Canyon Springs’ assets under the microscope
FORMER Trilinear Holdings chief financial and risk officer Mxolisi Motau claimed in an affidavit that a company Canyon Springs owned was worth R50 million to R150m despite the company’s being in the red for the 2009/10 and 2010/11 financial years.
This was disclosed at a liquidation inquiry into Canyon Springs Investments 12 (Pty) Ltd in Cape Town yesterday during Motau’s testimony to the inquiry.
He said the affidavit, filed during Canyon Springs’ liquidation last year, was based on an earlier evaluation of Pan African Benefit Services (PABS) by BDO accounting firm, which found the company to be valued at around R334m. PABS was wholly owned by Canyon Springs.
SA Clothing and Textile Workers’ Union (Sactwu) advocate Gavin Woodland SC put it to Motau that the BDO evaluation also said PABS’S value was based on forecasts by the Canyon Springs managers, rather than what was happening in the company.
Woodland asked Motau why his affidavit said PABS was valued at up to R150m when Trilinear Empowerment Fund manager Siphamandla Jama had said three months earlier, in an e-mail to Motau, Trilinear Empowerment Trust owner Sam Buthelezi and others, that the BDO evaluation was “nonsense”.
Woodland said PABS had incurred losses of R7m and R8m for the previous two years.
He suggested it was strange for Motau to say the company was worth up to R150m.
Motau said his affidavit was based on documents submitted to the court, including the evaluation report.
He added that he suggested a forensic probe into the financial affairs of the empowerment fund after Jama told him that former Sactwu consultant Richard Kawie’s companies pocketed R8m from the loan the provident fund made to Canyon Springs.
Motau also told the commission he did not discuss the suggestion of a forensic probe with Buthelezi because he did not see a need for that.
Sactwu’s provident fund transferred more than R400m to the Trilinear Empowerment Trust which later illegitimately lent Canyon Springs more than R100m.
The inquiry is to establish why Canyon Springs collapsed and what money, if any, is recoverable.
Kawie was a consultant to Sactwu when its provident fund for union members handed more than R400m to BEE investment managers Trilinear.
Canyon Springs was owned by former economic development deputy minister Enoch Godongwana, his wife Than-diwe and local businessman Mohan Patel.
The inquiry continues at Pollsmoor Prison today where Buthelezi, an awaiting-trial prisoner for multimillion-rand fraud as a result of his role in the provident fund scandal, is to testify.
Despite being granted R500 000 bail in December, Buthelezi spent the festive season behind bars because he could not raise the money.
The Godongwanas are expected to testify on Friday. Kawie, who is out on bail for fraud, is expected to testify on Monday.
Meanwhile, Sactwu lawyers have denied shielding Economic Development Minister Ebrahim Patel from the proceedings of the ongoing liquidation. Patel was Sactwu’s general secretary at the time of the financial transaction.
On Monday, the DA spokesman for economic development, Kobus Marais, claimed that the union was shielding Patel from the liquidation hearings.
But another Sactwu lawyer, Tony Canny, told the Cape Times yesterday that, based on their forensic investigations, as well as evidence heard so far at the commission of inquiry, they were of the view that Patel “does not have information or documentation that may be relevant to the affairs of Canyon Springs”.
“In the circumstances, because of that, we have not requested the commissioner to subpoena Minister Patel to attend the inquiry,” said Canny.