A tale of two investors

ONCE they were business associates who worked together on what has become Namibia’s most scrutinised investment deal in years, but last week Lazarus Kandara and Nico Josea just could not seem to agree in the High Court on how N$30 million in Social Security Commission money had to be invested, how much was supposed to be invested, and if either of the two men had funnelled some of this money into his own pockets or not.

Until Tuesday, the only narratives setting out the movements and distribution of the SSC’s millions after these public funds had been transferred to Kandara’s Avid Investment Corporation, had been provided either by various bank account statements or in oral evidence given by Josea, the Chief Executive Officer of asset management company Namangol Investments. On Tuesday and Wednesday, however, as Kandara spent two days in the witness stand before Acting Judge Raymond Heathcote, he spun his own account of what was supposed to have been done with the SSC’s money, and what he found had actually been done.That version is one that at times appeared to bear only a passing resemblance to what Josea has told the court.JOSEA’S TALE The main threads of Josea’s evidence had been that, after Avid received N$30 million from the SSC on January 26 – which is independently reflected in bank statements before court – Kandara, who was the CEO of Avid, transferred only N$29,5 million to Namangol Investments on January 28.Josea told the court that Kandara asked him to send N$20 million of this money to a South African bank account of a financial trader who had to invest that money, Alan Rosenberg Investment Services, to return N$3,2 million of the money to Kandara, which Josea claimed he then did in cash, and to invest N$6,3 million for Kandara in London.Bank records also show that on March 14, N$14,899 million was deposited in an account held by Josea in Windhoek.This money, the lawyers representing the SSC and the provisional liquidator who last month took control of the affairs of both Avid and Namangol Investments argue, came from Rosenberg, and had originally emanated from the SSC money that Namangol Investments transferred to Rosenberg’s account on January 28.According to Josea, he received the N$14,899 million from Rosenberg, but had also been told by Rosenberg that he was free to use this money for himself, since Rosenberg promised he would also be making a huge payment of close to 18 million US dollars to Namangol as that company’s share in an unusually lucrative financial trade that Rosenberg had claimed he was involved in at that stage.KANDARA’S TALE Kandara’s account started differing from Josea’s as soon as it came to the transfer of the SSC’s money from Avid’s to Namangol Investment’s account seven months ago.Kandara confirmed that he had ordered the transfer of only N$29,5 million to Namangol Investments after the SSC had placed the N$30 million with Avid to be invested.He started off with an explanation that at that stage Josea and his company had linked up Avid with Rosenberg once for an investment of N$10 million that Avid placed with Rosenberg on behalf of the Navachab gold mine.Rosenberg paid back that investment, with N$2 million interest, after only about two months – but by then he had reached an agreement with them that he would guarantee the growth that they wanted on the Navachab investment if they also followed through on their undertakings to raise a further N$45 million to be invested through Rosenberg, Kandara related.By the time that the SSC’s money arrived in Avid’s bank account, the company had only N$2 661 in the bank, Avid’s bank records show.”We were struggling with cash flow, to be honest.We were setting up the office,” Kandara told the court.’NEVER.NEVER’ Kandara said he spoke to Josea, and Josea told him that they would still be getting a N$1-million loan from Rosenberg, who had also promised them an upfront payment of US$1 million before they embarked on the N$45 million investment transaction with him.The result was that he told Josea that he would transfer only N$29,5 million to him; Josea had to add half a million dollars from the money Rosenberg was lending them to that amount before he had to send the N$30 million on to Rosenberg for investment, Kandara said.He also wrote a letter, dated January 28, to Josea to instruct him to invest N$30 million with Rosenberg, Kandara added.He insisted under cross-examination from Josea’s lawyer, Jaco van Rooyen, that he had instructed Josea to invest N$30 million, and not only N$20 million, with Rosenberg.At one point Van Rooyen asked him: “Is it not true that you instructed my client to invest 20 million with Alan Rosenberg?” “Never.Never,” Kandara answered.He also denied that he received N$3,2 million back from Josea, as claimed by Josea.When Acting Judge Heathcote asked him about this claim of Josea, Kandara replied: “My Lord, to be honest, I would like to have it, to be honest.