Officials of the Committee visited JCS on various occasions and held discussions with Maharaj and his attorney. The investigation by the Committee was frustrated on many occasions. The following serve as examples.

29 April 1996: The Committee received a complaint from (TISA) against Maharaj. The allegations were, inter alia, that JCS did not have a registered property trust, the 'Points Rights' being sold to members therefore had no "legal origin", the vendor had not registered with the Estate Agents Board and did not possess a fidelity certificate and that a management association had not been formed.

08 May 1996: The Committee faxed letter to JCS about the complaint received.

13 May 1996: The Committee received a reply from JCS. JCS threatened legal action against TISA.

15 May 1996: The reply of JCS was faxed to TISA.

16 May 1996: TISA sent a fax to the Committee in which it was stated that it would appreciate the assistance of the Committee as it believed that the public was being drawn into the scheme on a daily basis.

17 May 1996: The Committee resolved to undertake a section 4(1)(c)(2) investigation.

21 May 1996: Officials visited the offices of the attorney in Durban.

22 May 1996: JCS sent the Committee a fax in which JCS alleged that the trust account (see section 2) was in the process of being registered.

13 June 1996: The Committee received a fax from TISA in which the Committee was requested to conduct a section 8(1)(a) investigation.

12 July 1996: The attorney sent a fax to the Committee in which he referred inter alia to sections 23 and 24 of the Constitution of the Republic of South Africa.

22 October 1996: The Committee wrote a letter to the attorney stating inter alia:

"Should your client not comply with this request before 8h30 on 24 October 1996 the Committee would be left with no alternative than to publish its intention of formally investigating your client's business activities in the Government Gazette".

24 October 1996: The Committee resolved to undertake a section 8(1)(a) investigation in terms of the Act into the business practices of Maharaj.

28 October 1996: The Committee received a letter from the attorney in which he stated that he would revert to the Committee in due course.

04 November 1996: The attorney faxed a letter to the Committee. He said that his client's instruction was that he would bring an application against "... such official in his personal capacity; report the matter to Adv. Selby Baqwa; and refer the matter to the Minister of Trade and Industry for an enquiry".

21 November 1996: The Committee invited Maharaj and his attorney to meet the Committee on 5 December 1996.

28 November 1996: The attorney informed the Committee the following: "Our client will not be attending (the meeting on 5 December 1996) but will expect a written report once the meeting has been held".

21 January 1997: An official called the attorney and it was agreed that a meeting would be held at the offices of the attorney on 20 February 1997. The meeting of 20 February 1997 was attended by the Maharaj, the attorney and two officials. On the same date the attorney wrote to the Committee stating that his client "... hereby gives his irrevocable and unequivocal undertaking to comply with the code" and "We will be forwarding you all other requirements relating to the trust account, audited certificates, stock holding and constitution".

22 May 1997: The Committee received two more complaints against Leisure Club.

27 October 1997: The Committee received a fax from TISA dated 24 October 1997 stating that "... despite various letters sent to the attorney as well as the company concerned, we have not received as much as the courtesy of a response in this matter".

On the same day the Committee wrote to the attorney that, in view of the fact that:

"... the Committee had already resolved on 24 October 1996, more than a year ago, to undertake a section 8(1)(a) investigation in terms of the Act into the business practices of your client,

your client gave his irrevocable and unequivocal undertaking to comply with the code and that you would be forwarding all other requirements relating to the trust account, audited certificates, stock holding and constitution as arranged during our meeting in Durban on 20 February 1997, and

the required information and documents have not yet been furnished to the BPC,

it is clear that the Committee have bent over backwards to accommodate your client. A summary of events would be put to the meeting of the Committee on 19 November 1997 and the Committee would probably confirm to proceed with the section 8(1)(a) investigation".

5.1.2 The attorney of Maharaj withdraws as attorney of record

In a letter dated 10 November 1997 the attorney inter alia wrote the following to the Committee: "Be that as it may, our mandate has ended and our files are now closed".

On 20 November 1997 he again advised the Committee: "Please liaise with JCS Developments directly". However, the Committee again received letters from the attorney dated 24 November 1997 and 8 December 1997 which seemed to indicate that he again represented Maharaj.

