EL couple ordered to pay R43m

Funds diverted from family business’s liquidation account

EAST LONDON entrepreneur and pastor Lonwabo Mahlati is R43-million down on his fortune after the High Court sitting in East London granted summary judgment against him.

Judge John Smith said there seemed little doubt that Mahlati and his wife, Gail Hilda Mahlati, had misappropriated the money from the business’s liquidation account.

The family business New Creation Construction was placed under provisional liquidation in April. Joint liquidators Carol-Ann Schroeder and Zaheer Cassim say the R43million, which was due to the closed corporation in liquidation, was instead diverted by Mahlati to another bank account created by him with the business’s name.

Two different amounts – R39million and R4-million – ended up in his Absa bank account with the name New Creation Construction, instead of the actual closed corporation account.

The two amounts were paid in by the department of human settlements and the SA Revenue Services respectively.

Mahlati rejected this, saying the account actually did belong to the business and not him.

However, the bank confirmed that Mahlati was, in fact, the customer even though the bank account held the name of New Creation Construction.

Judge John Smith said it had been alleged by the joint liquidators that Mahlati and his wife received the money by diverting payments made to the close corporation in liquidation into the Absa account controlled by Mahlati.

He said the Mahlati couple had not denied that the duly appointed liquidators of the close corporation were accordingly entitled to sue for the recovery of the misappropriated funds.

“There can be little doubt that the payment of monies due to the close corporation in an account [regardless of what it is called] controlled by [Lonwabo Mahlati] amounts to misappropriation of funds due to the close corporation.”

He granted the joint liquidators summary judgment against the couple in the amount of R43-million with interest.

There can be little doubt that the payment ... amounts to misappropriation