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How is it that presumably sophisticated investors with large amounts of money to invest – one allegedly lost R90m – and astute bank managers handed over big sums to the Louis Group? This is a question that I always find myself asking when reporting on schemes that have wiped out savings and left professionals red-faced after falling for the charms of individuals running these operations.
The Louis Group is in the spotlight following the collapse of property syndicates into which individual investors from South Africa, the UK and elsewhere in the world ploughed cash. At least 10 different banks in five countries fell over themselves to lend money to Louis Group companies.
In a joint liquidators’ report into about 120 Louis Group companies registered in the Isle of Man, the Louis Group has been accused of “highly improper” business activity – which led to the downfall of its property investment schemes. PricewaterhouseCoopers has referred to a “taint of illegality across the vast majority of businesses carried out by this group in the Isle of Man”.
The first ingredient is, as you might expect, the lure of above-average returns. Investors were promised “high returns from property backed investment with support from the Louis Family when needed”, said the liquidators. The banks, no doubt, were impressed with the quality of properties in the Louis Group stable, which ranged from hotels to office blocks in several countries.
The other part of the equation was persuading investors that this was an above-board operation. The liquidators said in their report: “Promotional materials and investor testimony show us the sales pitch was compelling.”
One investor told BizNews that a key part of the proposition was trust. The Louis family emphasised its “Christian values” and the fact that it had been in business for generations and was a sizeable operation. This all contributed to the impression that its schemes did not fall into that “if it’s too good to be true, it probably is” category.
The publicly available marketing material of the Louis Group and its website reveals that it does indeed emphasise spirituality in its business dealings. So much so, that I can’t help wondering why it is that at least one of their fold has not ended up in the priesthood or a convent.
Under its values and mission, it emphasises it is “Christian-centred”. It says: “We desire to live and behave according to biblical principles”. The company’s primary mission, meanwhile, isn’t generating returns for shareholders. It is to “adhere to Christian values and principles”.
The Louis Group drives home this point, over and over, in a series of articles published in the media. It provides links to these pieces, which include detailed reports by the Financial Mail and Independent Newspapers’ Business Report.
The Financial Mail said this of the Louis Group, in 2007: “A prominent privately owned property and financial services company in SA, Louis Group’s success is due in no small part to the way in which it holds itself accountable to its history, the family which owns it and, most importantly, to God.”
It quoted patriarch Colia Louis saying that guiding the Louis Group is a lot like building a puzzle. “The trick to putting the puzzle together is wisdom, experience and God’s blessing,” said Louis.
The Financial Mail, which is perhaps better known for its incisive financial analysis than reflections on religion, told its readers: “God is unquestionably the biggest influence” in Louis’ life.” The publication spoke about how the five sons in the Louis Group – Michael, Brian, Alan, Dean and Emile – pull together in stormy times thanks to “faith in Christ”.
— Bruno (@CPT_Investor) September 1, 2014
Further reinforcing the focus on Christian principles, the Financial Mail said of oldest brother and CEO Alan Louis, under the heading “Living Christian values”: “Louis Group strives to be a Christian-centred organisation which uses the Bible as its policy document.” It included this line from Alan saying: “It’s about running this company based on the laws of the Bible as best we can.”
Business Report was also hugely impressed with the Louis Group’s focus on religion. In a joint report it compiled with the Corporate Research Foundation on “Exemplary Leaders”, it said: “While Alan and his brothers, who all work for the Group, have been mentored by their father, it is their Christian values on which they rely for everyday guidance, vision and wisdom.”
Alan Louis, said Business Report, “reads the Bible a lot”. “I draw inspiration from the greatest mentor, the word of God. I find inspiration in how God protects people and guides them through life’s troubles, showing solutions where they are least likely to be found,” he is quoted as saying. There’s more, much more, about the Louis family’s devotion to their Christian way of life, on its website and elsewhere.
Also helping to build credibility for the Louis Group brand are references to a company link to Milo. Apparently the name is drawn from Michel Louis (Milo), though Wikipedia’s entry on Milo says the name is a reference to an ancient Greek wrestler.
A smattering of awards, including for “Social Impact Leadership” from the University of Stellenbosch Business School, add polish to the veneer that the Louis Group is an entity that can be entrusted with your money. Alan Louis’ academic credentials are publicly emphasised, too.
Investors learnt on the Louis Group website that he has a Masters degree (with distinction) and a PhD in commerce. They are no doubt impressed that the family’s “conductor of the orchestra”, as Colia calls him, was chosen to relocate to England to run international operations.
Intriguingly, there is no mention on the Louis Group website – that I could see – of the debacle that has been playing out in the Isle of Man. That leaves me wondering whether confession is part of the Christian faith to which the Louis family members are most closely aligned.
The Louis Group says it has an “extensive retail, office, industrial and residential property portfolio in South Africa, England, Germany and Switzerland”. However, a link to its global property portfolio delivers this message: “We are keeping this space warm for an exciting new project.”
Perhaps the Louis family is waiting for another sign from the heavens before updating its stakeholders? I imagine there’s a lot of knee-work going on within Louis households as they await the results of further investigations, including by the regulatory Financial Services Board in South Africa and the Isle of Man’s Financial Supervision Commission.
Some Louis Group investors – and a few journalists who work for esteemed financial publications – are presumably feeling a bit silly for having fallen for some of the religious spin.
For the rest of us, here’s a reminder: just because someone sits next to you in a church pew doesn’t mean you can trust him or her with your money. If an investment provider is emphasising holy credentials, beware.
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