City Capital in Liquidation

This is the Front Page News Paper Article on City Capital
Printed 30 May 2009, Weekend Argus

Widow takes company to court over investment


A 69-year-old widow has brought down a multimillion-rand property investment company in a brave fight to preserve "almost all the money she ever had in the world".Elma Taylor, from Franskraal in the Overberg, successfully applied for the provisional liquidation of City Capital SA Property Holdings Ltd, but she and more than a thousand pensioners countrywide could still face dire financial straits.Papers before the Cape High Court indicate that about 1 200 investors - 90 percent of whom are pensioners - stand to lose their investments in the company which only two months ago claimed its net value stood at around R238 million.Now, the Master of the High Court has appointed four liquidators to investigate.Taylor applied to the court for the company to be liquidated after discovering that she and the other investors were misled into believing City Capital owned several properties which it was selling, buying and using to generate a rental income.Two weeks ago, the four-year-old company ended the rights of its fund administrator to make monthly payments to its investors, and subsequently offered to sell off its assets to pay investors some money.According to court papers, Taylor then discovered she had been misled - City Capital did not own the properties featured in its brochure, but merely held shares in property-owning companies."I feel the court must do something to see to it that justice is done for the elderly people like me who invested in this scheme," Taylor said in her affidavit before the Cape High Court.Taylor's grandson, Christo Jacobs, said company director Willie Viviers had told them there would be no money at the end of the month for the elderly investors."He said it was a very sad situation but the directors of City Capital could not be blamed as the money was never 100 percent guaranteed," Jacobs said in court papers.The company's other directors are Herman Kriel, Alan le Roux, Bertus van Zyl and Jurie Wessels.Earlier this month, in a letter to shareholders, the directors stated: "The board of City Capital decided today to recommend to shareholders that the company ceases taking in new investments and, over time, repays current investors. The company isn't attracting sufficient new investments to continue without destroying value for current investors. "A process will be put in motion to liquidate the company's assets and, as money is generated from this, the money will be distributed progressively and proportionately."Taylor's application to have the company liquidated was initially opposed by City Capital, but their opposition was withdrawn before the matter went to court."I think it is a real shame that the pensioners and the elderly were exploited because we were naive. We were deceived by these so-called property syndicates, and representations were made to us that were simply not true," Taylor said in her court papers.Taylor said her broker, Johan Geldenhuys, had assured her City Capital would be a safe investment choice. But when she did not receive money last month, she contacted Charl Pienaar, the company's legal officer, who admitted they had cash-flow problems. "I tried to withdraw my investment. I was told there were no buyers for my shares and that I cannot get my money. If the company is liquidated at least other pensioners and I will get some money to survive on," she submitted to the court.Judge Andre Blignault ordered City Capital's provisional liquidation last week. The court will decide in July whether to make it final.