Southern District Council could be soon a big loser on its P10 million worth of investments it channeled into BluThorn Fund Administrators, a company which is facing a potential liquidation.
The Council invested P10 million with Blu Thorn and as at 31st August 2020 the money was not yet paid back to the Council though it matured on 10 January 2020 hence Council set to lose big. As a result, Chairman Thamiso Chabalala led Council could also see itself battling before the courts of law with the scandal ridden investment firm as the Council’s P10 million is in big doubt.
According to the Council’s Centre of Finance report submitted to the full Council meeting session that took place this week in Kanye, there is uncertainty whether BluThorn will pays back money. The report revealed that the company was placed under statutory management in January 2020. “Due to the state above the company is no able to transact and please note that the role of a Statutory Manager under the Securities Act is to investigate, manage and report solely to NBFIRA. Only headquarters managed to invest and Sub Districts were unable to invest due to low cash flow,” reads part of the report emphasising that this are main issues behind the money invested.
The Council said it engaged Non-Bank Financial Institutions Regulatory Authority (NBFIRA) to get the findings of the statutory manager and map way forward regarding funds that are in danger. In addition, the Finance Centre said as part of interventions pending BluThorn resolution, it will continue investing available funds to increase own source a move that Councilors are against it.
Council Chairman Thamiso Chabalala in interview said the Council is aware of the current conditions facing the company which they invested money on but hopeful Council will be repaid. He said he cannot divulge more details on the matter because it is before courts through NBFIRA. “Yes it is true that the Council made such investments on BluThorn and unfortunately as of now there is no payment we received though the investment have matured. Many Councils across the country are in same problem as of ours but we are following on the issue very well,” he added.
NBFIRA at Court
NBFIRA recently published a public Notice giving update on embattled BluThorn Fund Managers. The regulator has announced that it has acted on the Statutory Manager’s recommendations and filed an application at the High Court seeking an order for it to liquidate BluThorn Fund Managers.
NBFIRA acted based on the Statutory Manager’s recommendations to file an application at the High Court seeking for the company to be placed in liquidation with application still before court.
CEO of NBFIRA Oduetse Motshidisi said in line with Section 57 of the NBFIRA Act, the High Court confirmed the statutory management of BluThorn Fund Managers (Pty) Ltd on April 03 2020. “A comprehensive report with recommendations was submitted to NBFIRA by Statutory Manager.NBFIRA interrogated the report and concluded that BluThorn be placed under liquidation and duly filed an application at High Court seeking for its liquidation,” he buttressed.
BFM was licensed by NBFIRA in 2016 to operate as Collective Investment Undertaking (CIU) within the capital markets industry, having satisfied the licensing and legislative requirements. But, NBFIRA said during its supervisory activities in May 2019 revealed that the company was not compliant with the relevant financial services laws hence closed as per section 57 of NBFIRA Act.
Furthermore, it was established by the authority that BluthThorn Fund Managers was insolvent. “BFM’s audited financial statement of February 2018 revealed that the company was insolvent as its liabilities exceeded assests and authority requested BFM to recapitalize accordingly, “said NBFIRA.