Carol Paton Writer at Large
Nothing dubious: Capitec was hit hard by a Viceroy report, which described it as a predatory lender. The claims have been firmly rebutted. Waldo Swiegers/Picture: SUNDAY TIMES
Nothing dubious: Capitec was hit hard by a Viceroy report, which described it as a predatory lender. The claims have been firmly rebutted. Waldo Swiegers/Picture: SUNDAY TIMES

Questions have emerged over an independent report commissioned by Business Leadership SA (BLSA) into controversial short seller Viceroy, with suggestions that Capitec — one of Viceroy’s recent targets — commissioned it and was going to pay for it.

The report, done by financial research company Intellidex, was a thoroughgoing demolition of Viceroy’s work and the integrity of its members, including evidence of plagiarism and the suggestion that it does not conduct its own research but uses that of other short sellers and hedge funds.

Capitec was hit hard by a Viceroy report in January, which described it as a predatory lender that should be placed under curatorship. The report was widely dismissed as inaccurate, including by the Reserve Bank.

Both BLSA chairman Jabu Mabuza and CE Bonang Mohale say that the research was commissioned by the organisation’s executive management on its own initiative.

However, in an exchange of e-mails between Mohale and Capitec CEO Gerrie Fourie in mid-June, Mohale "confirms the acceptance of this assignment to conduct research into Viceroy!" He goes on to say that as per their one-on-one conversation the cost for the report and the related media costs will be R1m.

Fourie replies to question the amount, saying that if the research by Intellidex, of which Stuart Theobald is a founding director, is expected to cost R400,000 then a price of R600,000 for a media launch "does not make sense".

"Capitec is therefore willing to pay for the report [Stuart bill] plus to spend R100,000 on media at this stage. If we understand the content of the report we can always decide with BLSA if we want to spend more," wrote Fourie.

On Thursday, both Mohale and Fourie said they previously discussed that Capitec would pay for the report but that the payment had never been made.

"Gerrie knew about us doing the report and he came to us and said since they were the ones hurt, he would go ahead and pay for it. Along the way, after we had started the process, we [at BLSA] said we want to own it. So the conversation took place, but Capitec did not pay a cent for that report," he said.

Mohale says that in the end Capitec made no additional payment to BLSA other than its R1m membership. BLSA is a membership-based organisation open to large businesses based and operating in SA with a standard membership fee of R1m.

Charl Nel, head of communications at Capitec, said that Fourie and Mohale were in frequent communication.

"Capitec has offered to contribute towards the cost of the report. However, the BLSA Exco has decided that all members gain the benefit of the report. Today, their [short sellers’] focus is on Capitec, but tomorrow, it may be another member of the BLSA. There were no additional payments to BLSA other than our membership," he said.

Mabuza said that the BLSA board had not been involved in commissioning the report as it would have been inappropriate for members who were affected by Viceroy’s activities to do so.

"I’m aware that Fourie did have engagements with Mohale and offered to pay for it but ultimately BLSA exco made the decision to pay for and own the report," he said.

Theobald said that he did not know if Capitec had suggested paying for the report but that his contract was solely with BLSA.

"Intellidex was contracted and paid by BLSA. Intellidex only accepted the commission on condition that its report would be fully independent. All remuneration was paid upfront before the report was handed over so that no duress could be applied," he said.

The first Viceroy report to make waves was one into Steinhoff last December, days before the firm’s spectacular collapse.