BEHIND THE NEWS | The sacred bond between journalists and their sources
The unravelling of the Rawlins Trust, the East London business entity effectively owned by Richard and Marise Rawlins, in which about 1,000 individual investors placed money over the past 18 months, arguably constitutes the single biggest investment setback in the region in many years.
The story — published in the Dispatch on Tuesday — is a critical public interest issue.
An individual financial loss or similar calamity is one thing, but an action which affects a vast swathe of people in a community is another matter entirely.
As one source told the Dispatch: “I don’t think East London’s economy can take this”. And reader interest in the story via our online channels confirms its public importance.
The significance of the output of Buffalo City Metro’s business community is often underrated, and the story points to the ability of locals to make big investments.
Not all the investors are wealthy enough to have used cash reserves on what has turned out to be a high-risk investment.
Some may well have borrowed money to place with Rawlins Trust, creating more personal problems than they may have hoped they were addressing with the investment in the first place.
Certainly, the prospect of a return on investment of reportedly between 15-20% must have been appealing, especially in the recent Covid-19 context when many people have had to consider radical reductions in their income.
Most prudent financial advisers, however, would have asked important questions about an investment proposition that “sounds too good to be true”, as reader Julio Xavier pointed out on the Dispatch’s Facebook page.
The decision to place the trust into provisional liquidation preserves whatever residual value exists in the business and also allows a provisional liquidator to fully investigate what happened, in order to answer the critical question for investors: “Where’s the money?”
It remains to be seen to what extent poor investment decisions — including putting money into cryptocurrency — mismanagement, or theft played any role in the loss of at least R118m, a figure based on investigative work to date as revealed in the high court provisional liquidation application on Tuesday.
Of course, the Dispatch reports daily on the iniquities which come to light in the Eastern Cape public sector, with corruption and mismanagement by provincial and local government officials affecting vastly more people.
The Rawlins Trust matter came to the Dispatch’s attention when a member of the public reached out to me.
The relationship between journalists and our sources is necessarily a sacred bond, and we honour their contribution to our work and the public’s interest, even if it must remain anonymous.
Much of the Dispatch reporting on corruption and mismanagement in the public sector is underpinned by brave sources whose anonymity we protect at all costs, because they risk their lives, let alone their livelihoods, to reveal something which may be hidden from the public, either intentionally or by accident.
By Monday morning, I was in touch with a few investors and had also seen some of the communication issued to investors by independent trustee Gary Klinkardt, who first raised the alert about financial returns and information shared with investors.
By then, the legal papers in the liquidation application had also been lodged in the East London high court. — DispatchLIVE
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