Forensic
investigators are concerned that a former clothing union consultant, who
allegedly played a key role in the investment of R93-million of
workers’ pension money in a company that has now been provisionally
liquidated, may be planning to leave the country with his Swedish wife
and children.
Tony Canny, a partner in Eversheds law firm and the head of its forensic division, said Richard Kawie had recently put his multimillion-rand house in Cape Town’s affluent seaside suburb of Bantry Bay on the market.
Eversheds was employed by the South African Clothing and Textile Workers’ Union (Sactwu) to investigate the high-risk investment of clothing workers’ provident fund money in Canyon Springs Investments 12, a company co-owned by the deputy minister of economic development, Enoch Godongwana.
“Kawie put his Bantry Bay house up for sale, but it was in a depressed market so the house was later put on the market as a long-term rental,” said Canny. “One of our investigators found the ads on [classified ad website] Gumtree.”
An estate agent who went to view the three-storey luxury home told the Mail & Guardian that Kawie had not set a sale price, but that his “glamorous” wife said the family planned to build a house in Noordhoek. Their small children needed a large garden in which to play, she apparently told the agent.
Kawie did not respond to messages left at his office in Athlone or calls to his cellphone, and attempts to obtain comment from his lawyer were unsuccessful.
Staff at the union, where Kawie once worked as a pension consultant, are also eager to know where he is living. Sactwu general secretary Andre Kriel confirmed that Kawie had worked at the union’s headquarters until his contract came to an end in December 2009.
‘Not going to rest’
Up to 25 000 workers had been affected by last week’s provisional liquidation of Canyon Springs in the Cape High Court, Kriel said. “We will not rest until every cent that may have been lost is recovered. And if any criminal guilt is proved against anybody, the guilty must go to jail for a long time.”
A total of R420-million from five provident funds in the clothing and textile industry could be at risk after it was invested in the Trilinear Empowerment Trust, which the Financial Services Board does not recognise as a suitable investment vehicle for pension funds.
With the authorisation of a linked asset management company, Trilinear Capital, R93-million of the pension fund money was invested in Canyon Springs, with another R250-million invested in floundering luxury property development group Pinnacle Point.
The spotlight has also fallen on Sactwu deputy general secretary Wayne van der Rheede. The M&G has established that he was the principal officer of the Textile and Allied Workers’ Provident Fund, one of the affected provident funds.
Sactwu staffers claimed Van der Rheede did not alert them to any problems or risky investments. Van der Rheede asked the M&G to send him questions but at the time of printing he had not answered them.
Kriel said the union could not be held responsible for the investments made with the retirement funds.
“Sactwu has not taken any decisions on behalf of the respective retirement funds,” said Kriel. “The investment decisions were taken by the funds’ board of trustees; union structures were never party to the discussions on how they have reached these decisions.”
New claims
The scandal is unravelling at rapid speed, with the Textile Open Provident Fund launching a claim of R21-million against Trilinear Investment Managers. The company plans to defend the claim.
The Textile Open Provident Fund claims it authorised the payment of more than R16-million to Trilinear Capital, which then invested it in the Trilinear Empowerment Fund. The court papers state that, to the provident fund’s knowledge, this money was “used to purchase shares in Pinnacle Point”, in breach of its agreement with Trilinear Investment Managers.
The provident fund also claims in court papers that Kawie “purported to be a trustee” of it at a meeting last year when resolutions were taken to invest further money in Trilinear.
In the application by trustees of the Trilinear Empowerment Trust to liquidate Canyon Springs, Kawie was cited as one of the “main protagonists” who decided how the money lent to the company was spent.
An affidavit by Trilinear Capital fund manager Siphamandla Jama said “some R8-million” had gone to Kawie.
Behind the corporate veil Enoch Godongwana said last week that his wife, Thandiwe, was still a director of Canyon Springs. This week Godongwana’s spokesperson, Mandilakhe Mantlana, said the deputy minister was on sick leave and could not answer further questions.
The Godongwanas have a 50% stake in Canyon Springs that is held in a family trust, and the other half is owned by the families of Kawie and Mohan Patel, a former managing director of the company.
Following his resignation as a director of Canyon Springs last week, Patel declined to comment. “I won’t be making any statements to the press,” he said.
According to court papers, Patel co-operated with the investigation by Jama into how the money at Canyon Springs was spent, and supplied documents that revealed the money trail.
An M&G investigation last week revealed that Enoch Godongwana was the chair of Canyon Springs when some of the “drawdowns” of the controversial loan were made.
