Dines Gihwala to pay up big time

Once celebrated, since disgraced.

Dear reader, this story begins way back in 1998, but listen patiently and keep in mind: the sting is in the tail. It was in that year that Cape Flats attorney Dines Gihwala was made an acting Judge of the Western Cape High Court on the recommendation of then- Minister of Justice Dullah Omar. This was, Noseweek reported at the time, after Gihwala, a one-time political opponent of his, had made a donation of R50,000 to ANC funds, and  persuaded the Hindu Association of Rylands Estate to throw a festive bash in honour of the new minister – in an election year.

May 1999: Noseweek revealed the improper involvement of Dines Gihwala, then BEE chairman of mega-Afrikaner law firm Hofmeyr Van der Merwe (later Cliffe Dekker Hofmeyr) in the cases of hundreds of Macassar residents with claims against the chemical giant AECI,  resulting from a sulphur fire that broke out at the company’s premises.

Hofmeyrs were AECI’s attorneys, defending the company against all the claims brought by the Macassar residents when Gihwala secretly managed to gain access to – and control of – the claimants’ attorney’s files – more than 600 of them –creating an obviously serious conflict of interest.

In August 2000 Noseweek reported how, back in 1988, Cape Town attorneys Faizal Noor and Dines Ghiwala had decided it would be a good idea to go abroad to raise money for the poor and oppressed of South Africa.

This represented a remarkable and praiseworthy conversion, as neither man had previously shown any concern for the lot of the poor and oppressed.

They travelled to London (where they stayed at the five-star Dorchester Hotel, and called on the luminaries of the Regent’s Park Mosque for introductions to rich Arabs), then flew to New York by Concorde. There they saw various well-connected people to whom they promised 25% commission on any money they could raise for this cause. How much money they raised and what causes benefited, no-one was ever told.

Dines Gihwala

It was ten years later that the first serious move was made to strike

Gihwala from his deviously created pedestal: in January 2010 summons was issued against Gihwala by Karim Mavji, a UK-based businessman with the vast financial resources along with the determination and patience needed to drive a case that would drag on for six years – from the Western Cape High Court all the way to the Constitutional Court and back again.

The action arose from a business arrangement reached between the two men in 2003, in terms of which Mavji had entrusted Gihwala with several millions of rands for investment in South Africa.

Mavji explained that had been led to trust Gihwala because, at the time and for several years afterwards, Gihwala was widely perceived to be a highly respected attorney and businessman and chairman of Hofmeyr Herbstein & Gihwala (another predecessor of Cliffe Dekker Hofmeyr), a major law firm.

Clearly Mavji had not been a subscriber to Noseweek, which reported in January 2011 that Johannesburg attorney Ian Small-Smith had also laid criminal charges against Gihwala, and that Cliffe Dekker Hofmeyr (at about the same time) quietly removed him as chairman of their firm. Noseweek could with fair justification declare: “These developments should come as no surprise to Noseweek readers: they have long known Dines Gihwala to be unscrupulous and a disreputable opportunist.

In the midst of all this, in 2011 Liberty Medical Scheme, too, discovered that Dines Gihwala was a thief and a scoundrel who was happy to defraud anyone fool enough to trust him, and issued summons against him in the North Gauteng High Court in Pretoria. That case arose from Gihwala’s appointment in 2001 as curator of the Medicover 2000 Medical Aid Scheme which later, in 2010, merged with the Liberty Medical Scheme.

In the summons Gihwala was charged with having authorised, as curator, a loan of R5 million by Medicover to a company controlled by Cape Town businessman Farel Mark Bernberg to fund a property development. Various other companies under Bernberg’s control were to provide security for the loan. All the relevant documents were drawn up by one of Gihwala’s junior partners at his law firm Hofmeyr Gihwala – a serious conflict of interest.

Bernberg subsequently repaid only R180,000 of the R5m owed before he was declared bankrupt. All the security offered to Medicover proved to be dud. The contracts drawn by Gihwala’s law firm were all found to be flawed and unenforceable.

Not only was the loan not deemed to be prudent use of medical aid funds;  Gihwala had not revealed that he was Bernberg’s business associate. They were, inter alia,  both directors of one of the companies that provided dud security for the loan. Far from acting with the utmost good faith, as is required of a curator, he had acted in a fashion calculated to gain advantage for himself at the expense of Medicover.

The medical aid fund sought repayment of the outstanding R4.8m plus interest from Gihwala and from his then law firm.

The case was subsequently taken to arbitration where a settlement was reached in 2014. The agreement includes a secrecy clause which “regrettably” prevented Liberty’s attorneys Gildenhuys Lessing Malatji Inc from divulging to Noseweek what the terms of the settlement had been.

The Western Cape High Court delivered its judgment in Mavji’s case on 26 June 2014.

The court found that Gihwala:

•    failed to keep proper books of account;

•    failed to allow his business partner access to the accounts;

•    failed to disclose material information to his business partner;

•    failed to distribute to his partner a fair share of the profits;

•    preferred himself as a creditor above other creditors;

•    misappropriated funds of their joint venture for his own benefit;

•    made a secret profit for himself;

•    was recklessly in breach of his fiduciary obligations;

•    was guilty of grossly negligent conduct in making payments to himself of R2.75m as “director’s remuneration”, R1.1m as “surety fees” and R225,000 as “promotion fees” when he was entitled to none of these payments; and

•    failed to disclose that the shareholders of a company in which he had invested his partner’s funds were related to him.

The court felt that in the circumstances it had no option but to declare Gihwala a delinquent director, no longer fit to be a director of any company, or be entrusted with the fiduciary responsibility of managing any corporate entity.

In his judgment, Judge P B Fourie remarked: “It is necessary to eliminate rogue directors from operating in South Africa to protect investors, as well as boost confidence in the South African regulatory system in order to attract investments and stimulate growth.”

Mavji, in the interim, has discovered evidence revealing even more frauds perpetrated by Gihwala. Further court hearings are anticipated.

Legal costs awarded against Gihwala in Mavji’s favour continue to mount up.

Currently on the court roll for taxation by the taxing master at the Western Cape High Court in May is a bill from Mavji’s lawyers for costs still to be paid by Gihwala totalling close on R20m.

He has already managed to pay several millions in damages awards. But then he did manage to accumulate a fair fortune as curator of Fidentia, thanks to his kind friends at the FSB who would hear no evil said of him.

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Submitted by : Starving beneficiary on 2017-05-01 10:34:16
With the story of an ex Fidentia employee using the mine workers' widows and orphans monies in the Bophelo Fund for his own gain hitting City Press this last weekend, one could not help wondering why the press let the Fidentia story die when it is still ongoing.


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