Steeped in Blood (33 page)

The Wentzels were schoolteachers who had retired to Cape Agulhas. When they retired, they had invested their money with Sanlam, who had offered to guarantee their capital and pay them
a reasonable income every month. They were happy with this arrangement, and after five years they had received their capital back. They wanted to reinvest with Sanlam, but were told that the same product was no longer available, as market conditions had changed.

The Wentzels shopped around and met a broker, Leon Coetzee, who represented Dynamic Wealth, an offshoot of a company that used to be called De Witt Morgan. A few years earlier, Morgan, the senior partner, had made the strange decision to invest in maize futures, which had lost the Johannesburg City Council R1.8 billion of their pension fund.

Coetzee convinced the Wentzels to invest with Dynamic Wealth. He arrived at their home with Johan Strydom, one of the directors of the company, and they promised the Wentzels an income of R3 500 per month, saying that their capital of R450 000 would be preserved. They were sold a policy from the Dublin-based Scottish Mutual International, a company not registered as a life insurer in South Africa, so the Wentzels had no protection under the Long-Term Insurance Act. This product should not, therefore, have been marketed in South Africa in the first place.

All went well, until the Wentzels started receiving a fairly irregular and slightly lower monthly income of R3 100. They were not too perturbed, however, as they felt safe in the knowledge that their capital would be preserved.

Then, in 2008, a shock came: R210 000 of their capital was paid back to them at the end of the term – less than half of what they had invested. They tried in vain to get some kind of explanation from Dynamic Wealth, but could not get hold of anyone from the company. Messages were not returned, and the Wentzels’ mood changed from disappointment to anger. In desperation, they approached me to see if I could help them.

I called Dynamic Wealth and was initially referred to their compliance officer, Willem Lecante. He skilfully evaded my questions
and openly taunted me, questioning my involvement in the matter, as I would not be paid for the work. I then received a letter stating that I could talk to the company’s attorneys. I informed them that I do not deal with attorneys, and that I would talk to them in another way.

I called Bruce Cameron, editor of
Personal Finance
, and sent him my file to look at. He then wrote to Dynamic Wealth, asking them what they were going to do about this situation. When Lecante unpleasantly tried to evade Cameron’s queries, as he’d done to me, he received an even stronger reaction. At long last there was some action, and two of the company’s directors came to see me. They asked me what I’d like them to do.

I replied that I wanted to speak to Strydom, the broker. I received a visit from Strydom, who told me how anxious the Wentzels had been to invest with them and how hungry they had been for risk. He had warned them, he said, of the potential risks involved in investing offshore.

It was clear that we were not going to make headway on our own, so we agreed to take the matter to arbitration. Since I am not a lawyer, I prepared my documents as well as I could, and simply stated the facts and the particulars of our claim. We exchanged papers with the other side, and I received a multipage document from them, filled with legal jargon.

As prepared as we could be, the Wentzels and I flew up to Pretoria the day before the arbitration was due to start. It was comforting to know that the retired Judge President of what was the Transvaal, Judge Frikkie Eloff, a man of high standards and integrity, was to preside over the matter.

The next morning, as we were waiting for Judge Eloff to arrive, the advocate representing Dynamic Wealth came to introduce herself. Observing this, Mrs Wentzel anxiously called me aside to check whether they were really using an advocate to defend themselves in this matter. I told her that they were. She then asked me if I had
any legal qualifications, and I had to tell her that I didn’t. She looked me straight in the eye and said, ‘
O, fok!
’

As the plaintiff, we started the proceedings. I was in full swing, outlining the case as well as I could, when Judge Eloff stopped me mid-sentence. ‘Doctor, have you read this contract?’ he asked.

‘Yes, I have, my lord,’ I replied.

‘Have you understood this contract?’

‘I think I have,’ I said.

‘Proceed.’

We all breathed a collective sigh of relief.

