N$80m missing at Prowealth

CLOSE to N$80 million that investors entrusted to a key company in the Prowealth group, whose founder committed suicide six months ago, is now missing.

Riaan Potgieter, the founder and CEO of the Prowealth group of companies is being accused of stealing N$39,9 million of the missing N$80 million from investors – mostly retired people or people close to retirement – who trusted him and his company to manage the investment of their savings on their behalf.The massive scale of alleged fraud that is claimed to have been committed by Potgieter, before he took his own life near the end of last year, is starting to emerge from documents filed with the High Court.Out of some N$103 million that investors entrusted to Potgieter and a key company in the Prowealth group, Prowealth Asset Managers, close to N$80 million is now missing, it is claimed in the documents.The allegations are made by Alwyn van Straten, who has been appointed as the liquidator of Prowealth Asset Managers, an asset management company of which Potgieter was the sole director and which the High Court ordered to be finally liquidated on March 28.Potgieter committed suicide by shooting himself in his house in Windhoek on December 8 last year. He died only four weeks before what would have been his 40th birthday.Since his death, a string of investors have filed claims against Prowealth Asset Managers with the High Court in a bid to recover money that they claim Potgieter and his company were supposed to invest on their behalf, but which they allege has instead been invested in Prowealth itself.Now Van Straten has informed the court that the companies and close corporations that Potgieter established ‘were all part of a fraudulent scheme’ devised by Potgieter. Van Straten alleges that in this scheme, about N$79,9 million in trust monies received from Prowealth Asset Managers’ clients ‘were unlawfully and intentionally misappropriated by (Potgieter) and other related companies and close corporations in which (Potgieter) had interests’.Of this N$79,9 million, Potgieter ‘unlawfully and intentionally’ had at least N$20 million transferred to various bank accounts that he had in his own name, Van Straten states.Potgieter also had some N$18,366 million transferred from an account of Prowealth Asset Managers into which investors’ money was deposited to an account of Prowealth Consult, which is another company in the Prowealth group, Van Straten has informed the court.Van Straten based his account of the transfer of investors’ money from Prowealth Asset Managers’ account on the preliminary findings of a forensic investigation that chartered accountants Grant Namibia are conducting into the financial affairs of that subsidiary of the Prowealth group.According to Van Straten, investors’ money was not paid into a trust account of Prowealth Asset Managers, which was supposed to be used to receive money from investors, but into another account that the company has with Standard Bank Namibia.Potgieter in turn had eight bank accounts in his own name, Van Straten states.He relates that in the period between October 3 2003 and May 21 last year, Prowealth Asset Managers received deposits totalling a little over N$103,053 million from investors on a bank account under the name ‘Prowealth Asset Management Account’. The company had another account that was its trust account.From the Management Account, Potgieter transferred a total of N$14,17 million to three of his own accounts, and also transferred some N$18,36 million to an account of Prowealth Consult, Van Straten states.From Prowealth Consult’s account, a total of N$2,986 million was also transferred to personal accounts of Potgieter.Van Straten alleges that of the more than N$103 million that Prowealth Asset Managers received from investors, Potgieter ‘had unlawfully and intentionally misappropriated N$39 950 301,16’.’Totally apart from the above a further amount of at least N$39 900 000 is unaccounted and cannot be allocated to an investor of (Prowealth Asset Management),’ Van Straten states. This amount had been transferred by Potgieter to various other companies and close corporations in which he had interests, it is claimed.Like Prowealth Asset Managers, which by the end of February this year was some N$19 million in the red, Prowealth Consult has also been losing money, financial records of the company that have been filed with the court indicate. In the year to the end of February last year, Prowealth Consult lost N$8,49 million, the company’s financial statements show. In the previous year, it had lost more than N$2,83 million.According to Van Straten, his preliminary investigations have revealed that the income that Potgieter earned from legitimate sources was ‘extremely limited’. As time progressed, the amounts of investors’ money that was being transferred to his personal accounts systematically increased and his legitimate income decreased, Van Straten claims.Whatever income Potgieter legitimately earned was certainly – at least since the beginning of 2005 – not enough to pay for the premiums on eight life insurance policies that Potgieter had, Van Straten also alleges.He claims this means that money misappropriated from investors had been used to pay the premiums on those policies.Death benefits totalling over N$17,78 million are set to be paid to Potgieter’s former wife, Louise Potgieter, as a result of these policies.Van Straten however wants the court to prevent these payments to Mrs Potgieter. His application for a court order to that effect is scheduled to be argued on June 12.werner@namibian.com.na