CMM curators still waiting for prosecutions

The National Prosecuting Authority (NPA) has yet to take action against those responsible for the losses incurred by investors in Corporate Money Managers (CMM), although the matter was brought its attention in 2017.

This is according to the curators’ 13th status report, for the period to 30 June last year, which was published by the FSCA last week.

CMM and seven related entities were placed under curatorship in April 2009.

At the time, it was reported that one of CMM’s entities, the Cash Management Fund (CMF), had taken in about R1.1 billion from investors.

The curators found that CMM’s activities had contravened the Banks Act and the Collective Investment Schemes Control Act.

In July 2017, the Gauteng High Court instructed the FSCA to provide the NPA with a copy of the curators’ status report to 28 February 2017. It was also instructed to draw the NPA’s attention to the paragraphs in the report where the curators express their frustration at the lack of progress in persuading the SA Police Service to initiate prosecutions. The curators asked the court to request the NPA to instruct the SAPS regarding the investigation.

“To date, we have had not had any feedback from the Director of Public Prosecution,” the curators said in their 13th report, dated 31 August 2021.

One of the curators, Graeme Polson, has undertaken to take up the matter with the “newly appointed Director of Public Prosecution”.

Assets of R474m recovered, while costs exceed R252m

According to the report, the curators had at 30 June 2021 recovered assets of R474 780 485 from CMM’s entities. This amount includes a R175m settlement with Absa. Absa Capital Investor Services was the custodian and trustee of investors’ assets in the CMF.

The curators had also recovered R17 773 497 from the SA Revenue Service for income tax and VAT refunds due to CMM.

Interest on bank deposits came to R34 293 985.

The curators had distributed R77 755 988 to investors by the end of June last year. This includes interim dividend payments of about R70.5m and “hardship payments” of about R13.6m.

Against this are the total costs incurred by the curatorship to 30 June last year: R252 332 596. More than half of this is due to litigation fees of R132 598 329.

The two curators have earned fees of fees R42 899 912.

To paraphrase Shakespeare: rather a curator than an investor be…

According to the report, the other expenses were:

• Forensic accounting and investigation costs (excluding litigation costs of R46 423 085;
• Legal fees other than litigation costs of R14 714 607;
• Administrative and personnel costs of R10 684 024; and
• Operational costs of R5 012 639.

The curators must file their next report by 31 August this year.

Click here to download the curators’ report, their supplementary report to 14 September 2021, and the court order granted on 24 February condoning the late filing of the 13^th report and replacing one of the curators.