I was a little rattled by all of this, but I continued, and proceeded to call my first witness, Mr Wentzel, asking him if he had signed the contract. When he responded in the affirmative, I asked him if he had read the contract. He replied that he had not. Why not, I asked, to which he replied that it was because he had listened to the man who came to see him, and pointed to Johan Strydom. ‘We trusted him,’ Wentzel added.

The advocate then had her chance at cross-examination, and she grilled Wentzel, telling him that ignorance of the law is no excuse and referring to specific clauses in the contract, amidst all kinds of other legal jargon. Wentzel was quite overwhelmed by this, and left the witness box visibly shaken.

I then questioned Mrs Wentzel, and she was a little more forceful. She told the court that she and her husband could never get hold of the company to find out where their money had gone. She spiced up the proceedings a little by saying that she had left a few messages with explosive expletives on voicemail out of sheer frustration because no one ever returned their calls!

These were ordinary people who wanted straight answers. Eventually we found out where their monthly income was coming from: it was being taken out of their capital, which is why the capital had reduced to such an extent.

It was then the advocate’s turn to present her case. As she was
about to start her argument, Eloff interrupted, asking her if she was planning to call a witness. She was – Johan Strydom. The broker, Coetzee, had left the company to become a pastor. It transpired that he was being pursued by the Receiver of Revenue and had some judgments against him, which tells a story in itself.

As Strydom was testifying, it became apparent that Judge Eloff was rather taken with him – he started chatting to Strydom about financial matters. Strydom came across very well in his testimony, but said something very interesting – that he could remember more or less what he had told the Wentzels about the risk. I bided my time.

In cross-examination, I asked Strydom if he considered himself a professional. ‘Yes,’ he replied. I went on further, asking if that meant that all the detail in the contract and pleadings was accurate and thoroughly checked. He agreed with this, and said that he had read the contract and the pleading document. Seeing as this was a brokered deal, I said, there would be no vicarious liability to the company, and that our remedy, if any, must be sought from the broker. Strydom concurred. In theory, I knew that we had little recourse because Coetzee was nowhere to be found.

I then referred Strydom to page three of the contract, asking him to tell the court whose name was written down as the broker. There was dead silence. I knew whose name had been noted as the broker, of course – Johan Strydom. There was no need even to mention Coetzee’s name in the arbitration. The whole basis on which Dynamic Wealth’s case rested was cut away with that simple question. They had been so confident that they had not even read their own contract properly.

I referred back to the discussion that had taken place in my office in Cape Town previously, and asked him if he could recall exactly what he had said to me on that occasion. At the time, he had said that he could remember the exact words he had used when he spoke to the Wentzels five years earlier. I asked if he could
remember that I had questioned his infallible memory of a discussion that had taken place five years previously, even though he dealt with many of these contracts. He had stood by this fact at our meeting in Cape Town. Now he was telling the court that he could remember
more or less
what he had told the Wentzels. I wanted to know from him on which occasion it was that he was lying – then or now. It was downhill from there.

The advocate was looking a little green around the gills, and Judge Eloff suggested that the parties spend more time preparing closing arguments. I objected, saying that my clients had no more money to travel back to Pretoria again, and that we should proceed. So we did.

I launched into my closing argument, throwing in a few legal terms. Judge Eloff stopped me again, when I was in mid-flow. ‘Doctor,’ he said, ‘what is your case?’

‘What do you mean?’ I asked him, my heart skipping a beat.

‘Are you coming to me in contract or in delict?’ he wanted to know.

Slightly flustered, I replied, ‘Neither, my lord; it’s a sort of mixture.’

He raised an eyebrow at me, and I rattled on. ‘It’s mainly delict, and about the way in which these people were lied to. It’s also about equity, and we are arguing this matter in terms of the SAFEX Rules, as this allows your lordship a wide scope in terms of equity.’

‘Well, yes, that is so,’ he replied, hauling out the SAFEX book, in which he already had some pages flagged. After reading from some of the pages, Judge Eloff announced that he would not give his judgment that day.

The Wentzels were unhappy, as they wanted an answer, having waited so long. I pointed out to them that if Judge Eloff had wanted to rule against them, he would have done so immediately. The fact that he wanted time to think about his ruling was a positive sign.

