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Mission head lost follower’s millions

ONE of the leaders of the kwaSizabantu Mission in Kranskop, which is at the centre of a storm of allegations of abuse, was duped into soliciting millions of rands from Christian believers to invest in a diamond mining venture that flopped in the late 1980s.

Hundreds of Christian believers in South Africa and Europe lost millions between them after investing in the diamond mine outside Kimberley, which was an elaborate scam that duped all its investors, including Friedel Stegen, the brother of kwaSizabantu leader Erlo Stegen.

Despite assurances that it would become a public company within months of their investing, the mine – called Klipdam and falling under the holding company Montrose Mining – did not cover costs and the investors lost most of their money. A concern expressed at the time was that they were not given a proper explanation from Friedel Stegen, whom they trusted as “a man of God”.

Although one meeting was held in Europe among questioning investors, they were reportedly left far from satisfied.

This is the latest twist in the unfolding saga of the mission, which has lost hundreds of members nationally and internationally in the past five years.

Despite several attempts by the Witness to get a response from Stegen, a mission spokesmen had not responded on this issue at the time of going to press.

The mission has branches in six countries in Western Europe as well as in Australia, but most of the losers in the mining deal were from South Africa, Germany and Switzerland.

A picture is emerging of debts incurred both locally and internationally and of disillusioned associates of the mission questioning its business dealings.

According to one person who was previously close to the mission, the diamond mine was “a disaster, a total flop”.

The source said this week that the investors did not receive receipts for their money from Stegen.

“He was a godly man and so the deal was from God, and so one could give him money.”

Stegen reportedly became a director of the mine before realising he was involved in a scam.

“Instead of standing up before all the Christians and saying we made a mess, he kept quiet and it was hushed up.”

Another source said that towards the end of the 1980s, Stegen went through Europe and advertised the diamond mine deal in the congregation of mission “friends”, after which he collected money.

“He promised them 30% profit on their money. Some were promised 100%. Many people from Germany, Switzerland and France invested in the diamond mine.”

Already in 1988 and 1989, business magazine Finansies & Tegniek carried reports on the questionable business activities of Johannesburg share promoter Zirk Engelbrecht, who was responsible for the Montrose Mining venture.

The magazine noted that he had been involved in selling the shares of a series of unlisted companies without substance to unsophisticated small investors who then lost all their money. His activities with such failed companies as Jewellers Club, the Coffee Corporation and the Silver Corporation were widely known, yet he appeared to have no difficulty persuading the public to part with another R100 million or so in a new series of companies such as The House of Investments, Montrose Mining and Multigold.

“He appears to have perfected the art of selling such shares to a gullible public,” the magazine observed in June 1990.

One of the tricks employed by Engelbrecht, according to the publication, was to issue shares in the companies to himself for a fraction of a cent each, and then sell them to the public for a rand or more a piece.

As a result, while investors thought they had invested R50 million in Montrose Mining, only a small fraction reached Klipdam and very little development took place in the two years the company existed from 1988 to 1990. The company never produced annual accounts.

Finansies & Tegniek identified one community in particular that was targeted by the operators: “A small community, Kranskop in northern KZN, was veritably flattened by Engelbrecht with the assistance of a prosperous farmer, Mr Friedel Heinrich Stegen,” it reported.

“Mr Stegen bought more than four million shares for himself and 800 000 for his son. Farm workers also invested and even a local mission station is now stuck with 1,2 million shares.”

Stegen was appointed a director of House of Investments. Engelbrecht was not himself a director as he was officially an unrehabilitated insolvent.

By June 1990, Stegen was trying to take over control of Montrose Mining in a desperate bid to get mining operations started. F&T noted: “The fact that Mr Stegen is at this stage only prepared to offer R400 000 for the company does not bode well for small shareholders.”

In November that year the company was put into liquidation.

“They made Friedel Stegen a director and paid him a huge commission so he could go to Europe to get money – and he did it,” said a source close to the Kranskop mission. “When he realised what was happening, he went to court – he was responsible for liquidating the mine. But everything was lost.

“The tragedy was that pension funds of the mission workers went into this,” the source said.