Old Mutual confirms fraud report on Mayibuye Group

BY PHAKAMISA NDZAMELA, 

Blue Financial Services and Mayibuye CEO Johan Meiring. Picture: FINANCIAL MAIL

Related articles

Blue leadership left red-faced after fraudulent transactions

OLD Mutual confirmed last week that allegations of fraud within the Mayibuye Group, which is the controlling shareholder of JSE-listed pan-African lender Blue Financial Services, had been reported.

In 2008, Old Mutual granted Mayibuye — through a specialised vehicle called Leonox — a facility to provide home loans and short-term finance to borrowers. About R440m was invested in Leonox.

"It has been brought to our attention that fictitious loans, and loans that do not meet the agreed criteria, appear to have been sold to Leonox Investments by Mayibuye and its various group companies," Old Mutual said last week.

"These alleged unlawful activities are currently under investigation and we will only learn the nature and extent of the alleged activities with certainty when the investigation is concluded."

A February 2011 circular issued by Blue Financial Services notes that an agreement was concluded by Old Mutual Life Assurance Company South Africa, Leonox, Blue Financial Services and some of its subsidiaries and Creditedge, which is owned by Mayibuye.

The agreement makes reference to provision being made for Blue Financial Services and some of its subsidiaries to sell to Leonox up to R300m of claims "which Blue and certain group companies have against debtors".

Blue Financial Services has said that it has instituted a forensic investigation.

Blue Financial Services and Mayibuye CEO Johan Meiring said last week he would not confirm or deny the allegations.

Mr Meiring did not want to comment on whether the Blue forensic investigation was linked to the Old Mutual matter.

Blue Financial Services, whose shares are suspended on the JSE, is trading under cautionary.

Mr Meiring said the lender was in a closed period and would only comment on issues affecting the company once it released its financial results. Mr Meiring has previously said that Blue Financial Services will release its results by the end of August.

Former Blue Financial Services CEO Dave van Niekerk said two weeks ago that he had been informed of financial irregularities at Blue Financial Services.