Alliance liquidators ordered to hand over inquiry papers
LIQUIDATORS of failed Alliance Mining have been ordered by the High Court in Johannesburg to hand over transcripts relating to an inquiry into the collapse of the company.
The judgment has consequences for other companies seeking to hide information as this could now be difficult.
Alliance Mining, an erstwhile JSElisted technical solutions provider to the mining industry, went into liquidation in 2010 after the state-owned Industrial Development Corporation advanced R114m to the company in 2009 for an empowerment deal. The company’s collapse was shrouded in secrecy, with its liquidators refusing to issue information on why it failed.
Stuart Theobald, a Business Day columnist and BDFM publishers made an application under the Promotion of Access to Information Act in 2013, asking the court to compel the liquidators to provide access to two sets of documents with details of shenanigans in the company.
The documents related to a report by professional services firm Grant Thornton, commissioned to find out what happened to Alliance Mining. The liquidators — Norman Klein, Juanito Damons, Christopher Monyela and Osman Moosa — had also been granted the right to convene an inquiry under section 417 of the Companies Act to investigate Alliance Mining’s affairs. The inquiry is still under way.
After resisting for some years, the liquidators told the High Court in Johannesburg at the beginning of this month that they would not oppose the disclosure of the Grant Thornton report. However, they argued against their disclosure of the section 417 inquiry records.
Judge Kathleen Satchwell ruled the liquidators liable for the legal costs that arose from their opposition to issuing the Grant Thornton report.
The report, which Business Day has seen, shows that directors at Alliance Mining intentionally manipulated the financial statements of the company including the valuation of assets and the creation of fictitious loan accounts, in the two years before its collapse.
The company issued and acquired shares illegally to place them on a contract for difference platform that generated millions of rand in cash, which then disappeared.
In effect, Nedbank used the shares as security to provide finance through its Ned-Trade platform.
On the section 417 inquiry, Judge Satchwell ordered last week that the liquidators “are to provide all of the information and records sought in applicants’ request for access to information .... within five court days”.
Initially, the liquidators had argued the request for information was too vague and disclosure might constitute an action for breach of confidence. They further argued that section 417 (7) of the Companies Act provided for such an inquiry to be private and confidential and that third parties had not consented to disclosure. The liquidators also contended that Business Day had asked for the inquiry records from the wrong people, as it was run by a commissioner, not the liquidators.
There was also an argument that disclosure of the information from the inquiry can “reasonably be expected to threaten the recoverability of the property of the company”.