On 20 February 1997 he stated in a letter to the Committee that his client "... gives his irrevocable and unequivocal undertaking to comply with the code". In a letter dated 19 December 1997 to the attorney the Committee wrote: "Now your client contends that he does not know in what respects he is in breach of the code. He must have known in February 1997 in what respects the code was breached, otherwise he could not have given an undertaking to comply with the code".

Also on 19 December 1997 the Committee said that officials of the Committee should meet with the attorney and Maharaj at his offices to finalise the investigation. It was put to the attorney that rather than a vague "undertaking to comply with the code", his client could spell out exactly what he will comply with and when he would do so.

5.2 The Investigation Continued

It was established that the structures which were set in place according to the constitution of the club were non-operational. For example, the non registration of a property-owning trust. This resulted in point rights being sold to clients of which the weeks were still registered in the name of the owners of the weeks or JCS. This concerned the Committee because as sole shareholder Maharaj owned these weeks and not the property-owning trust as required by the Property Time Share Control Act. Maharaj also did not see to it that a management association was put in place. He administered Leisure Club as a management association, in spite of the sales agreements specifying that he (JCS) could not be involved with the managing association. The structures that did exist, were cumbersome and ineffectual.

The members were at risk as to both the assets of Leisure Club (the non-registration of a property-owning trust) and the making of reservations at the resorts. It was also evident from the levy statements that the fees collected from Leisure Club's members, could not meet the levy commitments of the different resorts. The non-payment of these levies resulted in the accommodation rights of the units not being available to clients.

At some stage after the commencement of the investigation, Maharaj did register a trust. This trust, however, was not a property-owning trust, but resembled a "family" trust with Maharaj as the only trustee. He thus had sole discretion over funds. The trust registered by him defeated the requirement of a property owning trust. It was found that a significant portion of the stock of Leisure Club consisted of weeks ceded to the "family trust". This put the members that had bought points at severe risk.

An important marketing strategy employed by pooling schemes is that members need not purchase sufficient points to buy a full week's accommodation. They are afforded the opportunity to buy fewer points at a time which could be supplemented at a later stage. The lesser number of points bought could also be accumulated by the client which would enable him to enjoy a week' s accommodation, say every second year. Another marketing strategy is that members could visit any resort of their choice and they were not limited to the resort where they have originally bought a timeshare week. These two marketing strategies were also exercised by JCS. However, the successful application thereof was possible only if JCS has had stock available at the timeshare resort requested by the member.

JCS had bought weeks in various resorts and a number of weeks were ceded to JCS. This represented 20 resorts in which JCS had at its disposal 92 weeks. Yet, most of these weeks were not transferred to JCS and were still registered in the names of clients. Thus, a number of weeks were registered in the name of JCS and other in the names of the original owners. The weeks had to be transferred to a property-owning trust to ensure that members that bought points indeed had assets. JCS sold points rights to 118 clients. The available stock did not match or exceed the stock acquired by clients. Several clients of JCS were still indebted to JCS because the latter financed their purchases of points. Others were also considerably in arrears with payment of their annual membership fees to Leisure Club due to the latter's inadequate administration of the scheme. A brochure used in the marketing of the scheme showed 90 different resorts, each with an allocation of 52 weeks per unit. This was not true and could have misled clients.

The constitution of the management association only followed the basic provisions contained in pooling schemes. There was no protection for the clients because the constitution did not provide for meetings of the association. The constitution also stated that the one trustee at date of the adoption of the constitution would be the sole executive committee member. The owners in the scheme apparently had no representation whatsoever in the management association.

There were also provisions in the constitution that the executive committee dispose of the sole and exclusive right to amend the constitution and to set the rules pertaining to the generation of income and the allocation of expenditure. Maharaj was the only director of JCS, trustee of the "family" trust, and member of the executive committee. Maharaj could therefor change the constitution when and how he saw fit.

A further concern of the Committee was the provision in the sale agreements that JCS would, free of charge, increase the points purchased by a member by 50 percent every third year. The effect of this provision was that JCS was obligated to buy additional weeks to enable the allocation of these additional points. The additional points did not generate any income for JCS and represented an indirect expenditure. This provision seriously jeopardized the points availability and stock.