How Krion estate was pumped dry
Pyramid scheme’s leftovers gobbled up by liquidators
OVER the past 11 years, lawyers, liquidators and “collectors” have drained R84-million from the estate of Krion, one of SA’s biggest pyramid (Ponzi) schemes, which devastated the Vaal Triangle.
Hundreds of poor Afrikaners lost millions.
New accounts lodged with the master of the court show that while the liquidators collected R100-million from the ruins of the giant scheme, less than R10million is available for Krion creditors after paying SARS and other expenses.
The accounts show that ‘‘legal and collection” fees amount to R74-million.
The apparent stripping of the estate has taken place despite the law requiring liquidators to act, above all else, in the interests of creditors.
An attorney specialising in this area of the law, who asked not to be named, said that the nature of the processing of Krion’s affairs was not unusual in the South African context.
“It’s clear,” he said, “that various vested interests have kept the Krion estate alive so that it could slowly be bled to the bone. Now that this has almost happened, the decision has been made to move towards closure.”
In the past few days, the first liquidation and distribution account of MP Finance — Krion’s official name — has appeared.
The pyramid scheme attracted an estimated R1-billion and while the Vaal Triangle was hit particularly hard it involved an estimated 30 000 “investors” in at least five provinces.
A separate criminal case, which later produced prosecutions and convictions, took years to assemble but was largely successful. In October 2010, seven accused, including apparent ringleader Maria Prinsloo, were convicted on 394 counts, including racketeering, money laundering, theft and tax evasion. The seven were sentenced to an aggregate of 83 years’ imprisonment.
The civil case, by contrast, has been a disaster. On June 4 2002, when Krion went down, four individuals, Koos van Rensburg, Jacob Lubisi, Lily Malatsi-Teffo and Philip Fourie were appointed as liquidators of the bankrupt estate. Two years later, the Pretoria master’s office appointed two extra liquidators, Enver Motala and Moses Kgosana, executive head of KPMG.
The controversial Motala made headlines when, in 2003, Department of Justice deputy director-general Mike Tshishonga went public on what he described as the “nepotistic”
Motala ... had been convicted on 93 counts of fraud
relationship between Motala and Penuell Maduna, then minister of justice.
Motala had risen to become the top liquidator in the country with no experience, and had been appointed to some of the biggest estates in the country, such as Retail Apparel Group, which guaranteed millions in fees for Motala.
When Motala and Kgosana were appointed, Van Rensburg told the Master that their appointment was ‘‘unlawful and invalid”.
Now the Krion accounts show that the liquidators have filed invoices for fees of R10-million, of which R5-million has already been paid.
The attorney who specialises in this area of law says it is “unlawful” for liquidators to be paid a cent until the accounts have been signed off by the master of the high court. The Krion accounts have not yet been through such a process.
This week, Kgosana, who could be described as the “senior” Krion liquidator, failed to respond to questions on why the accounts show that payment has already been made, or why it appears the Krion estate has been bled dry. Oloff van Niekerk, KPMG legal director, also failed to respond to requests for comment.
There are also unanswered questions on why Motala’s name continues to appear on the list of Krion liquidators.
In September 2011, the master’s office in Pretoria wrote to Motala, removing him from the panel of liquidators.
Motala, the master’s office had discovered, had been convicted on 93 counts of fraud and one of theft in 1978 under another name, Enver Dawood.
Subsequent to Motala’s banning as a liquidator in 2011, sources in the legal profession say that Motala was earmarked for a “search and seizure” process, based on the fact that he had represented himself as a ‘‘fit and proper person” to qualify as a liquidator. While liquidators in South Africa are not required to have any specific qualifications, not even matric, they must be “fit and proper”.
However, no such case against Motala was ever launched. Various lawyers who have represented Motala in the past were approached this week, including Stan Rothbart, senior counsel Steph du Toit and Ian Lindsay and Mohamed Husein of the law firm Knowles Husain Lindsay — but all of them refused to comment. Comment on this: write to letters@businesstimes.co.za or SMS us at 33971 www.timeslive.co.za