(…) I would like to have it.I was never given that money.”The SSC had agreed with Avid that the N$30 million would be invested for four months, at a fixed interest rate of 14,5 per cent a year, and with a first-rate bank in the form of Standard Chartered Bank in South Africa.According to Kandara, though, he and Josea invested the money for 90 days only.By the end of April, it was supposed to be repaid, but nothing happened, and he started getting worried.THE BUSINESS SOURS Kandara said he was eventually shown a copy of a fax that Rosenberg sent to the SSC.In it, Rosenberg stated that he had received only N$20 million, had returned N$15 million of this, and that the remaining N$5 million would follow.Kandara said when he asked Josea about this, Josea’s reaction was: “Alan is lying.”Josea denied that he received any money from Rosenberg, Kandara told the court.Kandara said he then travelled to South Africa to meet with Rosenberg himself.Rosenberg informed him that there had never been a loan from him to Kandara and Josea or their companies.Rosenberg also told him that he had received only N$20 million from Josea, who then asked within 30 days that N$15 million be returned to him.Josea gradually changed his version, Kandara indicated.He first told Kandara that there had been a settlement in a court case between him and Rosenberg.At a later stage, Kandara continued, Josea added that he had in fact transferred N$23,5 million to Rosenberg to be invested.At a later occasion still, when he confronted Josea with the fact that Rosenberg had received only N$20 million, Josea claimed he had given another N$3,5 million to Rosenberg in the form of a bank cheque.Yet later, he changed this – again – to say he had given the N$3,5 million to Rosenberg in cash, Kandara continued.With an explanation that he did not want to put all their eggs in one basket, Josea said he had transferred the remaining N$6,5 million to London to be invested, Kandara testified.TRUTH AND FANTASY At this point Kandara’s evidence took on a touch of the fantastical.He told the court that part of that money that had supposedly gone to London, was said by Josea to have been invested for a two-week period at a phenomenal 280 per cent rate of return.Josea had said that they would receive N$41,5 million back from that London investment, Kandara claimed.At another meeting with Josea in Johannesburg, he continued, Josea finally admitted that he had received N$15 million from Rosenberg.By then, he claimed that he had drawn the money in cash and invested it in the United States for five years – something that Josea’s and Namangol Investments’ bank records, as well as evidence heard so far in the inquiry, have in the meantime proven to be untrue.Kandara said when he later traced the entire movement of the trade that the SSC’s money was supposed to be invested in, he established that the traders had not been able to place the money in the financial market at that stage, so N$15 million was taken back by Josea.Kandara’s testimony sketched a picture of a major breakdown in the relationship between two one-time business associates, with one – Kandara – in effect accusing the other – Josea – of having perpetrated a multi-million dollar theft against him and his client, the SSC.On one score, Kandara and Josea found grounds for agreement in their evidence, though.Like Josea, Kandara told the court of a world where amazing returns on investments could be realised.Kandara also explained that he still believed that investments placed with the right traders, in the right places – such as “private placements” as part of a “federal reserve trade” that was being used to raise humanitarian aid to rebuild places like Iraq, Egypt and Turkey, he remarked, without further explanation – would routinely realise returns as high as 60 per cent a year, or even the 280 per cent that he claimed had been seen in a two-week period.The SSC’s particular investment was supposed to realise growth of 60 per cent a year, Kandara stated.That would have been N$16 million over a four-month period.None of that has materialised, subsequent events have shown, and on July 12, the High Court placed Avid under provisional liquidation for being unable to repay the SSC’s money.On the same day, Acting Judge Heathcote heard on Wednesday, Kandara sent Josea a number of