The collapse of a Windhoek financial advisory firm has raised fears that Namibian investors, including pensioners, might have lost millions of dollars through foreign exchange trading.
Wealth Management Solutions (WMS), run by managing director Hanjo Schlabitz, has collected money from Namibian clients and invested it on their behalf through brokers and trading accounts.
The Namibian understands that WMS placed N$17 million with IJG Securities, a Namibian stockbroker, which says those funds are safe.
Clients estimate WMS’ total losses in foreign exchange investments run into millions.
Schlabitz’s firm applied for voluntary liquidation on 21 April, a month after it lost a large sum of money in foreign exchange trading.
“It was resolved that the corporation be wound up due to accumulated losses and financial deterioration, rendering its continued operation no longer feasible,” Schlabitz says in a letter to clients announcing the liquidation.
He says the company had applied to shut down voluntarily and had begun the official liquidation process at the Business and Intellectual Property Authority (Bipa).
“A liquidator will, in due course, be appointed to take control of the corporation’s affairs, oversee the realisation of its assets, and deal with creditor claims in accordance with the applicable legal process,” the letter continues.
Schlabitz did not respond to requests for comment this week.
The Namibia Financial Institutions Supervisory Authority (Namfisa) did not immediately respond to requests for comment sent yesterday either.
WMS claims on its website they are “true independent financial advisers”.
“We advise in your best interests acting on behalf of you and not a company we sell products for. We tailor solutions to your particular circumstances using the whole of the market,” it says.
It boasts that “nothing grows unless it is planted”.
“In order to expand your wealth and ensure you live the type of life you want to in the future, it is prudent to invest today,” it says.
However, it now appears some of its investors are likely to lose the money they invested through Schlabitz.
The firm was founded by his father and was a well-known and trusted company in the German-Namibian community.
A client who declined to be named says WMS has dragged people’s lives into potential ruin.
The client says he has raised concerns about the company’s trading in foreign currency in March.
He says Schlabitz at the time told him all was well and he should leave his investment in forex trading.
“I didn’t suspect anything was going wrong, until three weeks later he had to liquidate [because of the foreign currency bets and gold prices],” the client says.
The advisory firm, on behalf of its clients, held an account with the South Africa-based online brokerage firm Mt.Cook Financial.
Many of the traders operating with the brokerage firm were under the impression that gold prices would go up, even borrowing large sums of money for those bets.
On 23 March, gold prices suddenly fell.
“During this window of time, an abnormally large percentage of our book (including, managed accounts, EA users and self-directed traders) was simultaneously long gold,” Mt.Cook tells its clients in a letter.
This means so many of the traders were betting on gold going up that the brokerage as a whole did not have enough money to cover the bets and could not continue operating normally.
This led Mt.Cook Financial to close WMS’ trade account at a loss. WMS’s own losses meant the company was unable to continue operating.
After the liquidation announcement, clients began asking for the money they had invested.
One of the accounts Schlabitz had invested in is IJG Securities. IJG Securities is a Namibian stockbroker.
Companies such as WMS can pool money from their clients and give it to IJG to invest.
IJG Securities managing director Mark Späth wrote a letter to the affected clients on 5 May, distancing their company from WMS.
Späth says the company had received correspondence from several of WMS’ clients asking for clarity on investments made with IJG.
“IJG places on record, unequivocally, that it is not associated with WMS. Any relationship that may exist between IJG Securities and WMS is limited to an arm’s length client-service provider relationship,” Späth says in the letter.
He says the company cannot act on any funds held in the name of WMS without authorisation from the company itself.
“In terms of Namibian law, IJG Securities is only entitled to take instructions from, and make payments as instructed by the named account holder and contracting counterparty, being WMS.
“IJG Securities is therefore not legally permitted to release, transfer, or otherwise deal with any funds standing to the credit of WMS in favour of any other person, including individuals alleging to be underlying investors of WMS,” Späth explains.
He, however, confirms that “[the company] is taking appropriate and prudent steps within the framework of the law to safeguard any funds lawfully held by it in the name of IJG”.
The collapse of the company raises questions about Namfisa’s oversight capabilities.
This case comes six months after Namfisa was held by the Supreme Court to have been negligent in its responsibility to oversee financial institutions.
Namfisa was ordered in November to pay back investors who were victims of a 2008 fraudulent investment scheme led by Riaan Potgieter on the basis that the authority was responsible for supervising financial managers.
Schlabitz, whose investment decisions are at the heart of the controversy, is a Windhoek-based financial adviser and managing director of WMS.
He identifies himself as the second-generation owner of the firm, which provides financial planning and wealth management services.
Schlabitz is a chartered accountant and certified financial planner. He claims his professional background includes experience in the financial sectors of Namibia, South Africa, the United Kingdom, Germany, the United States, and Kazakhstan.
Beyond his private practice, Schlabitz is listed on several institutional websites, including being the vice president for finance on the Namibian Gymnastics Federation’s executive committee.
Schlabitz is also the chairman of Hope for Life Foundation, a non-profit organisation overseeing projects such as JoyHouse Children’s Village.
He has also been listed as a member of the Deutsche Höhere Privatschule board.
It’s unclear if he still serves in those roles.
This article was produced by The Namibian’s investigative unit. Send us story tips via your secure email to investigations@namibian.com.na
