So, that liar, cheat and fraud, Jack Milne, will spend about a year in jail (even though he received a sentence of eight years). Although I would not wish imprisonment on anyone, it does give me some satisfaction that Personal Finance placed the first large question mark over Milne's so-called guaranteed investment, which has to date cost investors R160 million.
When Milne launched his PSC Guaranteed Growth (PSCGG) fund, Personal Finance was the only publication to criticise it, explaining exactly in detail where the risks lay.
A commentator in another financial publication, instead of asking probing questions, endorsed "my friend, Jack Milne". This person has since disappeared from the scene.
Personal Finance's advice that readers should treat Milne's offering with a great deal of caution was met with abuse and threats from Milne and his cronies, including numerous personal attacks on me.
Hopefully, Milne's fate will give other people who are ripping off investors pause for thought and make them realise they may have to pay a penalty.
There are, however, a number of issues that still concern me about the Milne case. One is the number of people who should have known better than to have publicly endorsed the scheme and to entice individuals to hand over their money to Milne.
Top of my list is one Jim Millar, who owns something called the Financial Fitness College, which apparently educates people about their finances and sells them financial products.
Millar also writes a column for Money Marketing, a magazine aimed at financial advisers.
Millar was a close business associate and friend of Milne's. What makes Millar, an Irish national, even more interesting is that he served as a director of PSCGG in its early months. As such, he was a director when the prospectus of the company was compiled and published. But, at the time, Millar said nothing about the falsehoods in the prospectus and, in fact, encouraged others to invest in the scheme.
You may remember that Milne also managed an investment educational outfit, Progressive Systems College, with which Millar was also associated. This is a man who now purports to be educating people while a wing of his business sells financial services products!
Abusive and threatening
Another interesting thing about Millar is that when I started asking him questions about his role as a director of PSCGG and his past, he became as abusive and as threatening as Milne, repeating many of the same accusations made by Milne - virtually verbatim.
Like Milne, Millar has also refused to answer a number of questions about himself, including refusing to provide Personal Finance with comprehensive details about his past.
I have no idea whether or not Millar was aware what Milne was up to in using investors' money to ramp share prices in the Tigon group. (Ramping means artificially pushing up a share price.) Millar says that he was not aware of this.
What concerns me is that Millar did not have the nose to ask the very questions that we asked at Personal Finance. If Millar was not sufficiently informed to have asked the right questions himself, he could have used the questions we provided in Personal Finance.
By his own admission, Millar was impressed by the "prima facie credentials of the Tigon group" at the time PSCGG was launched. Tigon, which is currently under investigation for tax fraud, provided the now unmet guarantees.
Incidentally, Susan Bennett, another director of PSCGG, and Porritt are still to face charges related to PSCGG as well as to what happened at Tigon.
Obviously, Millar does not investigate many things in much depth, because if he did he would have found that a very dark cloud was already hanging over Gary Porritt, the chief executive of Tigon, and Tigon itself.
Among other things, no reputable asset manager in South Africa, that I know of, would invest money in Tigon because of concerns about what was happening in the company. This was long before the launch of PSCGG. That fact alone should have concerned Millar.
False claims
Millar says he resigned after serving as a PSCGG director for four months, because, he claims, Milne would not show him the investment portfolio. Good for him, but Millar should have been concerned about that from day one, as well as the false claims in the PSCGG prospectus and the reputations of Porritt and Tigon.
He was a director of PSCGG and as such had both legal and ethical responsibilities in terms of the Companies Act. He had an even greater obligation to properly check out the operation than those advisers who merely sold the products. If he did not know what the duties of a company director entailed, he should not have accepted the appointment in the first place.
My concerns about Millar and his company and their ability to give sound financial advice started some years before the Milne affair. As a result of these concerns, I stopped Millar and his associates from speaking at Personal Finance events.
Now to get to another of my concerns about PSCGG. A number of financial advisers also recommended PSCGG to investors. If I was one of these investors, I would be preparing to sue the adviser who gave me such advice. There is a legal precedent for doing so in the Durr vs Absa case, where advisers working for Absa Bank advised people to put their money into Masterbond. The court found that the advisers had not done the required work in checking out Masterbond.
I would think the same principle applies here.
Non-disclosure
After all, how can any reputable adviser suggest that you put your money in a financial organisation that fails to disclose the details of its underlying investments? This is what Milne consistently refused to do.
If I were an aggrieved party, I would be asking the Financial Services Board why anyone who actively sold PSCGG and/or took commission for doing so should be registered as a financial service provider.
This is a particularly relevant question now that full implementation of the Financial Advisory and Intermediary Services Act - which requires financial advisers to conform to certain fit and proper qualifications - is just around the corner.
It is about time that advisers who give inappropriate advice that leads to people losing large sums of money are banned from the industry, not only in the interests of investors but also in the interests of the good names of those many advisers who do a good job.
It recently came to my attention that my name and that of Personal Finance had been used to infer that we had given a certain financial adviser our "stamp of approval".
Neither I nor Personal Finance endorse any individual financial adviser.
We do advise that you should contact the Financial Planning Institute, which issues the Certified Financial Planner (CFP) accreditation. You are on the right track if you seek advice from a CFP, because he or she has passed tough examinations and has to abide by a strict code of conduct.