In a curious turn of events, it has emerged that Absa Asset Management refused to co-sign a letter sent by top asset managers to the Resilient property group demanding a proper probe into allegations of misconduct.

Significantly, Absa was one of the only large shareholders of the four Resilient companies — Resilient, Fortress, Nepi Rockcastle and Greenbay — that refused to be a signatory.

The letter, sent on August 23, says that due to a "perceived lack of independence and insufficient scope in the investigations commissioned by Resilient", there needs to be a new "full, transparent and independent forensic investigation of all allegations".

The fund managers who wrote to Resilient say this is the only way to address the "current negative perception" around the Resilient companies. Over the past year, Resilient’s share price has fallen 54%, Fortress "B" has fallen 58%, Nepi has lost 27% and Greenbay 34%.

The Resilient group has been accused of manipulating the price of its shares through subsidiaries and its own BEE vehicles, funding the growth in dividends through artificial means, and selling properties to related parties at the expense of shareholders.

The letter was signed by a who’s who of investment managers including Coronation, Allan Gray and Prudential.

Signatories included managers which had little if any shareholding in Resilient.

Among them, and perhaps carrying the most weight, was the Public Investment Corp, which is the single largest shareholder in all four companies, according to Bloomberg.

We are looking for more transparency and disclosure. The current situation has led to more uncertainty and There is a degree of frustration on behalf of investors of simply not knowing
Rob Lewenson

Absa Asset Management, through its hugely successful Absa Property Equity Fund run by Fayyaz Mottiar, has been a consistent shareholder in the Resilient group.

It is somewhat surprising that Absa should decline to join its peers.

The head of Absa Asset Management, Ann Leepile, tells the FM the company did not disagree with the contents of the letter and would welcome any further action to investigate allegations against the Resilient Group. It had already conducted its own thorough investigation and did not feel another one was warranted.

"We engaged the services of an independent auditor to ensure independence in our views on the Resilient Group," says Leepile. "The investigation was based on publicly available information, including the report on findings of the independent review into the Resilient Group, led by Shauket Fakie, and engagements with the management team of the Resilient Group."

Leepile says Absa’s findings will remain confidential but do not preclude it from investing in the group. This suggests Absa has discovered nothing sufficiently untoward to be worried about.

Ultimately though, Absa believes it is the regulatory authorities that should provide conclusive judgment on the matter. "Our view is that the FSCA [Financial Sector Conduct Authority] and the JSE have the appropriate and intrusive powers to access more information than can be accessed by any investor or stakeholder in the Resilient Group. The outcome of the investigations by the FSCA and the JSE will guide any further steps we may take regarding our interests and those of our clients in Resilient," says Leepile.

What it means

Probes into Resilient have so far failed to quell doubts over whether all is above board in the group

This contrasts with the public view of at least one of the signatories, Old Mutual Investment Group (Omigsa). Rob Lewenson, head of environmental, social & governance engagement practice at Omigsa, believes lack of disclosure by the companies prevents a conclusive opinion on the findings of investigations like Fakie’s. "From our point of view, we are looking for more transparency and disclosure. The current situation has led to more uncertainty and there is a degree of frustration on behalf of investors of simply not knowing," says Lewenson.

"We are not questioning Mr Fakie’s ability, but what we don’t have is a clear set of information nor any input from the regulators at this point either. So we think full disclosure around the scope and findings of any forensic investigation would improve this, and this would go a long way for us to draw comfort from the findings."

Lewenson says he wants "to ensure that there is not anything else we could be blindsided on".