cellphone text messages.In one, an apparently dejected Kandara appeared to have given up the fight, as he informed Josea that he could keep all the money that Kandara had by then demanded back from him, as well as the money that was claimed to have been invested in London.That message was in Afrikaans, but Kandara closed it off with a few words in English.These were: “God will take care of me.As usual!On Tuesday and Wednesday, however, as Kandara spent two days in the witness stand before Acting Judge Raymond Heathcote, he spun his own account of what was supposed to have been done with the SSC’s money, and what he found had actually been done.That version is one that at times appeared to bear only a passing resemblance to what Josea has told the court.JOSEA’S TALE The main threads of Josea’s evidence had been that, after Avid received N$30 million from the SSC on January 26 – which is independently reflected in bank statements before court – Kandara, who was the CEO of Avid, transferred only N$29,5 million to Namangol Investments on January 28.Josea told the court that Kandara asked him to send N$20 million of this money to a South African bank account of a financial trader who had to invest that money, Alan Rosenberg Investment Services, to return N$3,2 million of the money to Kandara, which Josea claimed he then did in cash, and to invest N$6,3 million for Kandara in London.Bank records also show that on March 14, N$14,899 million was deposited in an account held by Josea in Windhoek.This money, the lawyers representing the SSC and the provisional liquidator who last month took control of the affairs of both Avid and Namangol Investments argue, came from Rosenberg, and had originally emanated from the SSC money that Namangol Investments transferred to Rosenberg’s account on January 28.According to Josea, he received the N$14,899 million from Rosenberg, but had also been told by Rosenberg that he was free to use this money for himself, since Rosenberg promised he would also be making a huge payment of close to 18 million US dollars to Namangol as that company’s share in an unusually lucrative financial trade that Rosenberg had claimed he was involved in at that stage.KANDARA’S TALE Kandara’s account started differing from Josea’s as soon as it came to the transfer of the SSC’s money from Avid’s to Namangol Investment’s account seven months ago.Kandara confirmed that he had ordered the transfer of only N$29,5 million to Namangol Investments after the SSC had placed the N$30 million with Avid to be invested.He started off with an explanation that at that stage Josea and his company had linked up Avid with Rosenberg once for an investment of N$10 million that Avid placed with Rosenberg on behalf of the Navachab gold mine.Rosenberg paid back that investment, with N$2 million interest, after only about two months – but by then he had reached an agreement with them that he would guarantee the growth that they wanted on the Navachab investment if they also followed through on their undertakings to raise a further N$45 million to be invested through Rosenberg, Kandara related.By the time that the SSC’s money arrived in Avid’s bank account, the company had only N$2 661 in the bank, Avid’s bank records show.”We were struggling with cash flow, to be honest.We were setting up the office,” Kandara told the court.’NEVER.NEVER’ Kandara said he spoke to Josea, and Josea told him that they would still be getting a N$1-million loan from Rosenberg, who had also promised them an upfront payment of US$1 million before they embarked on the N$45 million investment transaction with him.The result was that he told Josea that he would transfer only N$29,5 million to him; Josea had to add half a million dollars from the money Rosenberg was lending them to that amount before he had to send the N$30 million on to Rosenberg for investment, Kandara said.He also wrote a letter, dated January 28, to Josea to instruct him to invest N$30 million with Rosenberg, Kandara added.He insisted under cross-examination from Josea’s lawyer, Jaco van Rooyen, that he had instructed Josea to invest N$30 million, and not only N$20 million, with Rosenberg.At one point Van Rooyen asked him: “Is it not true that you instructed my client to invest 20 million with Alan Rosenberg?” “Never.Never,” Kandara answered.He also denied that he received N$3,2 million back from Josea, as claimed by Josea.When Acting Judge Heathcote asked him about this claim of Josea, Kandara replied: “My Lord, to be honest, I would like to have it, to be honest.