But he claimed he did not know where the money came from and was not interested in it at the time. Godongwana told the M&G that the loan agreement with Canyon Springs was drawn up before he joined the company.
However, Trilinear Capital contradicted this claim, alleging that Godongwana was involved from the start in securing the loan agreement. Trilinear Capital’s attorney, Chris Briston, said Godongwana knew that the Canyon Springs loan came from clothing workers’ provident funds because he had been involved, with Patel, in procuring the loan.
Creditors crowd Pinnacle
Luxury golf estate and property developer Pinnacle Point faces a new liquidation application by one of its creditors in the Cape High Court next week. This will raise further concerns among clothing and textile factory workers, who recently learnt that about R250-million of their pension-fund money was invested in Pinnacle Point.
Behind-the-scenes negotiations took place on Thursday between Pinnacle Point and Atvantage, the project manager for Pinnacle on its Lagos Keys golf estate development in Nigeria. Atvantage attorney Kotze van Wyk said Pinnacle owed his client about R1.2-million.
A business rescue application for Pinnacle, lodged in court by attorney John Taylor from John Taylor & Associates, was withdrawn this week.
Pinnacle had been trying to sell some of its estates to stave off an application by Investec to liquidate some of its assets. Investec claims it is owed R85-million.
Hlophe no conflict of interest
Eyebrows were raised when last week’s application to liquidate Canyon Springs Investments 12 was heard by Western Cape Judge President John Hlophe because the application was brought by Hlophe’s personal attorney, Barnabas Xulu.
Legal observers said they were initially suspicious about why this had happened. One law expert said such a situation did not often present itself because “not many judges have their own lawyers to tackle their own ongoing litigation”. But the consensus now is that there was no conflict of interest.
Xulu said attorney Ren Dunster, acting on behalf of the Textile and Allied Workers’ Provident Fund, had sent a letter to him the day before the hearing. It pointed out that the file had not been handed to Hlophe’s registrar and the matter had not been allocated.
“The judge president allocates matters before him, but because the file was not there the matter was not allocated to a judge,” Xulu said. “In the end, all the judges had been allocated [cases] and the judge president had to step in and I had to recreate the file.”
The liquidation application brought by Xulu’s clients—the trustees of Trilinear Empowerment Trust—was heard in open court.
Trilinear Holdings, which asked the court for leave to intervene in the winding-up application, presented its case in court, as did the Textile and Allied Workers’ Provident Fund, which launched an urgent application to interdict the liquidation of Canyon Springs.
Tony Canny, a partner in Eversheds law firm and the head of its forensic division, said Richard Kawie had recently put his multimillion-rand house in Cape Town’s affluent seaside suburb of Bantry Bay on the market.
Eversheds was employed by the South African Clothing and Textile Workers’ Union (Sactwu) to investigate the high-risk investment of clothing workers’ provident fund money in Canyon Springs Investments 12, a company co-owned by the deputy minister of economic development, Enoch Godongwana.
“Kawie put his Bantry Bay house up for sale, but it was in a depressed market so the house was later put on the market as a long-term rental,” said Canny. “One of our investigators found the ads on [classified ad website] Gumtree.”
An estate agent who went to view the three-storey luxury home told the Mail & Guardian that Kawie had not set a sale price, but that his “glamorous” wife said the family planned to build a house in Noordhoek. Their small children needed a large garden in which to play, she apparently told the agent.
Kawie did not respond to messages left at his office in Athlone or calls to his cellphone, and attempts to obtain comment from his lawyer were unsuccessful.
Staff at the union, where Kawie once worked as a pension consultant, are also eager to know where he is living. Sactwu general secretary Andre Kriel confirmed that Kawie had worked at the union’s headquarters until his contract came to an end in December 2009.
‘Not going to rest’
Up to 25 000 workers had been affected by last week’s provisional liquidation of Canyon Springs in the Cape High Court, Kriel said. “We will not rest until every cent that may have been lost is recovered. And if any criminal guilt is proved against anybody, the guilty must go to jail for a long time.”
A total of R420-million from five provident funds in the clothing and textile industry could be at risk after it was invested in the Trilinear Empowerment Trust, which the Financial Services Board does not recognise as a suitable investment vehicle for pension funds.
With the authorisation of a linked asset management company, Trilinear Capital, R93-million of the pension fund money was invested in Canyon Springs, with another R250-million invested in floundering luxury property development group Pinnacle Point.
The spotlight has also fallen on Sactwu deputy general secretary Wayne van der Rheede. The M&G has established that he was the principal officer of the Textile and Allied Workers’ Provident Fund, one of the affected provident funds.