A week later, on 25 April 2008, the judgment was faxed through
to my office. Judge Eloff had blown the delictual basis of my argument right out of the water, but he found for the Wentzels in the contract. The verbal contract had overridden the written contract. Irrespective of what the Wentzels had signed, the verbal discussion that they had had with Strydom took preference and was binding. This meant that there was no contributory negligence on their part. The Wentzels were to be paid back R244 557.71, plus interest at 15.5 per cent per annum, and all costs were to be paid by the defendant, Dynamic Wealth.

Judge Eloff is a man of great fairness, with the highest degree of integrity, and this case serves as a warning to investment companies.

Interestingly, because this was a legal issue and I was acting as an imitation lawyer, I could not charge a fee for my services. For me, the case had been great fun, and I learnt something new. Lawyers often get so wrapped up in their own jargon that they forget they are dealing with real people with straightforward needs. And everything has a simple answer at the end of the day if you cut through the clutter.

In yet another example of the arrogance of big business, I challenged Sanlam in the case of Leonard Louw, an unfortunate client who found that his investment had mysteriously ‘shrunk’.

When Louw, a mining engineer, left his employer in 2001, he invested his pension payout – R613 000 – with Sanlam. He was advised by his broker, Eugene van Eeden, to invest 80 per cent in gilt funds and the balance in a Sanlam Money Market account.

Initially, Louw was very happy with the progress of his investment. He received regular updates from Van Eeden, and at one point his investment had apparently grown to R793 000.

Some time later, Louw and his wife divorced. Finding that he owed her half of his pension payout, in April 2003 he notified Sanlam to make the payment to his ex-wife, expecting the sum to be around R400 000.

The letter that he received came as a huge blow: Louw’s investment was now worth only R306 711, roughly half of what he had originally invested. He tried in vain to obtain explanations from Sanlam, but felt as if he were running into a stone wall. The company’s call centres were not able to give him any explanation and nobody returned his calls. His wife became suspicious of him, so he approached me to ask me to investigate.

I called Sanlam and eventually managed to get through to one of the senior members of the investment fund in question. ‘Look,’ I said to her, ‘you’ve got twenty-four hours to find me somebody who carries the can and is answerable to the public on this particular issue.’

I subsequently received a phone call from a Mr de Villiers. ‘Does the buck stop with you?’ I asked him.

‘Ja,’ he said, ‘it stops with me. In fact, it lives on my desk!’

I wrote a letter to Sanlam on behalf of Louw, in which I asked some rather cheeky questions. The letter appeared in
Noseweek
magazine in September 2004, in an article ironically titled ‘Happily Ever After’.

How is it that a company of your size and reputed expertise, of which I am constantly reminded in the media, can manage to lose half this client’s money in so short a time? … Who advised the client to invest his money in this way? … Why is it that your company, despite the disastrous advice given to this client, still debits the man with a fee? I have come across some shameful acts, but this one must surely take the cake.

I received a letter back from Sanlam reprimanding me for the tone of my letter, but also informing me that Louw’s investment had been switched four times within a month in mid-2002. This, they wrote, probably explained the sad state of affairs, particularly because of the ‘switch fee’ and broker’s commission, which would have
been deducted on each occasion. According to them, Louw had authorised these switches. They enclosed copies of each of the signed mandates.

I examined these documents, and it soon became apparent that they were all forged: all the signatures were identical – they were merely photocopies of each other. So I wrote another cheeky letter to Mr de Villiers, in which I alleged that the signed mandates were all forgeries and that they clearly were not signed by my client.

This naturally created a small panic within Sanlam, and they rushed off to find another handwriting expert, hoping to prove me wrong. Their expert was a retired brigadier from the police force’s handwriting division. As I expected, he reached exactly the same conclusion that I had reached. The principles of forensic science are rigorous and unbending: again they proved that, by challenging information and cutting through the confusion, the truth can be ascertained.