We had a meeting last Thursday

If you eagerly logged into the blog to find out about any news concerning last Thursday's meeting between Edwabond, the FSB, and the NCC, then I'm sorry to disappoint you. I have a suspicion, that anything anybody has to say about this matter - if there is anything to say, will be in the press and probably after the long weekend. Of course this will give everybody the opportunity to enjoy they chocolate Easter eggs.

Of the three participants I must say that I have no doubts about the FSB'. Mr Lawrence Muravha has shown himself to be capable, sincere and above board. He has continuously responded positively to questions and issues, and seems to have an open attitude with the public's interest at heart. Mr le Meme, and the NCC does concern me somewhat. Their manner of handling my enquiry was extremely slick and somewhat evasive, or am I mistaken? But then I might be mistaken in the belief that they have any responsibility to the public, and perhaps their purpose in life is to make companies look good by proudly displaying NCC as part of their armament of credentials.

The third party was, of course, Edwabond, with Carole Gardiner at the helm. She is the person who takes your money, and then follows it up with the advice to consult with a debt advisor (that is if you still have another income of sorts), if they cannot pay you your interest. Now, isn't that extremely humane and helpful - the ultimate in feminine vindictiveness? Caroline Myss, the author, refers to this archetype as the "consuming-mother" figure - they gobble up that which they nurture and maternally produce.

Perhaps I am not taking this meeting too seriously, because I do n ot perceive it having much effect on the outcome of our, the investor's, struggle to get some equity from Edwafin. Yes, it would be with some satisfaction that I would learn of the revoking of Edwabond's licence - at least it would hinder them somewhat in taking others for a merry ride - but it would not return us our money.

A bit of trivia:
I refuse to add the word Edwafin to my spell checkers list of legitimate words. As a result, every time I type "Edwafin" the word processor suggests the words "deafen" and "deathen", like in the deafening silence of our deathening interest payments.

Jingle, Jingle, Jingle

Yesterday I finally received my copy of the letter that accompanied the minutes of the meeting held under the auspices of Edwafin on 17 March 2009.

On opening the letter, a huge cloud of smoke emerged from the depths of the envelope, and when i tried to retrieve the rest of its contents, there was the jingling of shards or mirror. When I finally got to the documents, I understood why.

I have not yet spoken much about Don Hutchinson, the actual financial wizard of Edwafin (in a previous blog I had referred to Brian Poliah as the wizard, yet wizards they all be), and if I reckoned that Stapleton was a conjurer, then here we have a true emulator of Derren Brown. The main difference is that Derren Brown is successful.

The first three paragraphs is no more than a rehash of the oft-repeated structure of Edwafin and its fast diminishing organogram (I just love that word and found it on the now extinct Edwafin web siten - it's so earthy). Then it is stated that July 2008 was a record month, and one presumes that that is in terms of capital raised via debentures for the purpose of the groups business operations. Note that he doesn't mention what the "business operations"are. He continues that the following months were dismal as few debentures were issued and this is where the countries appalling financial situation begins to have an effect. Now, that they are not receiving any more capital via debentures, the money to pay investors is beginning to dry up. No mention is made of any income generated through business ventures, or that such hypothetical business is effected by the bad economic climate. Yet, he starts the same paragraph with the words "...Edwafinj is essentially a venture capital group, i.e. public funds are taken and invested in projects and companies that produce revenue streams and capital growth ...". Which projects? which companies? which revenue streams?

And then he admits it: "The company's cash reserves became fully depleted by the end of November beginning December 2008." Is that not a miracle? without any business generating finance, and no more interested investors - hey, no more money. We must keep that in mind for future reference.

Hutchinson, of course does not put the investors' minds at rest by assuring them that all the investments are covered by adequate assets.

Then he carries on by stating that they are expecting R40,000,000 from somewhere, first in November and then April/May. Yet, later on in the letter, Stapleton pegs the date to be in June 2009 (reminds me of the song "And my hat blows, blows, blows in the wind"). I wonder if that investors name is Paul or perhaps Peter? In any case we are now past the end of April and one word applies: zilch.