Sactwu staffers claimed Van der Rheede did not alert them to any problems or risky investments. Van der Rheede asked the M&G to send him questions but at the time of printing he had not answered them.
Kriel said the union could not be held responsible for the investments made with the retirement funds.
“Sactwu has not taken any decisions on behalf of the respective retirement funds,” said Kriel. “The investment decisions were taken by the funds’ board of trustees; union structures were never party to the discussions on how they have reached these decisions.”
New claims
The scandal is unravelling at rapid speed, with the Textile Open Provident Fund launching a claim of R21-million against Trilinear Investment Managers. The company plans to defend the claim.
The Textile Open Provident Fund claims it authorised the payment of more than R16-million to Trilinear Capital, which then invested it in the Trilinear Empowerment Fund. The court papers state that, to the provident fund’s knowledge, this money was “used to purchase shares in Pinnacle Point”, in breach of its agreement with Trilinear Investment Managers.
The provident fund also claims in court papers that Kawie “purported to be a trustee” of it at a meeting last year when resolutions were taken to invest further money in Trilinear.
In the application by trustees of the Trilinear Empowerment Trust to liquidate Canyon Springs, Kawie was cited as one of the “main protagonists” who decided how the money lent to the company was spent.
An affidavit by Trilinear Capital fund manager Siphamandla Jama said “some R8-million” had gone to Kawie.
Behind the corporate veil Enoch Godongwana said last week that his wife, Thandiwe, was still a director of Canyon Springs. This week Godongwana’s spokesperson, Mandilakhe Mantlana, said the deputy minister was on sick leave and could not answer further questions.
The Godongwanas have a 50% stake in Canyon Springs that is held in a family trust, and the other half is owned by the families of Kawie and Mohan Patel, a former managing director of the company.
Following his resignation as a director of Canyon Springs last week, Patel declined to comment. “I won’t be making any statements to the press,” he said.
According to court papers, Patel co-operated with the investigation by Jama into how the money at Canyon Springs was spent, and supplied documents that revealed the money trail.
An M&G investigation last week revealed that Enoch Godongwana was the chair of Canyon Springs when some of the “drawdowns” of the controversial loan were made.
But he claimed he did not know where the money came from and was not interested in it at the time. Godongwana told the M&G that the loan agreement with Canyon Springs was drawn up before he joined the company.
However, Trilinear Capital contradicted this claim, alleging that Godongwana was involved from the start in securing the loan agreement. Trilinear Capital’s attorney, Chris Briston, said Godongwana knew that the Canyon Springs loan came from clothing workers’ provident funds because he had been involved, with Patel, in procuring the loan.
Creditors crowd Pinnacle
Luxury golf estate and property developer Pinnacle Point faces a new liquidation application by one of its creditors in the Cape High Court next week. This will raise further concerns among clothing and textile factory workers, who recently learnt that about R250-million of their pension-fund money was invested in Pinnacle Point.
Behind-the-scenes negotiations took place on Thursday between Pinnacle Point and Atvantage, the project manager for Pinnacle on its Lagos Keys golf estate development in Nigeria. Atvantage attorney Kotze van Wyk said Pinnacle owed his client about R1.2-million.
A business rescue application for Pinnacle, lodged in court by attorney John Taylor from John Taylor & Associates, was withdrawn this week.
Pinnacle had been trying to sell some of its estates to stave off an application by Investec to liquidate some of its assets. Investec claims it is owed R85-million.
Hlophe no conflict of interest
Eyebrows were raised when last week’s application to liquidate Canyon Springs Investments 12 was heard by Western Cape Judge President John Hlophe because the application was brought by Hlophe’s personal attorney, Barnabas Xulu.
Legal observers said they were initially suspicious about why this had happened. One law expert said such a situation did not often present itself because “not many judges have their own lawyers to tackle their own ongoing litigation”. But the consensus now is that there was no conflict of interest.
Xulu said attorney Ren Dunster, acting on behalf of the Textile and Allied Workers’ Provident Fund, had sent a letter to him the day before the hearing. It pointed out that the file had not been handed to Hlophe’s registrar and the matter had not been allocated.
“The judge president allocates matters before him, but because the file was not there the matter was not allocated to a judge,” Xulu said. “In the end, all the judges had been allocated [cases] and the judge president had to step in and I had to recreate the file.”
The liquidation application brought by Xulu’s clients—the trustees of Trilinear Empowerment Trust—was heard in open court.
Trilinear Holdings, which asked the court for leave to intervene in the winding-up application, presented its case in court, as did the Textile and Allied Workers’ Provident Fund, which launched an urgent application to interdict the liquidation of Canyon Springs.
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