Report 68 Business Practices Committee13. Shares Resold between April 1998 and July 1998 |
It was stated above (see section 7, document 6) that Botha said he had a "few" enquiries about shareholders that probably did not understand the marketability of unlisted shares and he then decided that a circular should be sent to all shareholders.
However, GCI actively assisted some shareholders in selling their shams. It would appear that when a shareholder "insisted" on getting his/her money back, GCI canvassed prospective new shareholders for these shared and thus created an artificial market for GCI shares. The new shareholders paid GCI for their shares. The "selling" shareholders received their proceeds from "AZ" the "share broker".
"AZ Brokers" are insurance brokers. "AZ" said that Botha called him and asked him ("AZ") to help GCI with the "trading" of GCI shares. This was the first time that "AZ Brokers" got involved in the "trading " of shares. The procedure was that "AZ" would receive a call from Botha or a clerk, Francois Jonker, who worked for GCI. "AZ" would then visit the offices of GCI and he was then handed a GCI cheque made out in his favour of "AZ Brokers". "AZ" was then instructed to issue "AZ Brokers" cheques to the sellers. The names of the sellers and the amounts due to each was furnished by GCI. "AZ" never met any of the shareholders and he never actively sought buyers for GCI shares. On three occasions he received written instructions from GCI requesting him to pay certain amounts to certain "sellers". These instructions were not given in letters with the letterheads of GCI.
More than R1 million was paid to "AZ Brokers" who took three percent of the gross amount as "commission". This amount was paid by 16 cheques during the period 17 April 1998 to 17 July 1998. The biggest amounts of the cheques were R288 201.50 and R250 657.10 respectively and the smallest amounts were two cheques of R1 000 each. "AZ Brokers" distributed the more than R1 million through 56 "AZ Brokers" cheques to the "sellers" of GCI shares. "AZ Brokers" this earned three percent in excess of R1 million, or R30 000+ to write out 56 cheques.