Wrap Text
Outcomes of special subcommittee investigation findings of and board responses to PwC report
FORTRESS REIT LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 2009/016487/06)
JSE share codes: FFA ISIN: ZAE000248498
FFB ISIN: ZAE000248506
Bond company code: FORI
(Approved as a REIT by the JSE)
("Fortress" or "the Company")
OUTCOMES OF SPECIAL SUBCOMMITTEE INVESTIGATION
FINDINGS OF AND BOARD RESPONSES TO PWC REPORT
Shareholders are referred to the Company's previous announcements on SENS regarding the establishment of
a Special Subcommittee ("the Subcommittee"), and subsequent appointment of PricewaterhouseCoopers
("PwC"), to undertake an investigation into allegations about share trading activities by and in the Company,
as well as certain historic property transactions by Fortress and its directors.
Fortress is pleased to announce that the Subcommittee has completed its investigation in accordance with the
scope of work published on the Fortress website in November 2018, and that PwC have issued a report to the
Fortress Board ("the Board") on the findings and conclusions of their investigation, which has found no
substantive evidence that confirmed any of the allegations made either in respect of market manipulation and
insider trading, or, save as set out below, in respect of related parties, conflicts of interest or wrongdoing in
the historic property transactions.
In terms of its stated commitment to make public the outcomes of the Subcommittee's investigation, the Board
has published on Fortress' website a detailed summary of the findings contained in PwC's report, along with
the Board's responses to those findings.
This summary can be accessed at https://cmsignition.co.za/download/files_1184/FortressREITLimited-
TheBoardsresponsetoPwCreport.pdf
Although it was the Board's wish to publish the PwC report itself in some format, Fortress is precluded by the
terms of PwC's engagement letter from doing so without PwC's express consent, which PwC have declined
to provide in terms of their risk management policies and precedents.
In lieu of publication of PwC's report, the Subcommittee has compiled, and the Board has endorsed,
a summary of PwC's findings, which has been reviewed by PwC who have consented to its release.
Regarding the allegations of market manipulation and insider trading, PwC found no evidence that confirmed
such activity on the part of Fortress and its directors in the shares of Fortress itself or of other companies in
the so-called Resilient Stable, or on the part of the Siyakha Trusts in the shares of Fortress.
In accordance with the Board's commitment to co-operate fully with the FSCA in its ongoing investigation
into prohibited trading practices in relation to the trading of Fortress shares, PwC have, at the request of the
Subcommittee, met with the FSCA to share an overview of PwC's findings in relation to the market
manipulation and insider trading allegations.
Regarding the allegations of undue related party benefits and conflicts of interest, PwC found no evidence that
confirmed any allegations of illegality, misconduct or malfeasance on the part of Fortress or any of its current
or former directors in relation to the historic property transactions.
In the absence of any evident wrongdoing on the part of current or former directors of Fortress, which would
have necessitated the appropriate disciplinary or legal action being taken against those parties, the Board has
reviewed these transactions from the perspective of their financial effect on Fortress and its shareholders.
On that objective basis, the Board has determined that there is no reason to consider these transactions to have
been detrimental to the interests of Fortress or its shareholders.
PwC's investigation did, however, find some evidence of inadequate governance, potential conflicts of interest
and poor document management, and identified possible breaches of legislative and regulatory requirements
in relation to these historic property transactions, which are being dealt with by the Company's advisors with
the relevant authorities, to the extent that this is necessary or even feasible 10 or more years after these
transactions.
Based on legal advice received from its advisors, the Board is comfortable that these issues pose no risk to the
Company of significant regulatory sanction or material financial liability.
In respect of possible governance lapses in the historic property transactions, as far as the Board can determine
10 or more years after these transactions, the possible failure by certain directors strictly to meet the disclosure
requirement of the then applicable legislation had no material impact on the decisions of the boards of Fortress
or the affected group companies at the time.
The Board notes therefore that it has no price sensitive information emanating from the Subcommittee's
investigation and PwC's report that would require it to make any further announcement or to caution
shareholders.
During the course of its investigation PwC invited the authors of and complainants under the various
allegations to provide substantive evidence to support their allegations, but certain of those parties declined to
meet with PwC or to provide to PwC any new evidence that is material or relevant to their claims.
Throughout this process, Fortress has made available a whistleblowers hotline for any parties in possession of
relevant information to submit that directly to PwC, but that channel has yielded only two submissions, which
were included in and dealt with by PwC in their investigation.
Accordingly, it is the Board's intention that, after a further round of consultation with interested stakeholders
on matters arising from the Subcommittee's investigation and PwC's findings, the Subcommittee will be
disbanded and any remaining issues relating to governance in Fortress will be dealt with through the Board's
Social & Ethics Committee.
24 May 2019
Lead sponsor
Java Capital
Joint sponsor
Nedbank Corporate and Investment Banking
Date: 24/05/2019 05:05:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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