Magnate fears being bankrupted

TYCOON Roux Shabangu has expressed fear he could be bankrupted if he pays back a portion of the millions of rand that was irregularly lent to a liquidated company he co-owned.

Denying that he and eight others were liable to repay the state-owned Land Bank R82 million arising from a loan granted to Westside Trading 570 in 2006, Shabangu has taken the long-drawn-out legal battle to the Constitutional Court.

The bank and Westside entered into a R100m deal for a project that eyed land in Hartbeespoort, North West. A township and tourist attractions were to be developed on this land.

Westside had received over R62.6m when its deal with the bank was found to be invalid. The bank had no authority, in terms of the Land Bank Act, to enter into such an agreement.

In an affidavit, Shabangu sought to convince the Constitutional Court to rule that the invalidity of the agreement also meant the suretyship that Westside’s directors had signed was invalid.

“The question whether a deed of suretyship can survive in circumstances where the principal obligation is invalid lies at the heart of the dispute,” Shabangu said.

“A deed of suretyship is accessory to the principal obligation. Where the principal obligation is invalid, I submit that the suretyship is also invalid,” he said.

Shabangu’s mainstay was already dealt a blow by the North Gauteng High Court in 2016.

In her ruling, Judge Annali Basson said: “I should... point out that the fact that the loan agreement is invalid does not mean it necessarily follows that the deed of suretyship, being an ancillary agreement, is likewise invalid.”

Judge Basson, and subsequently the Supreme Court of Appeal, ruled that Westside’s directors were jointly and severally liable to pay the state bank R82m, plus 15.5% a year.

Westside was liquidated in 2012, meaning its former directors have to dig into their pockets.

“The consequences of holding the sureties liable for such an enormous sum of money are severe. It has the possibility of rendering me and the other sureties insolvent,” Shabangu said.

His business partners included several ANC heavyweights, such as former speaker of the Gauteng legislature Lindiwe Maseko, former ANC economic transformation committee member Desmond Golding and Dr Lydia Sebego, formerly departmental chief operations officer.