BHI Ponzi – A widow’s R2.2-million loss
In the wake of losing R2.2 million in the BHI Trust Ponzi scheme, a grieving widow finds herself abandoned by South Africa's financial regulatory bodies.
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By Chris Steyn
A widow, who lost R2.2-million in the BHI Trust Ponzi scheme, has been left bitterly disappointed by the lack of support she has received from South Africa's regulatory bodies.
This after she was informed by the Office of the Ombud for Financial Services Providers (FAISOmbud) that it did not have sufficient information to adjudicate the matter between her and Global and Local Investment Advisors and the BHI Trust.
It was Global & Local founder Michael Haldane who had "highly recommended" BHI products to her – despite knowing that she was "highly risk-averse" and had limited finances in the future.
At the time of her investment in 2019, BHI was already under investigation by the Financial Services Conduct Authority (FSCA), and she suspects it was Haldane's "intention to top-up this fund as it was running into financial peril".
She now faces little to no likelihood of her recovering her investment with BHI as it was placed under provisional sequestration last year – after it emerged that it was an unregistered and unaudited fund and a suspected Ponzi scheme.
It is this widow's belief that Global & Local and its representatives had failed in their professional duty and is liable for her losses, but a letter of demand from her attorneys has gone unanswered.
Meanwhile, she is reeling from the "extremely disappointing" response to her complaint lodged with the FAISOmbud against Global & Local.
"There just seems no accountability at all anymore!", she says in an email to BizNews.
In its letter dated 20 March 2024, the FAISOmbud states: "Although your loss amounted to R2248 462, the relief you seek is R800 000.00, the jurisdictional limit of this Office. We have no proof of how much you invested.
"In support of your complaint, you included a copy of the BHI Statement dated 31 October 2019 and one dated September 2023, respectively; a Letter of Demand by the Salant Attorneys dated 06 November 2023, a Withdrawal Form dated 24/10/2023 and a Notice of Provisional Sequestration of BHI Trust dated 25/10/2023. The Respondent did not provide us with any further information on your investment.
"This Office does not have sufficient information to adjudicate the matter. Despite the documents above, there is little information about the type of investment involved, the amount invested when it was invested, or any record of advice provided by the Respondent. The Office cannot determine whether a recognized financial product is involved and whether the Office has the required jurisdiction to adjudicate. In such circumstances, where no information is available, and the Respondent is not cooperating in providing the information, the Office cannot take the matter further. The Office can only report such a complaint to the FSCA for further enforcement action against the Respondent and close the file."
The FAISOmbud adds: "The FSCA may uncover the necessary information to assess and adjudicate your complaint. However, it must be noted that this process may take some time.
"Should the FSCA investigation uncover the information needed on your specific complaint, you can request the FSCA to provide it. You are at liberty to approach our Office with the information, then we can assess it to determine whether we have the required jurisdiction and whether the information is sufficient to adjudicate."
The widow herself lodged a complaint with the FCSA on 7 December last year (2023), but "never received an acknowledgment let alone a reply" – despite twice, in January this year, emailing requests for confirmation of receipt of her complaint.
In his comment, veteran fraud investigator Bart Henderson – who began investigating BHI when rumours first surfaced of its impending collapse – says: "I've seen numerous letters in the almost exact same off-handed, dismissive vein being sent to other victims of the BHI Ponzi by the Ombudsman."
He slams both the Ombud and the FSCA for their apparent lack of interest in maintaining the rules of honesty and integrity in the regulatory affairs and oversight of the industry under their remit.
"The Nel Commission's first report on its inquiry into the Masterbond debacle, and investor protection in general, highlighted how virtually every rule of honesty and integrity vital to ensuring organisational well-being was transgressed in the collapse of the investment scheme," Henderson says.
"The commission also investigated the problems encountered at the Owen Wiggens Group, Cape Investment Bank, Alpha Bank, Prima Bank and others, revealing critical deficiencies in investor protection, the Companies Act and a lack of independence on the part of auditors.
"I penned that as part of a feature article in Business Day in January 1998.
"Of course, since then we've had many, many cases highlighting how virtually every rule of honesty and integrity vital to ensuring organisational well-being was transgressed in the collapse of companies and investment schemes.
"Very little seems to have changed since 1998. We only need to look at Steinhoff, BHI and the curious case of Banxso happening right under our very noses today.
"What the Ombud and the FSCA are currently demonstrating, to compound this and add insult to the injury, is a seemingly disgraceful, patent level of apathy, lack of empathy and seeming interest, in maintaining the rules of honesty and integrity in the regulatory affairs and oversight of the industry under their remit. Regulatory affairs and oversight, vital to ensuring their industry well-being and investor protection within that industry."
Meanwhile, Craig Warriner, the alleged mastermind behind the BHI Ponzi scheme had his second bail hearing postponed until the 24th of April. This as authorities intensify their investigation into Warriner's alleged financial crimes, which include tax fraud and orchestrating the massive Ponzi scheme that defrauded an estimated R1.18 billion from nearly 220 investors over a decade.
To this Henderson adds: "While it seems to be regularly reported that BHI had only 220 clients and lost R1.1 billion, Global and Local alone had that many clients, perhaps more and R700 million under management in 2017 already. If these clients were combined, they would form a collective investment accounting for the low number of clients being reported and which, of course, would have been illegal. It would also mean a lot more money has been lost than is being reported. The next question that must follow: how many clients; how much money is going unreported in this scandal; and where is that money?"
Read the letter from the Office of the Ombud for Financial Services Providers (FAISOmbud) here:
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