'Pyramid scheme' under the spotlight

The South African Reserve Bank has appointed forensic auditors to investigate a suspected multimillion-rand pyramid scheme owned by a 26-year-old tycoon.

Jabulani Ngcobo, who has been dubbed Durban's King of Bling, recently splashed out an estimated R1-million for his 26th birthday party and the promotion of his controversial company, Cash Flow Properties.

His stock market investment company, which has attracted the attention of both the SA Revenue Service and the Reserve Bank, has about 12 branches, and over 1000 investors who have been promised "daily returns of between 10% and 30% on their investments".

This week the Reserve Bank revealed that audit firm Thabani Zulu & Co had been appointed to investigate Ngcobo's company.

The firm's forensic auditor Eckhard Volker said the probe would include establishing whether Ngcobo's company was illegally operating as a financial institution, thereby contravening the Banks Act of 1990 - Act 94 of 1990.

"There are allegations that they have contravened the act and we have been appointed as temporary inspectors to find out if that is so," he said.

The audit firm is busy analysing "a massive quantity of documents" seized from Ngcobo's company during a raid two weeks ago.

The forensic auditors recently interviewed Ngcobo and his business partner Mzabalazo Dlamini.

"I'm busy compiling a report ... and the Reserve Bank will decide what to do once we've submitted it," said Volker.

Ngcobo, who could not be reached for comment this week, has repeatedly denied that his company was a pyramid scheme or operating illegally.

Having started his business empire with a debt-collecting operation, Ngcobo opened Cash Flow Properties in 2009.

Two months ago, he told the Sunday Times: "I'll be a billionaire through this company... I (eventually) want government to lend (sic) money from us."

He also claimed to own seven exotic cars worth about R4.2-million and a R2.5-million, five-bedroomed home in New Germany in Pinetown, west of Durban.