THE cash crisis that haunted property developer Pinnacle Point and its eventual collapse was largely due to the "downward manipulation" of its share price, a commission of inquiry heard yesterday.

Pinnacle Point, a JSE-listed company, was placed in final liquidation late last year.

An inquiry led by retired judge Meyer Joffe has been set up to look into the affairs of the company. Analysts believe that the single-stock futures debacle in 2008 also had a huge effect on the property developer’s troubles.

Pinnacle’s share price had been in freefall since then, from a high of R1.40 in February 2006 to just 1c before the shares were suspended last September.

Former directors and shareholders have been subpoenaed to appear in the second round of the inquiry. Former CEO Wilfred Robinson gave his testimony yesterday and told the commission that the company had a "war chest" of funds until the share price dropped, scaring away potential investors.

"In my mind there was plenty of money available to the group … when the share price came down, confidence was lost in the company, the banks (such as) Nedbank and Investec removed their facilities," Mr Robinson said.

He told the commission that the company’s share price was manipulated downwards "every day at the close of trading".

"I reported this to the stock exchange and it (the investigation) is still pending."

Mr Robinson said before the share price crashed, the company had "plenty" of commitment from banks and other investors that funding would be made available. "When the share price collapsed, all these commitments for funding were withdrawn."

Gavin Woodland SC‚ for the liquidators, put it to Mr Robinson that it was "clear" that the company did not have sufficient money to fund its operations in the short term, yet it still went ahead with its listing.

Mr Robinson said he had "comfort" because of the commitments made by the banks.

Judge Joffe took issue with Mr Robinson deriving comfort from the banks, saying that there was no clear obligation for the banks to honour those commitments.

Mr Robinson was replaced by Hennie Pretorius as CEO in 2009. It is understood Absa had a say in the appointment of Mr Pretorius. In his testimony in the first round of the inquiry, Mr Pretorius told the commission his appointment was largely intended to protect Absa’s investment in the property developer.

Absa had a 27% stake in Pinnacle Point.

In 2010, the bank sold its R931m Pinnacle Point stake for R150m to Tri-Linear, which bought it for a pension fund it was managing for the Southern African Clothing and Textile Workers Union.

Last month, Absa said it would be going to court in an attempt to recover more than R773m from Nedbank for losses it claims it suffered after taking over an exposure to Pinnacle Point through single-stock futures.

This followed the collapse of single-stock futures dealer Cortex, which left Absa Capital contracted to buy R930m worth of Acc-Ross shares (a listing acquired by Pinnacle Point) from Nedbank’s subsidiary Syfrets. It left Absa saddled with a stake of about 27% in the bankrupt property developer after the largest default in the JSE’s history.

The inquiry continues on Tuesday.