On 3 September 1996 the Committee decided to conduct a section 8 (1) (a) investigation into the business practices as applied by Mr M M  Nxumalo (ID No. 4411285437088), XB National Care Society (Pty) Ltd and any director, employee, agent and/or representative of any of the aforementioned. The intention of publication of the notice of investigation was confirmed again on 8 March 1997. Notice No. 1194 of the investigation was published in the Government Gazette dated 22 August 1997.

XB National Care Society was incorporated on 4 September 1995, and its registered number is 95/09374/07. M M Nxumalo was the registered shareholder, sole director and Chairman of XB despite his allegations. This was also confirmed by Pieter Johannes du Toit.

XB opened an account at the beginning of 1996 at Nedbank in the name of XB Care Society, Account No. 700007 190805 1908 67202173. When XB Peoples's Society was placed in liquidation XB debited the bank accounts of clients who had signed debit orders in favour of a liquidation entity. This was done without knowledge or prior permission of clients. This action was likely to impact negatively on its relation with clients.

There was evidence that XB Guards had funded most of XB's funeral costs when members monthly collections could not cover all the burials. On 17 May 1997 officials were shown counterfoils of cheques of XB Guards that indicated payments made to members of societies for burials. This proved the fact that XB and XB Guards were operated as one company by Nxumalo. XB Guards was used as an underwriter of XB although it was not an insurance company. This had continued despite the fact that Rentmeester had agreed to underwrite XB's policies. It had happened that some members had paid their contributions but could not enjoy the funeral benefits. In the absence of a qualified underwriter all members of the Society were not safeguarded against any future non-payments of claims. Therefore they were unduly exposed to some risk. This action by XB has unreasonably prejudiced them and the conduct is considered to be harmful.

Nxumalo would not provide the information requested by the officials such as cash books, ledger and debtors books and cheque books. He explained that they were inviolable private property of XB which would not assist in the investigation. He further submitted that the books asked for could do nothing to prove or answer to the listed complaints that were received. Apparently this was done as they believed that they were entitled to their privacy and confidentiality under the constitution. It appears that XB operated without proper keeping of books of accounts and this was also a cause for concern.