In October, 2005, the Intermediate Court of Mauritius convicted two directors of Leaderguard, Hermanus Stephanus Pretorius and Jacobus Venter, on four counts (each) for the offence of falsification of documents. Each accused was sentenced to pay a fine of Rs 800,000 with costs. Renso Stefanus Du Plessis was also convicted on two counts for the offence of falsification of documents and sentenced to pay a fine of Rs 400,000 with costs.

Leaderguard lost $59m in foreign exchange speculation and was liquidated in 2005. The liquidator reported last November that Leaderguard Spot Forex began suffering losses as early as 2003 and while they claimed to have about US$56 million under management in February 2005, in reality most of the money had already been lost.

Sim Attorneys, which is acting for the Mauritian liquidator in South Africa as well as a number of brokers who sold investments in the Leaderguard group, sent a letter to investors in November, 2006, outlining possible liability on the part of the auditors, a trust company, a bank and a financial services company that provided services to Leaderguard Spot Forex. Sim said that there were good prospects of recovering money from the service providers within a year; but if legal action was necessary, it would take longer. The liquidator has so far recovered assets worth about R10m.

Sim's letter to investors says it has been established that some of the directors of Leaderguard Spot Forex had acted negligently, recklessly and fraudulently and that money could be recovered from them. However the liquidator thinks he should initially focus on recovering money from third parties as these efforts are more likely to be successful.

Papers filed by Jose Thibault allege that KPMG Mauritius failed to conduct its audit function in no less than 20 respects, including that KPMG had failed to satisfy itself that Leaderguard had sufficient financial resources at its disposal to continue its business and to meet its liabilities, and that it failed to establish that Leaderguard had failed to process all its banking transactions through a Mauritian bank account.

A senior partner of KPMG Mauritius, Wilfrid Koon, said that the firm had received a copy of the summons. "KPMG Mauritius is not aware of any reason to doubt the reasonableness of the work undertaken in connection with the engagements concerned," Koon said. "Lawyers have been retained to represent the firm in the defence of the proceedings, which will be vigorously contested."

The case is expected to be heard in Port Louis at the end of February next year.