Then rainbow paints was sold - it was profitable though. If something is doing well and is managed properly, then you sell it don't you? So that you no longer have to receive the income from it. This is not the whole story according to what I have received from various sources.

And then again we have the sleight of hand: "Edwafin is profitable but is has suffered hugely in terms of cash flow shortage." Yep. "There are prospects on the horizon" - now isn't that telling us something!
Then follows a whole account of off-shore investments, that they cannot lay their hands on, and peculiar set of measures that the company is undertaking and that one would have expected from a responsible company in any case. Then some more promises, conjectures, counting chicks before they bred, and pie in the sky rantings.

Actual bottom line
And then came the actual crunch, his recommendations (two of them essentially):

• No more interest payments for the rest of the year.
• No more capital refunds for the rest of the year.
• He is essentially recommending that they break the law! In his arrogance is forgets that not only is he recommending that the contractual agreements be broken with investors, but that he and brother Stapleton have already done so unilaterally already. That should entice new investors into the Edwafin fold.
  

But that is not the end of it

• He actually asks those at the meeting for more money. Those poor pensioners have to contribute more (5 to 7 million Rand) to make DMC a success. My word, that must have taken gutspa.
  

The rest of the correspondence covers questions asked by the investors and the predominant question was concerning the refund of their investment capital. Key to the response was Mr Hutchinson's statement that

"if funds were not available to pay the interest then it stands to reason that the capital cannot be paid.... The business is solvent but assets cannot be converted into cash quick enough."

Now, I ask you with tears in my eyes, what assets are being converted into cash? Are the banks not prepared to finance a good part of that fantastic car, the DMC? (you must read the rants and rave of Stapleton about this vehicle, but nobody seems interested in financing it). It is a pity that the company did not have the foresight of including the balance sheet with the circular, it might just have made the whole episode a bit more believable.

Patrick, if you were still wondering why I did not keep my word about publishing this blog, then wonder no more. Your colleague, and you (a tiny bit) has provided the answers yourself - you never had the intention to refund me, like you don't have the intention to refund anybody else. At the same time you hold the investors at randsom with the threat of financial ruin should they persue the issue.

And then their was a bit of showmanship (shame on you Patrick). Stapleton asked that people put up their hands if the had not received interest payments before August. The note says: "No one raised their hands". You old rascal, you, back on the old economic crises again; you had no business of any consequence at that time and you only relied on new investors, as you still do now . Now, even I saw through that little trick of deception.

It is my confirmed conviction that people may believe what they want, and naturally may act accordingly. That is part of the universal spirit that pervades us all. I must admit though, that I personally have difficulties in understanding that certain souls cannot perceive the archetype of deception, when it presented to them on a platter - this is exclusively my opinion. Yes, I'll have to come back to this earthly place again, just to try and understand that.

New Edwafin Business Dictionary available soon

I suspect that, in an effort to expand on it meagre business activities, Edwafin is working on a new edition of an English business dictionary. I have selected a few words, which have been given new meaning by its learned management, whilst some have been removed completely since they are seemingly redundant.

An example of the expansion of the meaning of the word "truth". Collins describes it as

<--- Collins Cobuild English Dictionary --->
truth
truth truths
1. The truth about something is all the facts about it, rather than things that are imagined or invented.

We have all experienced the interpretation that Edwafin management gives to the word truth: it is something that is so, or will happen on a certain date, or perhaps it won't. At least it leave the choice to reader to imbue it with a value that is most suitable.

