JUSTICE DELAYED IS JUSTICE DENIED

JUSTICE DELAYED IS JUSTICE DENIED
The South African Financial Services Board (FSB) and the South African Police.

Following the collapse of Leaderguard Securities in early 2005 the South African Financial Services Board launched its own investigation of the Leaderguard Group. (Do not however get carried away by the notion that the board itself were actively involved in the detective work.)

One of the big four auditing groups Ernst and Young were commissioned to investigate and report on Leaderguard marketing and trading. Ernst and Young have evidently claimed to have submitted their final report in March 2006. (Two years ago). To date our investor group have yet to see a copy. And this despite enquiries.

When questioned officials of the South African FSB have asserted that the Ernst and Young report was submitted to the National Prosecuting Authority (A police body, sometimes loosely referred to as “the scorpions”) in order to lay charges against what we consider to be the “Fraudulent Directors” of Leaderguard.

However, the victims of the fraud – the duped brokers and investors - have as yet to be informed:-
whether or not this report has been received by the National Prosecuting Authority,
whether or not charges have been laid,
and whether or not the Financial Services Board has enquired about action on the part of the Authority.
What brokers and investors however do know, for a certainty, is that,
the police know who the Leaderguard Directors are, and also
know exactly where they are now.
And finally the victims of the Leaderguard scam also know
that all of these thieves are alive and well and flourishing “free” citizens of South Africa.

Had these fellows broken into a large South African Bank and stolen 350 Million Rand, we can be sure that, within days the police would have had them by the heels and within weeks, sentenced and imprisoned.

The white collar fraudulent theft of 350 Million Rand by South Africans (and upon mostly South Africans) is obviously another matter. Three years have passed. And all that has happened, is that two and a half years ago, these South African robbers were fined (in Mauritius) at 2 cents USD for every dollar stolen.

Three years have gone by and the South African police have yet to make a single “Leaderguard related” arrest.

Justice delayed is justice denied. And this old legal maxim is particularly valid where those charged have repeatedly admitted their guilt.

THE FINANCIAL SERVICES BOARD OF SOUTH AFRICA AND LEADERGUARD SPOT FOREX

THE FINANCIAL SERVICES BOARD OF SOUTH AFRICA AND LEADERGUARD SPOT FOREX

We – a small group of professionals who invested in Leaderguard Spot Forex – do not always agree with the South African FAIS Ombud Mr. Charles Pillai in the matter of the fraudulent behaviour of the Directors of Leaderguard Spot Forex. We have a problem in as much as the Ombud seems to have concentrated his efforts upon brokers of the Leaderguard products and their lack of due diligence within the FIAS Act.

In our view the majority of brokers with whom we have had dealings, simply believed what Leaderguard Securities had advertised and promoted in respect to Leaderguard Spot Forex. For example they believed, with their investors, that a Leaderguard mandate applied. An investor could not lose more than 20% of his or her deposited funds. There are many other examples which could be quoted.

More recently, the Ombud has focused his attention on what we believe to be a more significant culprit in investor loss - and that is lack of suspicion, as well as lack of due diligence on the part of the Financial Services Board of South Africa.

In respect to FSB the Ombud now recognizes that :

The principal failure of the regulatory authority (FSB) was the exemption granted to Leaderguard Spot Forex – as a late applicant for a trading or operating licence in South Africa. The Ombud claims that in order to clear a back log of applications the FSB had “delegated” its authority to grant such a licence to the Forex Investment Association (FSA). (We are not sure that delegation is quite the right word).

The FSB however has asserted that the Ombud is wrong and that such bodies “merely assisted” in the processing of applications. In our view this remains a significant blunder on the part of the Financial Services Board of South Africa. At no time has the FSB explained the nature of this assistance or in fact the other bodies that might have been involved in providing this aid. In our opinion the FSB remains guilty of involving a third party in a process of licensing an activity for which they were solely responsible. The Ombud is in this analysis quite right.

In the case of Leaderguard (as already noted) the assistance and licensing was sought from the Forex Investment Association. Obviously the FSB did not know (or did not seek to know) that:

This was an association that was in part founded by Leaderguard
This was an association headed by Chris Dela Guerre (CEO) who was also a compliance officer for Leaderguard.
Mr. Dela Guerre was a Director of Leaderguard Securities a sister to Leaderguard Spot Forex as well as being a Director of the Leaderguard Game Farm (which was purchased and operated from Leaderguard Spot Forex funds).
Mr. Dela Guerre was also a Leaderguard beneficiary. Funds were regularly dispensed from LSF accounts to the “Dela Guerre Famille Trust”

Clearly the Leaderguard licensing process was in no way influenced by this particular third party!!! How could anybody think that Mr. Dela Guerre had any influence in the Leaderguard Licensing process?

As noted by the FAIS Ombud there is an absolute and total conflict of interest in the granting of a licence to Leaderguard. The FSB is guilty no matter whether the responsibility for licensing was either delegated or assisted. Neither should have occurred!