Legal authorities refuse to produce files on excessive liquidation fees. By Tony Beamish
The officially appointed liquidators of Asch Professional Services (Chris van Zyl of Progressive Administration; Natasha Sansom; and Rene-Lynne Barry-Kleynhans)in 2011 purloined R2,038,326.77 in excessive fees from the trust account of the company in liquidation. The fact that they were charging
|Chris van Zyl|
an unlawfully excessive fee was pointed out to them on a number of occasions by shareholders, yet they steadfastly maintained that possession was nine-tenths of the law. Since no-one had filed an objection to their account in the advertised period for objections, they believed they were safely home with their loot.
Their attorney, Juliette Langford of Edward Nathan Sonnenbergs, eventually responded to the shareholders’ complaints, saying: “The liquidators were not under any obligation to provide [you] with notice that the account was lying open for inspection, other than the requisite advertising of same, which was duly attended to. [You] have only yourselves to blame if you did not inspect the account.”
(Take what you can get away with, appears still to be the ethos at ENS. They, too, will of course be paid a handsome fee from the liquidation account: R2.3 million at last count.)
Three of the shareholders then brought an application in the Western Cape High Court. This was followed by a visit from the Hawks, who warned the liquidators that a few difficult questions would follow. The liquidators hurriedly repaid the full amount plus interest of R111,074.85 into the trust account.
The liquidation of Asch is unusual in that it was not liquidated due to an inability to pay its debts but because the director-shareholders did not get along. There was a lot of easy cash up for grabs, which prompted Van Zyl to rub his hands with glee in the presence of a Noseweek source, saying, “I love money. I luuurve money. I looooove money.”
The angry creditors who took the matter to court – and to the Hawks – were former directors Gavin Cooper, Ganief Fish and Omar Jakoet. Together they have a claim to a sizeable amount of the cash in the Asch account, giving them a direct and substantial interest in the proper administration of the company’s liquidation.
The liquidators are opposing the court action with two well-known senior counsel – Jeremy Gauntlett and Gavin Woodland – now briefed to try and persuade the court that their pillage was merely a “bona fide administrative error” and an “overpayment” and that they had “no intention to mislead creditors or the Master.”
Having made such an “isolated and non-deliberate error” one would have expected them to admit that all was not well in their accounting department and stand down to make way for another liquidator to check their accounts. But not Chris van Zyl and Co. They’re determined to maintain their (by now) anxious grip on the administration of the Asch estate in the belief that no-one, not even the Master of the High Court, will check their work.
This desperation to prevent anyone from questioning or checking their administration of Asch’s affairs, Noseweek has discovered, extends not only to the Asch files but to the records of all the scores of other lucrative liquidations the trio have dealt with over the past five years. Which, naturally, has made Noseweek suspicious.
Maybe this wasn’t “an isolated and non-deliberate error,” as Van Zyl has asserted. We can only know for sure if we check those files. All the files that we wish to check are held in the offices of the Master of the High Court in Cape Town. So, off to the Master’s Office we went in November, where Mr Warno Steenkamp warmly received us. He happened to have the list of liquidators and file reference numbers up on his screen when we called, but he said that the Master herself, Mrs Zureena Agulhas, would have to consent to his emailing it to us. Noseweek promptly emailed Steenkamp, confirming what he had told us and copied it to the Master. No response, so we repeated the exercise three days later but again there was no response.
|Lennie 'The Liquidator' Katz|
We asked Department of Justice and Constitutional Development (DOJCD) spokesman Mthunzi Maga to help. Mr Cool reassured us: “Send me the details and I will tell them to give you the information or else they must tell me why they are refusing it.” We never heard from him again.
Would an application in terms of the Promotion of Access to Information Act (Paia) help? There is always a hope that a Department of Justice might comply with Paia legislation.
We made our request on 14 December to the Deputy Paia Officer, Ms Marlyn Raswiswi, and by 20 December had paid the requested R35 into the DOJCD’s bank account.
On 21 January Noseweek received the following reply from Raswiswi: “I regret to inform you that record with information or records relating to...” she then proceeded to (mis)quote our lengthy and detailed list of requirements back to us, followed by a simple one-liner:
“[They] could not be found in the DOJCD. In this regard I refer you to the affidavit deposed to by Ms Raswiswi… which sets out the steps taken to find the records.”
Her attached affidavit painfully regurgitates the contents of her letter but she then adds one extra bit of information:
“I have instructed search to Adv Martin Mafojane, Chief Director at the Office of the Chief Master and was informed that the list of appointed liquidators does not exist. In the circumstances, it is therefore not possible to grant access to the records requested. Should the records be found later I shall reconsider your request.”
