Group takes on IDC over R200m loan
Mixed results for Southern Palace
A group of black industrialists who fell out with the Industrial Development Corporation (IDC) over a deal gone bad scored mixed results in their attempt to review a high court decision that compelled them to repay the development finance institution nearly R200-million.
The IDC took Energy Fabrication, Southern Palace and their directors – Harvey Buthelezi, Lefu Tseki, Matjanyana Matitoane and Sello Mahlangu – to task for allegedly fleecing it of nearly R200-million. Tseki is Southern Palace CEO.
The IDC funding to Southern Palace and Energy Fabrication took the form of a R125-million loan and a separate R60-million revolving credit facility to purchase Genrec in 2018.
In its summons it said only R20-million of the loan was used for its intended purposes, while R80-million was instead used to settle Southern Palace’s debts and a further R6-million was paid into Southern Palace’s account for unknown reasons.
The IDC alleges that R1.6-million was paid to an entity called Acutucel, which it claims is owned by Matitoane and Mahlangu, who died in July last year. Some funds from the revolving credit facility were allegedly used to buy a Bentley.
The Joburg High Court in November ordered that the IDC could attach the two companies’ properties to recoup its money.
It has opened criminal proceedings against individuals implicated in the matter.
However, Southern Palace appealed the whole judgment on the grounds that the revolving credit facility claim was abandoned by the IDC and that the ruling on the loan agreement was defective. The Joburg High Court this week ruled that a full bench could hear the revolving credit facility judgment.
“To an extent that the summary judgement in the amount of R64487779.72 may have been granted in error, there is a compelling reason why the appeal should be heard. The second defendant’s application for leave to appeal in respect of this claim succeeds,” the judgment reads.
“The application for leave to appeal in respect of summary judgment in the amount of R122008447.38 is refused.”
Southern Palace did not respond to questions.