More fun are the words that are totally removed from the vocabulary, essentially because they have become devoid of any meaning. For example the words bankrupt and insolvent:

<--- Collins Cobuild English Dictionary --->
bankrupt
bank.rupt
bankrupt bankrupts bankrupting bankrupted
1. People or organizations that go bankrupt do not have enough money to pay their debts. (BUSINESS)

1 without enough money to pay what you owe: insolvent
...
someone who has officially said that they cannot pay their debts

These words are replaced according to Edwafin (alias Patrick Stapleton) by the words "cash flow problem." This would again mean that the meaning of the phrase would have to be changed:

<--- Merriam-Webster's Collegiate Dictionary --->
cash flow
FUNCTION: noun
DATE: 1954

1 : a measure of an organization's liquidity that usually consists of net income after taxes plus noncash charges against income
2 : a flow of cash especially : one that provides solvency

The American Heritage Dictionary has a very quaint slant on the phrase "Cash Flow"

<--- American Heritage Dictionary --->
cash flow
cash flow n.
1. ...
2. The cash receipts or net income from one or more assets for a given period, reckoned after taxes and other disbursements, and often used as a measure of corporate worth.

Based on the above it appears that the term "cash flow" is in reality a function of the terms bankrupt and insolvent. Therefore, if you are unable to pay your debts, and don't have the assets to cover those debts, then, according to the new Edwafin interpretation, you have a cash flow problem. The terms bankrupt and insolvent no longer have their traditional meaning. There is of course one context in which it still can be used:

<--- American Heritage Thesaurus --->
bankrupt
1...
2...
3...
4. If you say that something is bankrupt, you are emphasizing that it lacks any value or worth.
He really thinks that European civilisation is morally bankrupt.

Housekeeping - NCC back on the list; SAVCA? and statistics

The morning was long, and gave me ample opportunity to think about my blogging activities. First I had to get up along with the birds because my licence had to be renewed. I discovered that my old licence had expired some days ago, and anticipated a good few hours in a queue with assorted fellow citizens. Not so! No waiting in line, and after half an hour we were back home, temporary licence in my pocket. Yes, its good to be legal again. I need to compliment the Tshwane council with their excellent, pleasant and efficient service.

Before I get to the statistics of the blog, I need to make some announcements:

NCC back in the loop
The NCC is back on the email list, and this time Clive le Meme will receive all the blog updates and comments as a direct feed. Now, I must add that I do this with some hesitation, as they don't seem like a very cooperative lot, and it is my sense that they are not friendly either. The reason why I decided to let them be in the first place, is that I considered them of little consequence in the matter of Edwafin. However, after some thought and after listening to the little devil on my shoulder, I fully realize that they are solidly involved in the Edwafin debacle. Let's be honest, their acronym appears on the brochures of Edwabond, the folks that dealt with the marketing of our dentures.

I quote again from the NCC's website:

We undertake to perform a risk management due diligence of our client’s practice and thereafter implement a compliance monitoring system that will not only exceed the requirements of the legislation but will also help to maintain the profitability of the practice.

According to Mr Le Meme they have been in contact with Edwabond since October last year, which to me is an indication that they must have been aware of the brewing problems since then. The question is now: "What did they do to try and remedy the situation?" Le Meme states in an email that he is satisfied that they complied with their brief, but where do we see any of the results. Is it not for us the public to decide whether a public body like the NCC has fulfilled their brief? How is it that six months later we have to deal with this mess, while the NCC has seemingly been silent all that time. One wonders what the NCC did to help maintain the profitability of Edwaband/Edwafin, or how the company was allowed to continue its activities, while they were aware of the financial difficulties.
As mentioned before, Mr Le Meme will receive our regular updates, and if he prefers not to, I shall replace his address with that of the CEO of the NCC, Adv. Opperman.
Tut, tut, tut, Mr Le Meme, we are waiting with abated breath on information about your activities in respect of Edwafin.

SAVCA revisited
You may remember that SAVCA was mentioned in the same breath as the NCC, and they were also placed on the email list. At least the NCC responded in a manner of sorts, but SAVCA is a quiet as the local graveyard that was raided by the ghost busters. Alas we found another email address, the executive officer, Mr JP Fourie, and he will be receiving updates from this blog in future. I repeat my previous quote taken from the site of SAVCA:
The codes of conduct of the SAVCA includes the following clauses:

Members will conduct their business in a responsible way and will not engage in practices which would be damaging to the image and interests of the venture capital and private equity industries.

