BHI Trust: provisional trustees trying to find and recover missing funds

The joint provisional trustees of BHI Trust are moving to find and recover the missing funds that saw about 2 000 investors lose about R3 billion where money from new investors was allegedly used to pay interest to earlier investors.

The trust was provisionally sequestrated on 25 October in an application brought by Cawood Attorneys. Cawood Attorneys represents about 100 investors and brought the application for the provisional sequestration of BHI last week in an ex parte hearing, (where only one party’s evidence is heard to ensure that the money in the bank is preserved).

The trustees, Sumaya Mohamed Ali and Gert De Wet of BHI Trust, that was placed in provisional sequestration last week on Tuesday received consent from the Master of the High Court to appoint legal and forensic experts to protect, preserve and proceed with the recovery of missing funds from the BHI Trust by using any permissible legal avenues.

Mohamed Ali and De Wet received their certificate as Master-appointed joint provisional trustees on 30 October and then applied to extend their powers from mere caretaking of the Trust to protect, preserve and recover investors’ money in line with section 73(1) to (3) of the Insolvency Act.

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Financial information, statements and enquiry

They will now apply to the Master to request and obtain financial information and bank statements that would otherwise not be available for investigation. In addition, they will request the Master to summons various identified individuals, who could possibly shed light on the nature of the dealings of the Trust.

This enquiry process will shed more light on claims against additional individuals and/or legal entities at the heart of the scheme.  The trustees said in a statement if their application is successful and they complete the appointment of the legal and forensic experts, they will be able to identify and where applicable ask the court to seize or freeze funds third parties hold.

“The recovery of funds will be for the benefit of the investors and creditors of the BHI Trust,” they said. Moneyweb reports that only R,78 million is left in the Trust’s bank account according to a statement issued on Thursday by Cawood Attorneys. Nedbank has been asked to pay these funds over to BHI Trust’s estate account.

Individuals and trusts are placed in sequestration while companies are placed in liquidation. A trustee is appointed for trusts and individuals while a liquidator for companies.

BHI Trust trustee and fund manager, Craig Warriner, recently handed himself over to police, admitting to fraud. He appeared in the Palm Ridge Magistrate’s Court south of Johannesburg and was remanded in custody, according to Moneyweb.

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Financial Sector Conduct Authority also investigating

The Financial Sector Conduct Authority (FSCA) is also investigating the Trust, as well as Warriner and others and says it is aware of media reports about alleged criminal charges against Warriner as well as his arrest on charges of fraud and theft.

The FSCA says the focus of its investigation is on the activities of the BHI Trust and the possibility that it was conducting unauthorised financial services and an unauthorised collective investment scheme. The financial services watchdog confirmed that none of the parties under investigation were authorised as financial services providers or licensed as collective investment schemes managers.

In addition, the FSCA extended its investigation to include regulated entities that may have promoted the products of BHI Trust. If this is so, it is a serious contravention of financial laws and these entities may be subject to a fine, debarment of individuals from the sector who were involved and, possibly, removal of their licence.

The FSCA often warns consumers about the dangers of conducting financial services business with unauthorised entities.

“Conducting unregistered financial services is a criminal offence. When investors buy financial products and services from entities that are not licensed as financial institutions, they do so at their own risk and they do not enjoy the protection and risk mitigation measures associated with appropriately licenced and authorised entities.”

The FSCA says licensed financial institutions are subject to strict laws and oversight to ensure that the businesses are well governed and treat their customers fairly.

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More information for creditors and investors

Investors and creditors of the Trust can find up-to-date information about the progress of administration of the Trust and the prescribed statutory claim forms by clicking this link here. Creditors and shareholders can contact the joint provisional trustees exclusively on info@insolventbhi.com. The first circular from the trustees to creditors is available here.

The return date for the final sequestration of the Trust is set for 7 February 2024.