thereof but rather seen as a denial of the entirety of contents of your aforesaid mail. Our clients reserve the right to react upon your allegations as stated in your aforesaid mail if the necessity arises.” Botha says the case is sub judice pending legal action.

Earlier this month Nicola Prinsloo informed investors she was planning to sue “the professional team” whom she blames for scuppering the project. Previously Moneyweb reported that some of the companies involved in the project included Als Roads, which had threatened to sue the development for outstanding monies. The matter was heard in the North Gauteng High Court and a settlement was reached, the details of which remained confidential. Als says its account has been settled recently upon the sale of the land.

The engineering firm Fick Hollenbach and Partners from Potchefstroom, which was also blamed for erecting tented structures that violated restrictions imposed by the Department of Water Affairs, was exonerated by the Engineering Council.

Several independent sources have told Moneyweb that the trouble began when Water Affairs and the Blue Scorpions found that the restrictions imposed in terms of the environmental impact study on the farm had been violated. It has also been alleged that Jaco Prinsloo removed reeds from the wetland area of the farm which was in violation of the law.

Initial calculations gleaned from an interim audit in 2008, revealed the money received from investors amounted to around R18m, excluding interest. At least three investors Moneyweb spoke to indicated their determination to recoup the full amounts invested with interest, saying the 40c in the rand offer is an insult. One says he/she will in the interim settle for the offer and try to recover the rest by laying criminal charges against the Prinsloos.

Moneyweb has been unable to obtain a final reconciliation of how the R18m was spent, despite asking both Cherie Eilertsen of Platinum Planet, which marketed and sold properties on behalf of the developers/ principals and Nicola Prinsloo for this information.

During a site visit to the location in February 2011, an investor said they were told by Eilertsen and Nicola that they would be issued with share certificates as a gesture of goodwill, but this never materialised. The offer was backed up by a letter from Botha.

In a letter dated September 23 2011, Botha made the offer of 40c in the rand. He also informed investors that the developers planned to proceed with legal action against the professional team, requesting permission from stakeholders to do so. The letter states that the Prinsloos hope to further reimburse investors with the proceeds of funds recovered should they succeed in successfully suing the team.

The letter further states: “You are hereby requested to accept the above mentioned offer of payment of 40c out of every rand in writing by no later than September 30 2011, and furthermore to undertake in writing your full support to institute legal action against the professional team.” The letter also undertook to start paying investors during the first week of October.

Several investors have indicated they will consider laying charges if this agreement is not honoured. Another has indicated he is not interested in pursuing the professional team as his contract was with Nicola Prinsloo who had in fact recruited the team.

On Wednesday afternoon an SMS to investors from Platinum Planet, advised them not to sign any offers on Metsi Pepa. “We have retained the services of BMV Attorneys and Adv Verster with a view to obtaining more info/better offer. A meeting with Metsi attorney Johan Botha has been set for Tues 4 October. Mr Johan Botha has given an irrevocable undertaking not to disqualify any investors whose acceptance/consent letters do not reach them by (the) 30 September (deadline). Platinum.” Eilertsen’s legal counsel, Antoon Botha, has confirmed the authenticity of the SMS. He said in an e-mail to Moneyweb: “As mentioned to you, Platinum is not claiming to act on behalf of ALL investors. There are however various investors whom have given Platinum Planet a mandate in this regard.”

In recent months Moneyweb has received numerous e-mails asking the same as investors have been unable to reach either Eilertson or her company, both of which have come under fire for their handling of the matter. At least two investors have spurned Platinum Planet’s offer to negotiate on their behalf, saying they want nothing to do with Eilertsen. Antoon Botha says the SMS was in response to a number of queries from other investors.

Eilertsen has maintained throughout that Platinum had at all times acted within its mandate in marketing the development and that the principals/developers should be held responsible for non-delivery. Antoon Botha has also indicated that Platinum is still owed a significant amount of money accruing from the development and that this will be addressed in the appropriate forum.


Denny Crane

Denny Crane
It's not me ... yet. Denny Crane from the TV series Boston Legal. Click on picture if you're not sure who he is!