In a new twist to the Dealstream saga, the curator of the failed online brokerage confirmed on Tuesday that former CE Russell Leigh was being investigated for his dealings in companies in other countries, and not just for the collapse of the local business. <\/p>\n
Bernard Levenstein, the curator of Dealstream, said on Tuesday investigations were under way, but with many people on leave not much was happening. <\/p>\n
“We’re engaged with various regulatory bodies. And we’ve been speaking to the authorities regarding the actions of Leigh. <\/p>\n
“We haven’t laid formal charges, but there are various suspected criminal activities,” Levenstein said. <\/p>\n
Dealstream went bust at the end of September, when it could not honour its financial commitments to Rand Merchant Bank (RMB). <\/p>\n
It was found that Dealstream raided its customers’ accounts to keep paying RMB. <\/p>\n
Eventually, with the market in free fall, it had to stop trading, and Leigh fled the country. <\/p>\n
At the curator’s last count there were outstanding liabilities of more than R233m. <\/p>\n
Companies owed money included RMB, the Industrial Development Corporation, Ernst & Young, Vox Telecom, Control Instruments and sundry creditors and investors. <\/p>\n
Levenstein could not give fresh figures yesterday, but said the liabilities “substantially” exceeded the assets. <\/p>\n
He reiterated that the bulk of the missing cash went to shore up Dealstream’s trading commitments to RMB. <\/p>\n
“I don’t know where he is. He says he’s in Israel,” Levenstein said of Leigh, but he had also heard that Leigh might be in the US. <\/p>\n
Leigh has been in e-mail contact with the curator since October. <\/p>\n
No formal extradition process had begun, but Levenstein said the authorities would try to extradite Leigh from wherever he might be, if they could. <\/p>\n
With the curator now following leads on companies in other countries, the trail of destruction in Leigh’s wake may be broader than first suspected. <\/p>\n
Levenstein, who is still working for a few hours every day from Dealstream’s offices, said he was updating cash flows and reconciling what he could from the company’s bank statements. <\/p>\n
He is due to issue a release to the Pretoria High Court on February 20 next year. His last report, handed to the court last month, was embargoed after RMB objected to Levenstein’s statements about the merchant bank’s inability to provide him with all of the information he had requested. <\/p>\n
Because of this embargo, Levenstein was unable to comment yesterday on whether or not RMB had now furnished him with the details for which he had asked. <\/p>\n
Before Levenstein’s last document was embargoed, he noted that the JSE was aware of Dealstream’s misleading statements about all of its trading being covered by the JSE, but that the exchange had failed to act. This, said Levenstein, might make the JSE liable, but the exchange has disputed this. <\/p>\n
Dealstream was dealing primarily in single stock futures and contracts for difference (CFDs). <\/p>\n
The former are listed on the JSE, and are guaranteed and regulated, but CFDs are over the-counter instruments that are neither regulated nor guaranteed. <\/p>\n
Nicky Newton-King, deputy CE of the JSE, said recently that the stock exchange had closely examined the curator’s report. <\/p>\n
She said the JSE did not believe that the report demonstrated any level of liability for the JSE.<\/p>\n