The SCA has clarified the powers of investigators appointed to investigate Ponzi schemes and facilitate the repayment of illegally obtained funds to duped investors. The Mercury reports the court was dealing with a case related to the Travel Ventures Institute (TVI) scheme, identified as a Ponzi scheme and shut down by the Reserve Bank. Judge Nambitha Dambuza, with four judges concurring, said TVI – promoted as an international direct-selling company – had the structure of a pyramid scheme.

An estimated R1.6bn had been invested in the scheme in the country. The case before the court involved a distributor who had opened bank accounts in the name of TVI. The Reserve Bank had appointed a temporary inspector, Johannes Kruger, to investigate TVI and the distributor. Kruger brought a High Court application without notifying the distributor, and obtained an order to recover and take possession of all the assets. However, the interim order was uplifted by the court in November 2013.

In the SCA judgment, Dambuza said that even without a court order, Kruger had been within his rights to take control of the possessions and assets. She said the Banks Act was clear on the functions of the administrator and it stated that the person must recover and take possession of the assets and facilitate the repayment of the money.

Full report in The Mercury (subscription needed)

Kruger v Joint Trustees