BHI Trust: R12.4 million recovered, R1.5 billion still at stake

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R12.4 million down, R1.5 billion to go. That is how much the joint trustees of the BHI Trust insolvent estate have recovered so far – and how much remains – to meet creditors’ proven claims.

A total of 812 claims, amounting to R1 512 857 185.24, were proved against the BHI Trust insolvent estate during the second creditors’ meeting on 12 June last year at the Randburg Magistrate’s Court.

In the seventh circular to creditors issued this week, joint trustees Gert de Wet and Sumaya Mohamed from Kaap-Vaal Trust reported that about R12.4m has been recovered to date “through monies found, settlements reached, and assets recovered”.

The trustees also noted that they “are working on other matter/s pertaining to potential recoveries to be made in favour of the BHI Trust”.

This is in addition to efforts to recover funds from parties who benefited in the six months before the trust’s sequestration.

According to section 29 of the Insolvency Act, the trustees are obliged to pursue action against entities or individuals who benefited from BHI Trust in the six months leading up to its sequestration. The law mandates that creditors who gained an unfair preference during this period must return the advantage they received.

The trustees confirmed they have issued about 200 letters of demand to individuals and entities that were unduly preferred in that period.

In their third circular to creditors, dated 17 January 2024, they estimated that more than R300m was involved. However, the latest circular provides no update on the success of efforts to recover these funds from creditors who benefited during that period.

“The section 29 recovery process is ongoing. The trustee and attorneys are in correspondence with individuals/entities regarding payment/s of voidable preferences,” the joint trustees stated.

Read: BHI Trust fallout: beneficiaries reluctant to return millions amid sequestration scrutiny

A more promising avenue for recovering funds may lie in the fact that Nedbank has now provided the joint trustees with bank statements dating back to January 2008.

“Now that the trustees have the bank statements, instructions have been given for a forensic audit opinion,” the joint trustees stated.

Where did the money go?

Some background is needed to understand the significance of these bank records.

In early October 2023, trustee and fund manager Craig Warriner surrendered to authorities and confessed to fraud. On 27 May 2024, he was sentenced to 25 years in prison following a plea deal at the Palm Ridge Commercial Crimes Court. He was convicted on 206 counts of fraud, as well as violating the FAIS Act by operating without an FSP licence.

Read: AfriForum criticises Craig Warriner’s plea deal for lack of disclosure

The State’s investigation found that since 2002, the trust operated as a share-trading scheme, initially requiring a minimum investment of R50 000. Warriner traded in seven JSE-listed shares before introducing “BHI Plus”, a higher-risk, unregulated scheme promising greater returns.

According to the State’s charge sheet, Warriner misled investors by claiming their funds were placed in various “strategies”, whereas in reality, only a small fraction was used for securities trading. Most of the money was held in an interest-bearing money market account, benefiting only Warriner. Investors deposited funds into a Nedbank Corporate Saver account.

During the analysis period from 1 January 2020 to 30 November 2023, records show that only about R584m of the nearly R3bn received was transferred to JSE broker Afrifocus Securities (Pty) Ltd for securities trading, accounting for less than 20% of the total.

Furthermore, about R576m was transferred back to BHI Trust’s money market account during this period, but trading profits were insufficient to sustain the promised returns.

The charge sheet states that Warriner used new investors’ funds to pay existing beneficiaries. By 2023, the scheme collapsed due to a lack of capital.

It is likely the joint trustees will also scrutinise the bank accounts of Warriner’s alleged accomplices.

Read: Two ‘enablers’ of BHI Trust Ponzi scheme hit with 30-year debarments

Shortly after Warriner’s sentencing, Michael Haldane, founder of Global & Local Investment Advisors (GLAI), and Sona Pillay, director of Rubicon Administration Services (RAS), were arrested for fraud and money laundering.

GLAI was among the FSPs that placed clients with BHI Trust, while RAS, under Pillay’s leadership, managed the trust’s administration, including deposits, statements, and withdrawals.

Both were released on R100 000 bail following a hearing at the Palm Ridge Magistrate’s Court on 10 June 2024. Their next court appearance is scheduled for March.

The prosecution’s affidavit at the bail hearing alleges that Haldane, as principal and/or director of multiple corporate entities, used them to divert funds belonging to BHI’s investors.

The State also claims that Pillay funnelled large sums from BHI Trust’s Nedbank account into his personal “pool account” instead of paying investors. Court documents suggest he then rerouted the money into other accounts in his name.

Section 152 inquiry

Meanwhile, the section 152 inquiry is set to continue on 20 February.

Initiated in late 2023 under the Insolvency Act, the inquiry has involved multiple subpoenas requiring individuals linked to BHI Trust to provide information, documentation, and testimony about its financial affairs. The first hearings took place from 6 to 8 December 2023, followed by sessions in April and August 2024.

The inquiry aims to trace how creditors’ funds were handled, identify transactions that should be set aside under the law, and recover assets or funds owed to the trust.

The proceedings are held in camera, so a report will be available to the public only once the inquiry concludes and with the Master of the High Court’s approval.

In the seventh circular to creditors, the joint trustees also noted that they had been granted an extension for filing the liquidation and distribution (L&D) account, with a further extension expected.

A first L&D account is a detailed financial statement prepared by the trustees outlining how the trust’s assets will be distributed among creditors. It details the initial payments, based on available funds after asset sales and administrative costs, in line with the trust’s sequestration process.

2 thoughts on “BHI Trust: R12.4 million recovered, R1.5 billion still at stake

  1. good day,it seems it’s going to long drawn out case,before the creditors will receive any money, if at all

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