Another court duel over Blaauwberg
Investor representatives want PwC papers
THE gloves come off in court in Cape Town this week when the 2 700 investors who lost almost R600-million in the Blaauwberg Beach Hotel take on auditing group PwC.
Two brokers mandated to represent the majority of investors, Deon Pienaar and Willie van Zyl, will be in the high court this week demanding that PwC hand over documents they requested last month.
The two are opposing an application by PwC to submit supplementary affidavits.
In 2008, the Reserve Bank appointed the accounting firm to first act as inspectors and, later, as managers of Realcor, the operations of which were alleged to have been a pyramid scheme.
This August, Van Zyl and Pienaar asked the court to declare that the PwC directors:
Had failed to comply with the Banks Act; and
That their conduct and mission had been unlawful, and they had exceeded their powers.
They also asked the court to find that brokers who sold investments on behalf of Midnight Storm, the Realcor company that marketed the hotel, should not be held responsible for any loss while director Linda MacPhail and her team were in charge of the Realcor group.
The matter was then postponed to November 25.
Late on Thursday afternoon, PwC and three of its directors — MacPhail, who has since left the company to start her own consultancy; Louis Strydom; and Tjaart Hamman — asked the court to be allowed to file supplementary affidavits ahead of the November 25 court showdown.
However, Pienaar and Van Zyl, two of the 102 brokers who sold investments on behalf of Midnight Storm, objected to this late change.
“We are unhappy about the possibility of a postponement of our November 25 application for a declaratory order,” said Pienaar.
In her supplementary affidavit submitted on Thursday, MacPhail said she wanted to deal with allegations made against her by Van Zyl about misappropriation of Realcor funds and “dishonesty”.
In her affidavit, MacPhail said she had asked Realcor’s bankers to limit withdrawals without her per- mission. At one stage in June 2011, she e-mailed First National Bank to have almost R200 000 taken from Purple Rain Properties, another Realcor account, to pay the salaries of Realcor’s employees. This was done without a court order.
When she learnt that the Purple Rain account was overdrawn, she consulted Realcor’s accounting officer, Christo la Grange, and former attorney Marius Prinsloo.
We are unhappy about the possibility of a postponement
Then she paid monies from two other Realcor companies into PwC’s own account.
Another issue she wished to clarify concerned a R53-million loan Realcor had taken from Wesbank.
MacPhail said she had become aware of the loan from a letter from a Realcor director only on October 7 2010.
Now, however, MacPhail says “on reflection the managers and I may well have gained knowledge of the Wesbank loan earlier than October 2010”.
But she is adamant she learnt of the loan only after the deal had been done with Wesbank.
Another problem raised by Pienaar in August was that the police and Hawks had raided Realcor’s premises on June 2 2011, and removed all the documents in Realcor’s possession.
MacPhail acknowledged the raid, and said the police involvement had been necessary for the safety of her staff.
Former Realcor CEO Deonette de Ridder, who has since been sequestrated and claims to have lost at least R80-million in the process — apart from the money lost by the investors — said the police even removed her son’s birth certificate and her marriage certificate.
On October 13, the two brokers served further papers on PwC, asking to see, among other things, MacPhail’s inspection report to the Reserve Bank, copies of the payments made to PwC and a list of all the irregularities MacPhail may have identified.
“They have refused to hand over these documents,” Pienaar told the Sunday Times this week.
MacPhail would not comment. Her attorney, Norton Rose Fulbright director Kim Rew, said the matter was sub judice.
De Ridder said on Friday that all she wanted was for investors to get their money.
In May, the unfinished 144-room Blaauwberg hotel was auctioned for R50-million.
Busines Times understands the buyer is Johannesburg businessman Manuel de Jesus da Silva Guimaraes.
Investor activist Daryl Ducasse of Merkurius Capital Solutions told Fin24 at the time that the auction price showed why creditors should not be permitted to rush into liquidations without seriously considering and giving business rescue a chance to succeed.
“We don’t believe the auctioneers did an adequate job of marketing the opportunity,” Ducasse told Fin24.
He also accused the judiciary of not being “flexible enough of mind to afford business rescue an opportunity to succeed”.