Her affidavit was commissioned on 14 December 2012 – the same day she received our Paia request and six days before we paid the DOJCD so that the search could go ahead. It was commissioned by “Modiba Attorneys” (no name, no pack drill) and doesn’t comply with the several formalities required for the commissioning of affidavits.
Annexed to it, is an “Internal Memo” from Adv Mafojane dated 20 December 2012, in which he states: “The requested information of list of appointed liquidators is not a statistics that the Master offices keep. There is thus no record of such a list. The requestor may however check the Masters’ portal in the Department website. There is no objection for the requestor accessing the Master’s office Cape Town to peruse any file containing what we deem public knowledge.”
Besides noting the extraordinary time sequence, we were effectively refused access to the computer on the basis of a denial of the existence of records we had ourselves seen on Warno Steenkamp’s computer screen.
No-one knows which matters these liquidators have handled better than they themselves, so we filed Paia requests with the three of them. We were sure that they would give us the list we requested, as it would – according to their own evidence before court – acquit them of any wrongdoing. They didn’t quite see it that way.
When it comes to requests for privately held information, one is required to indicate the right that one wants to exercise and protect. Noseweek said the following in our requests:
“The media have a right, and indeed the duty, to inform the public about matters which fall in the public domain and for which the liquidators are accountable to the Master of the High Court and the Master in turn to the public. This right is safeguarded and the duty is imposed by the Constitution. (Section 16 of the Constitution of the Republic of South Africa, Act 108 of 1996.) The matter on which Requester wishes to report clearly falls in the public domain and is therefore such a matter.”
After reminding them that, in the Asch court application, the shareholder-applicants had levelled allegations of fraud against them, and that in response they had claimed it was a “bona fide administrative error”, a mere “overpayment”, and that they had had “no intention to mislead creditors or the Master.” They told the court they had repaid the amount together with interest into the estate account.
We then informed them that we wished to check each and every Liquidation & Distribution Account and the supporting vouchers furnished by Progressive Administration/Van Zyl to the Master of the Western Cape High Court for the period 1 January 2008 to date. Just to check the veracity of their contention that it was “an isolated and non-deliberate error,” to overcharge for fees.
Attorney Leonard Katz of ENS responded on behalf of the liquidators, saying:
“1. The purpose for which you state in your application you seek the records is the very issue to be determined by the High Court. The issue has been fully ventilated in papers before the High Court.
“2. Our clients contend that the application is not a bona fide attempt to utilise the mechanism of the Act in order to obtain information. It is a further step in a vendetta which is being carried out by Noseweek against our clients. The application is thus for an ulterior purpose and amounts to an abuse of its provisions.
“3. We are instructed to advise that our clients decline to give you access to the records sought, in that the information requested is not required for the exercise or protection of any rights.”
Katz’s response didn’t make sense to us, so we approached the Paia whizz from Grahamstown: Jay Kruuse is an attorney and director of the Public Service Accountability Monitor at Rhodes University. He observed:
“Section 50 of the Promotion of Access to Information Act obligates a requester to show that the record(s) sought from a private body are “required for the protection of any rights”.
To contend that Noseweek has not met the requirements of this section when the very liquidators (who owe an onerous duty to both the Master of the High Court and a diverse range of public and private creditors) have tried to counter serious allegations of fraud on the basis that their considerable “overpayment” was an “isolated and non-deliberate error” is unconvincing and cause for further questions and concern.
Professors Jonathan Klaaren and Iain Currie, authors of the Promotion of Access to Information Act Commentary, make the point that “the use of the phrase ‘any rights’ means that particularity is not required – there is no need to show that the effects on rights is particular to the applicant. A generalised grievance is just as effective. So is a request motivated by a desire to protect the rights of the public in general.
“Clearly in instances where liquidators have acted erroneously but in good faith, or at worst, have conducted their affairs in an unlawful manner, the public has a right to know and the Master’s Office should ensure that the necessary corrective action is taken.
“In the present matter, rather than refusing access to the liquidator’s records, would it not be better to act transparently in order to meaningfully dispel any further concerns or suggestions that this was not an isolated incident?”
Noseweek will take a team of volunteers – who have already indicated their willingness to assist free of charge – and go through each and every file at the Master’s Office and, in due course, report what we find. This may be the biggest data journalism challenge in Noseweek’s 20-year history.
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