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Leaderguard Affair Drags On In Mauritius

by Lorys Charalambous, Tax-News.com, Cyprus

22 November 2006


More than a year after a Mauritius court imposed heavy fines on the principals of Leaderguard Spot Forex - which lost $59m of investors' money - for falsification of documents, the firm's liquidator says he thinks there is a good chance of recovering money for investors.

Liquidator Jose Thibaut will shortly hold creditors' meetings to report to investors on his progress. He says he is focusing on obtaining settlements from various companies that provided services to the failed foreign currency trader.

Nearly 2,000 lost money in the crash of Leaderguard Group in early 2005. Its managers were said to have taken an enormous management fee of 1.8% of its assets each month.

In October, 2005, the Intermediate Court of Mauritius convicted 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.

Major questions remained unanswered about the management of Leaderguard, its relationship to South African firm Towergate, the company's auditors, its directors, who include Jacobus Venter, Warren Luyt and Stephanus Pretorius, and its 'Risk Manager', Renso du Plessis, who is alleged to have been connected with a previous scheme which lost its investors millions.

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 last week 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.

The liquidator has established 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 says that there are 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.


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