Auction kickback scandal
Fat bonuses, rigged bids, laundered cash, bent lawyers, bankers exposed
NSIDERS have blown the lid on auction house Auction Alliance, linking bank staff, liquidators and attorneys to a money-making racket.
Based on a paper trail dating back more than 13 years, and on the damning evidence provided by a number of insiders who have broken ranks, the Saturday Star can reveal today how:
Auction Alliance paid kickbacks to liquidators, attorneys and bank staff to pull business their way, with founder and chairman Rael Levitt insisting that “they will be in cash”, according to an explosive e-mail trail.
The bank account of Levitt’s Joburg-based business development manager was used to launder some of the payouts in order to disguise the cash payouts. Money would be lodged in his account, then later withdrawn in cash, only to be hand-delivered to the intended recipients, all with the full knowledge of the individual in question.
Two staff members of Investec,
Iwhose names are known to the Saturday Star, have been paid such hefty commissions by AA to keep the flow of auctions steady, that other auctioneers have struggled to crack AA’S hold over the financial institution. A former senior manager at Absa in Gauteng was ousted by the bank some years back when the AA kickback trail which revealed him as a recipient, was unearthed.
A number of attorneys were also on the take, with documentation pointing to payouts of R500 000 in cash in one instance.
A number of liquidators also pocketed massive amounts.
The kickbacks in all these cases are typically 50 percent of the commission AA makes, but have risen up to 75 percent during market slumps, to ensure business keeps coming Levitt’s way.
Levitt forced staff to make the payments in cash cheques or EFTS, and ordered the company’s accounting system to be manipulated in order to keep auditors out of the loop, insisting in one e-mail that “this is money under the table” and cannot be revealed.
AA paid one aggrieved Joburg seller a cash “settlement” to drop a legal claim against the company when a botched auction was exposed, and threatened heavy legal action if he proceeded with a criminal case.
Another aggrieved seller in Cape Town successfully exposed an enormous kickback paid by AA to a liquidator. The kickback was channelled through a local attorney.
AA trained its auctioneers in how to rig auctions, and what to do and what not to do if they were caught in the act, and how to lean on bogus buyers who were and still are, paid by Levitt to attend auctions to drive up bids.
Levitt also traded on numerous occasions on his own auction floor by selling his own stock, representing a potential conflict of interests.
Levitt bought a string of properties at AA auctions at knock-down prices.
A court has found AA culpable of gross “misrepresentation” in a damning judgment.
Another is pending in Cape Town.
In an interview with the Saturday Star’s sister newspaper Weekend Argus last week, Levitt denied the allegations and threatened to interdict the publication of the story, arguing its “defamatory” content “would cause irreparable damage” to his business.
However, the insiders claim the al- legations are not new, and are common practice throughout AA nationwide, adding that it is on the back of such allegedly irregular business styles that AA grew to become the market leader.
In Rael Levitt’s own words, his company leads the industry “by a long shot”.
AA’S turnover was reported to be in excess of R1 billion last year. It has offices dotted throughout the country and employs hundreds of staff, directly and indirectly, though staff turnover is sky-high.
Many say Levitt “is the industry”, which to date has made it difficult for anyone to challenge him.
Insiders now talk candidly about “heavy-handed tactics” that were employed.