RESILIENT SAGA
MAGDA WIERZYCKA: It is a case of eyes wide shut if potential profits beckon
The optimism around Cyril Ramaphosa’s election has distracted attention from yet another dramatic corporate failure, that of the Resilient Group. Since January 1 more than R143bn has been wiped off the market capitalisation of the four companies that make up the group. That is R143bn of largely South African investors’ savings. Combine it with the loss of R229bn from Steinhoff, and savers have lost a staggering R372bn from fraud alone. I followed the saga closely after reading a leaked report by a hedge fund manager, which exposed a tale of potential corruption, market price manipulation, insider trading and a litany of other woes.Ignoring the noise, I delved into the companies’ financials. I did not need the report to see that Resilient Group was a wolf in sheep’s clothing. Presented as a listed property group, most of its profits came from active trading of its own shares between group companies. Handsome dividends paid to lure asset managers came from capital raises on the JSE an...
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