Namfisa goes to court to stop Prowealth policy payouts

THE Namibia Financial Institutions Supervisory Authority has intervened to stop the payout of five life insurance policies to the former wife of the founder of the Prowealth group of companies, the late Riaan Potgieter, who is accused of defrauding investors to the tune of tens of millions of Namibia dollars before his suicide near the end of last year.

Potgieter, who committed suicide by shooting himself in the head in his home in Windhoek on December 8, had eight insurance policies that included death benefit cover on his own life. The beneficiary of all the policies, which date from 1988 to 2003, is Louise Potgieter, who is Potgieter’s former wife and the mother of two of his children. The death benefit proceeds from these policies amount to at least N$17,7 million, the liquidator who has been put in charge of two of the companies in the Prowealth group, Alwyn van Straten, has stated in an affidavit filed with the High Court.A provisional order stopping the payout of the proceeds from five of these policies to Mrs Potgieter was given in the High Court on June 2. That interim interdict was in effect until Friday, when Acting Judge Theo Frank extended it to June 26 after Namfisa applied for such an extension to give it more time to investigate the financial dealings in the Prowealth group.The proceeds from the five policies in question would total about N$15,6 million.Namfisa is already the subject of a parliamentary question to the Minister of Finance because it failed to pick up anything untoward in the Prowealth group before Potgieter ended his own life.Since Potgieter’s death it has emerged that numerous investors who chose Prowealth – and specifically asset management company Prowealth Asset Managers, which is now being liquidated – to handle investments on their behalf could lose millions of Namibia dollars, since no trace of their supposed investments could be found.Van Straten has claimed that a preliminary investigation into Prowealth Asset Managers’ financial affairs has indicated that about N$79,9 million in trust monies that the company received from its clients had in effect been stolen by Potgieter and other companies and close corporations in which he had an interest. Prowealth Asset Managers received at least N$103,05 million from investors from October 2003 to May last year, Van Straten has stated.In an affidavit filed with the High Court on Friday to ask for the extension of the interim order preventing the payment of proceeds on five of Potgieter’s policies, Namfisa’s Acting Chief Executive Officer, Lily Brandt, informed the court in the same vein that it is clear ‘that the affairs of (Prowealth Asset Managers) were conducted in order to defraud the investors; that the funds of investors were misappropriated; that huge sums of money are unaccounted for or lost’. Brandt told the court that since Namfisa registered Prowealth Asset Managers as an asset management company in August 2001, when it also approved Potgieter as the portfolio manager for the company, Namfisa had no reason to suspect any irregularities in the business of the company. As a result, it did not have any reason to investigate the company’s affairs either, according to Brandt.She stated that Prowealth Asset Managers has always submitted the required quarterly reports and levies returns required by Namfisa, and no complaints by any person who had placed an investment with the company had been brought to Namfisa’s attention.Brandt at the same time acknowledged that, according to the allegations that Van Straten has made in the affidavit by him that has been filed with the court, investors had been defrauded through a scheme that had been masterminded by Prowealth Asset Managers.With the probe into the company’s affairs not yet finalised, it would be fair to let the investigation run its course before the court lifts the order preventing the payout of the insurance policy proceeds to Mrs Potgieter, Brandt stated.She claimed that the interests of the victims in the matter, who are the investors that were Prowealth Asset Managers’ clients, should be weighed up against the interests of Mrs Potgieter, ‘who stands to benefit at the expense of the investors who fell victim to the criminal conduct of a family member (ex-husband and father) to such beneficiaries’.Brandt informed the court that various issues around Potgieter’s insurance policies – including the payment of premiums on the policies, the sources of the money used to pay the premiums on the policies, and the nomination of the beneficiaries of the policies – must be thoroughly investigated to determine if the premiums should be repaid to for instance Prowealth Asset Management, or even if the whole of the policy proceeds may have to be paid to the company in liquidation.She claimed that a preliminary report on an investigation into the affairs of Prowealth Asset Management that is being done by a Windhoek auditing firm has so far indicated that premium payments on Potgieter’s policies were not done from Potgieter’s personal accounts or his own money, but from funds that had been paid by investors into accounts earmarked for their investment funds. This must however still be more clearly verified by a full forensic audit investigation, Brandt stated.Van Straten has previously stated that most of the premiums were paid from an account that Potgieter had with Standard Bank, and also from accounts of Prowealth Asset Managers and a sister company, Prowealth Consult, which is also now under provisional liquidation.Potgieter had transferred at least N$20 million from Prowealth Asset Managers’ account – into which investors’ money had also been paid – to his own bank accounts, and had also transferred no less than N$10,38 million of this money to the Standard Bank account from which some of the policy premiums were paid, according to the liquidator.