AltRe bays for Resilient blood
Asset manager says heads must roll for financial reporting flaws
An asset manager that exited its investments in the Resilient stable of companies earlier in 2018 after making losses has called for heads to roll.
In its August newsletter, Alternative Real Estate Capital Management (AltRe) singled out Bryan Hopkins, who heads property company Resilient’s audit committee, and chair of related property group Fortress, Iraj Abedian, saying they should have noticed irregularities in the financial reporting from these companies.
AltRe said these directors should resign, followed by other directors in the Resilient stable, including Greenbay and Nepi Rockcastle. Last week, a group of SA’s largest asset managers, who collectively manage trillions of rand, called for a thorough forensic investigation into the four companies.
Only Fortress’s board has responded to the request, saying on the stock exchange news service that it received the letter.
AltRe said Resilient and Fortress published retrospective changes to their numbers in their latest financial statements, suggesting there were problems at the companies that their boards did not pick up.
"Even without the investigation, the magnitude of the prior year ‘errors’ disclosed in the recently published June annual financial statements for Resilient and Fortress alone raises the question as to what the audit committees and auditors of those companies were doing."
In their latest sets of results Resilient unbundled its Fortress shares so as to remove a cross-holding that had led to related party transactions between the two companies. They also restructured their BEE trusts so that interest on them was no longer accounted for as income.
"At the very least, the financial directors or CFOs and the independent nonexecutive directors on the audit committees should have resigned," AltRe said.
Hopkins represented the audit committee of Pangbourne Properties, which was bought by Capital Property Fund in 2011 when Abedian was its chair. Later in 2015, Fortress bought Capital in the largest property merger in SA history at the time. Abedian is the independent non-executive chair of Fortress.
Abedian said he had seen AltRe’s letter and would resign from his position if he were proved to have been involved in any wrongdoing.
"I have always maintained that if proven guilty of wrong-doing, for sure I will resign and account for it," he said.
AltRe also wrote that other senior people should leave the Resilient group of companies.
Resilient CEO Des de Beer said: "Resilient has no knowledge of the company that has authored the letter presented to us for comment. Our approach remains that of engaging directly with our shareholders in relation to any concerns that they may have. Resilient has no comment on … this letter".
AltRe’s MD and founder, Hayden Bamford, formerly worked for Diversified Property Fund, a company that was later acquired by Resilient.
Bamford said AltRe no longer held any shares in any of the four companies in the Resilient stable, given that it had exited its positions in these stocks earlier in this year.