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The Cape Town masterminds behind the Louis Group property syndicates that have collapsed have reacted with outrage to a liquidators’ report into the real estate schemes.
Alan Louis, who heads the Louis Group, told BizNews this week that his organisation is disputing the contents of the report, which follows a complex investigation. He said the Louis Group has commissioned its own forensic investigation into the matter.
Liquidators Michael Simpson and Gordon Wilson of PricewaterhouseCoopers earlier this month published a report containing allegations of serious failings in corporate governance, highly questionable transactions and hidden fees and commissions. In addition, the liquidators accused Louis and/or his companies of failing to document or repay money “borrowed” from property syndicates.
More than 700 investors, mostly from South Africa and the UK, have lost huge sums. About 120 separate Louis Group companies registered in the Isle of Man allegedly sucked in more than R1bn from investors.
Investment amounts ranged from about R180 000 to R90m. Investors have been warned to expect very little of their money back. Banks that lent the property syndicates money to buy real estate are being repaid first.
The liquidators have highlighted that it was not possible to analyse every piece of documentation and information relating to the Louis Group. They said there may be information within the Louis Group archives and computer systems “which may add to our understanding and maybe cause us to amend/augment this report”.
@JackieCameronUK your article on the Louis Group shook me to the core. I hero worshiped Allan when I was at school. Shocking.
— Nick van der Leek (@HiRezLife) September 3, 2014
Nevertheless, they examined thousands of files, bank transactions and emails going back over a decade. “Gaining an understanding of the Louis Group has been a significant task for ourselves and our staff,” said Simpson and Wilson in their report.
The matter has been referred to the Isle of Man’s Financial Supervision Commission and South Africa’s Financial Services Board. These two regulatory organisations have confirmed to BizNews that they are investigating this matter. The liquidators were appointed by the Isle of Man High Court in January 2013.
Meanwhile, Alan Louis has warned BizNews that the Louis Group intends to proceed with legal action in connection with an article published about the liquidator’s report earlier this month (see the report: Louis Group property syndicates: SA masterminds accused of “prolonged deception” of investors).
“ We note that you chose to write a first article which is clearly wrong and slanderous, despite the fact that I advised you (in writing) that we will be responding appropriately.
You chose to slander us without awaiting our forensic reply, and according to our solicitors a clear breach of your journalistic ethics, which has caused us damage and for which we will not hesitate to claim extensive damages.
You will see by the attachment <see below> that we have chosen to respond under appropriate measures and have appointed independent forensics to report.
We look forward to objectively testing whether what we say is correct and whether what you wrote is proper and ethical.
When asked for clarity on which aspects of the BizNews report were “wrong and slanderous”, Louis said:
“you will get the full brief from our solicitors on the contents of your first report, but herein we have to include the contents of our commissioned forensic report to show that your journalism was not ethical and libellous. That’s my final word, you will be given every opportunity to prove us wrong.”
Louis did not answer specific questions put to him about the scheme, instead forwarding a copy of an update mailed to Louis Group investors.
In the interests of balanced and fair reporting, BizNews publishes the contents of this letter (which Alan Louis refers to as an attachment) here:
I am writing in response to the Joint Liquidators Report (“JLR”) of August 2014 re the Louis Group’s affairs in the Isle of Man. The JLR was released without notice and during the European Summer holidays, hence the delay in responding to its contents with our views on the extensive information that it presents. We have not had access to pertinent information for over 20 months, so we need time to examine and collate this information as best we can in order to formulate our response.
To ensure that we give an objective answer, we have appointed independent experts to assist in a forensic reply. This extra step is necessary since the JLR, like their first flawed report, contains a substantial number of inaccurate and false statements. More importantly it withholds key facts. This independent investigation which we have commissioned will speak for itself on the information we present.
Many of the conclusions of the JLR are written with a gross bias that goes beyond making factual statements. Instead, they make inflammatory insinuations that are simply untruthful. We are confident that the outcome of the forensic report will highlight these issues. Equally, errors that we and our teams have made will also be acknowledged.
Let me stress that regardless of the outcome of the forensic report we have commissioned, we recognize that many people who invested in Louis Group Isle of Man structures have sustained financial loss. It was always the desire of Louis Group to use property as a vehicle to benefit clients and until the beginning of the financial crisis in 2008 we had not made a single loss on a property investment in our entire history. The fact that some of our clients have indeed suffered loss is deeply painful for my family and me. This pain is exacerbated by the fact that this entire matter was wholly unnecessary and precipitated by an initial unqualified report that was written by the same individuals who are now acting as liquidators over companies which should and could have been preserved. In the process, they have also taken over £1.7 million in fees.
In conclusion, there may still be an opportunity to prevent more damage – and in many individual cases to recover more than the JLR predicts. This will be highlighted in the forensic report. Our efforts to date to assist in minimising the fallout have been totally frustrated, but the JLR at least now reveals the perspective and strategy and affords everyone (including ourselves) the opportunity to respond and act.
We thank you for your patience while the Report is being prepared.
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