Estate agency sector faces widespread probe

Image courtesy of FreeDigitalPhotos.net and Salvatore Vuono

The board has brought in auditing firms SAB&T, Ernst & Young and G&G Chartered Accountants to investigate the real estate industry.

Alleged irregularities

This comes after Wendy Machanik Properties, one of SA's leading estate agencies, had its trust accounts placed under curatorship following alleged financial irregularities in the management of the accounts.

Up to R25m may be involved, according to the findings of a risk management report provided to the South Gauteng High Court by the board.

The court appointed a curator to control and administer the accounts of the company, which belongs to property doyenne Wendy Machanik.

The court also issued an interim interdict preventing Machanik from operating the trust, savings or other interest-bearing accounts of the company.

Inspections

Communications head at the estate agency board, Portia Mofikoe, said yesterday the auditors would perform inspections on behalf of the board in their respective regions for 12 months, starting with transactions from November last year.

"(They) will perform inspections covering the validity of the Fidelity Fund certificate, which are issued to estate agents. ... The firms will also inspect trust accounts and investment of trust monies by estate agents," Mofikoe said. They would investigate payments of more than R25000 into trust accounts.

Public complaints and education

Mofikoe said the investigation was prompted by numerous complaints from the public.

"We have stepped up our consumer education and this has helped a great deal because people are more aware of what needs to happen when transactions take place between an individual and an estate agent when it comes to buying and selling a house," she said.

"The message we want to send out is that nobody is above the law. Machanik was our board member and she was just last year reappointed, but she has since stepped down after finding out that she was being investigated."

Ensuring compliance

The estate agency board is obliged to take all steps required to prevent, or identify and report, money laundering.

Mofikoe said the auditors would ensure compliance with the Estate Agency Affairs Act and the Financial Intelligence Act.

"The inspections process will in future also be used to monitor compliance of education and training with respect to applicable legislation and Estate Agency Affairs Board internal policies," she said.

Source: Business Day