Members will assure a high standard of their investment portfolio and will avoid financing enterprises or participating in activities which are contrary to these goals. They will take a long term view of the economy and private equity and venture capital industries, rather than engage in short-term speculation.

Each member shall promote and maintain ethical standards of conduct and deal fairly and honestly with all business concerns seeking its assistance, with all companies to or with whom it makes loans or investments, and with all other private equity and venture capital companies.

No venture capital or private equity fund may be used to promote the welfare or assist its directors, managers, employees, nominees, and representatives, except insofar as they benefit from the success of the fund according to established compensation and profit sharing contracts.

Members will be accountable to their investors by fully disclosed operating and financial reports.

Unethical conduct will be deemed to include any evasive device intended to conceal non-compliance with the Code of Conduct and any regulations enacted by the proposed Professional Standards Committee, designated by the committee of SAVCA for its enforcement.

Members will abide by the code of conduct and all rulings and regulations issued by the proposed Professional Standards Committee designated by SAVCA committee.

Isn't it interesting, but perhaps typical, that two of the more important bodies who's emblems and acronyms were used to promote Edwabond, are now tiptoeing through the tulips. One presumes that their work is easy when all goes well, but that it increases in complexity when trouble brews and actual active attention needs to be given to resolving a problem.

Statistics
A few days ago, I installed a statistics module in this blog, and I'm sorry that I had not thought of it before, as one has no idea about how many people have visited the site since its inception. Some figures for the period 6 April until today (2.5 days):

Total visitors: 488
Documents accessed: 186

Entering the sixth month of financial draught

As we statrted April, we started the sixth month of essentially non-payment by Edwafin. For me it is also thee fourth month that I have been trying to get my investment back from our friend Stapleton.
Perhaps you will recall that NCC is used as a credential on the promotional material of Edwabond, the Edwafin subsidiary that promotes and handles the debenture products. A few days ago I added the email address of the CEO of the NCC to the blog mailing list. I sense that that did not go down well.
Somewhere I missed a beat or two, as the NCC's Clive le Meme informed me via email that they have been in contact with Edwabond since October last year already, and that he will be attending the meeting with the FSB and Edwabond on 8 April. As far as I was aware, the problems around Edwafin (and its subsidiaries) only became the subject of government scrutiny during recent weeks. Anyway, read for yourself:
20090404 Email From CNN 1

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I removed the NCC's email from the list as it is clear that we don't share the same planet, and that we have to do here with a highly evolved species that clearly does like interacting with standard humans. Thus I provided Mr Le Meme, with my arguments:
20090404 Mario Responds to CNN 1

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To which the response was:
20090404 Email From CNN 2

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Well, clearly that was the wrong address, and is a clear indication that elements of 19th century snobbery is well an alive in the 21st century. The point that I tried to convey to Mr Le Meme is that people bought into Edwabond/Edwafin based on various factors, and one of those is the credibility that organizations like the NCC gives to such a financial institution. Five/six months after things begin to collapse at Edwafin, they provide the enquirer with a curt "we feel that we have done enough, and our duty." My -my, during those intervening months attempts were still made by Edwabond to rope investors into their scheme.

But let us forget about the NCC. An important aspect emerged from my interaction with the "entity" as Mr Le Meme refers to the NCC. Both the FSB and the NCC, can only deal with Edwabond, and have little jurisdiction over Edwafin, if any. Beside revoking Edwabonds licence, they have little to contribute to recovering any or some of the investors money. or to bring any perpetrators to book. It would, therefore, be prudent to rather concentrate efforts on recovering our money via other legal means, and on reporting progress that may be made by other Government bodies. I must say, though, that most of them are extremely quiet.