(…) I would like to have it.I was never given that money.” The SSC had agreed with Avid that the N$30 million would be invested for four months, at a fixed interest rate of 14,5 per cent a year, and with a first-rate bank in the form of Standard Chartered Bank in South Africa.According to Kandara, though, he and Josea invested the money for 90 days only.By the end of April, it was supposed to be repaid, but nothing happened, and he started getting worried.THE BUSINESS SOURS Kandara said he was eventually shown a copy of a fax that Rosenberg sent to the SSC.In it, Rosenberg stated that he had received only N$20 million, had returned N$15 million of this, and that the remaining N$5 million would follow.Kandara said when he asked Josea about this, Josea’s reaction was: “Alan is lying.”Josea denied that he received any money from Rosenberg, Kandara told the court.Kandara said he then travelled to South Africa to meet with Rosenberg himself.Rosenberg informed him that there had never been a loan from him to Kandara and Josea or their companies.Rosenberg also told him that he had received only N$20 million from Josea, who then asked within 30 days that N$15 million be returned to him.Josea gradually changed his version, Kandara indicated.He first told Kandara that there had been a settlement in a court case between him and Rosenberg.At a later stage, Kandara continued, Josea added that he had in fact transferred N$23,5 million to Rosenberg to be invested.At a later occasion still, when he confronted Josea with the fact that Rosenberg had received only N$20 million, Josea claimed he had given another N$3,5 million to Rosenberg in the form of a bank cheque.Yet later, he changed this – again – to say he had given the N$3,5 million to Rosenberg in cash, Kandara continued.With an explanation that he did not want to put all their eggs in one basket, Josea said he had transferred the remaining N$6,5 million to London to be invested, Kandara testified.TRUTH AND FANTASY At this point Kandara’s evidence took on a touch of the fantastical.He told the court that part of that money that had supposedly gone to London, was said by Josea to have been invested for a two-week period at a phenomenal 280 per cent rate of return.Josea had said that they would receive N$41,5 million back from that London investment, Kandara claimed.At another meeting with Josea in Johannesburg, he continued, Josea finally admitted that he had received N$15 million from Rosenberg.By then, he claimed that he had drawn the money in cash and invested it in the United States for five years – something that Josea’s and Namangol Investments’ bank records, as well as evidence heard so far in the inquiry, have in the meantime proven to be untrue.Kandara said when he later traced the entire movement of the trade that the SSC’s money was supposed to be invested in, he established that the traders had not been able to place the money in the financial market at that stage, so N$15 million was taken back by Josea.Kandara’s testimony sketched a picture of a major breakdown in the relationship between two one-time business associates, with one – Kandara – in effect accusing the other – Josea – of having perpetrated a multi-million dollar theft against him and his client, the SSC.On one score, Kandara and Josea found grounds for agreement in their evidence, though.Like Josea, Kandara told the court of a world where amazing returns on investments could be realised.Kandara also explained that he still believed that investments placed with the right traders, in the right places – such as “private placements” as part of a “federal reserve trade” that was being used to raise humanitarian aid to rebuild places like Iraq, Egypt and Turkey, he remarked, without further explanation – would routinely realise returns as high as 60 per cent a year, or even the 280 per cent that he claimed had been seen in a two-week period.The SSC’s particular investment was supposed to realise growth of 60 per cent a year, Kandara stated.That would have been N$16 million over a four-month period.None of that has materialised, subsequent events have shown, and on July 12, the High Court placed Avid under provisional liquidation for being unable to repay the SSC’s money.On the same day, Acting Judge Heathcote heard on Wednesday, Kandara sent Josea a number of cellphone text messages.In one, an apparently dejected Kandara appeared to have given up the fight, as he informed Josea that he could keep all the money that Kandara had by then demanded back from him, as well as the money that was claimed to have been invested in London.That message was in Afrikaans, but Kandara closed it off with a few words in English.These were: “God will take care of me.As usual!