Inside the matrix

The quaint brotherhood in the liquidations industry is starting to fall apart, showing up some astonishing tactics. One meaning for Mafiosi, according to the Merriman-Webster dictionary, is a person who is a member of a group of people likened to the Mafia; especially: a group of people of similar interests or backgrounds prominent in a particular field or enterprise. It would probably be stretching a point to describe a group of people networked within South Africa’s liquidations sector as Mafiosi. Nevertheless, they do have an overriding interest in generating mountains of filthy lucre. And they are now being subjected, to increasing doses of public exposure.

There is perhaps one major – and totally surprising - factor that would disqualify the group as Mafia. Where the original Mafia were linked by origin as Sicilians, this group is as diverse as it gets. There are Muslim elements, such as liquidator Enver Motala, who was arrested on July 2 on charges of fraud and corruption. There are Jewish elements, in attorneys Stan Rothbart, and in Motala’s only remaining partner, Norman Simon, and also their disgruntled ex-partner, Mervyn Swartz.

And then there are the black players: on the fringes ex-justice minister Penuell Maduna, and Vusi Pikoli, who is still director general of the justice department. The picture would be incomplete without a middle-aged, bespectacled white Afrikaner, represented by Leon Lategan, one of Motala’s chief button men, and a senior officer in the Masters Office, the unit of the justice department which appoints liquidators according to its “unfettered discretion.”

One of Lategan’s most unforgettable Motala appointments was seen in respect of RAG, a R1-bn bankruptcy. Maduna intervened in that case, long after the original four liquidators had done all the work, and appointed Motala as fifth liquidator. The action was struck out by the High Court. Maduna then simply appointed Lategan as an extra Master in the Pietermaritzburg Masters Office, and Lategan simply appointed Motala to RAG, apparently in contempt of court. The appointment has, however, stuck.

Other key players fit in-between this group. Take Enver Daniels, the Chief State Law Adviser, who became acting MD of the Masters Business Unit on January 29, 2003. Daniels, who has recently been on study leave to complete his doctoral thesis in law, was a Marxist way back when, like Pikoli. Again, Pikoli knows Maduna very well from their days in exile from the apartheid regime, and so on.

Like most such organisations, there has been lots of training involved within this network. Simon and Swartz selected Motala as their front man for converting their business, SBT Trust, into a “black empowered” entity. The basis for this selection has never been understood. For one thing, Motala had been arrested on charges of fraud and corruption, back in 1989, amid an alleged massive sugar swindle in Middleburg, Mpumalanga. The case has yet to be prosecuted; the file just seems to keep traveling around the country for reasons that cannot be fully explained. However, in the 1990s, Motala acquired lots of experience in liquidations – but on the receiving end. According to Mohan Patel, a medical doctor who loaned hundreds of thousands of rands to Motala in and around the mid-1990s, Motala went from one bankruptcy to the next. Some of the businesses were burned to the ground, in accidents no doubt. Today, Patel is just one of the many judicial opponents that Motala faces. Patel is sore about suing Motala for return of loans and interest, but fails to understand how Motala could be so insensitive to Patel’s role, then anyway, as a friend helping when Motala was down and out. Well, not quite, recalls Patel. At the time, Motala was the apparent owner of two luxury BMWs, a sports Mercedes Benz and a Porsche. The way Patel remembers it, at least one of those cars was mysteriously stolen from Motala.

And then fast forward to the year 2000, by which time Motala had enjoyed the full benefits of being trained by some of the “best” in the brotherhood. At the time, an offensive to clear the way for Motala was being waged. At the end of 1999, Oliver Powell, one of the country’s leading liquidators, had been “bust” by Maduna.

On December 9, 1999, Maduna stated that “possible prosecutions for alleged corruption at the Pretoria Master’s Office were expected as early as next month.” It was not just Powell’s premises that had been raided. On October 24, 1999, the Scorpions, an investigative unit of the National Prosecuting Authority (NPA, itself a unit of the justice department), also searched the Centurion home of the Master of the Pretoria High Court, Ben Nell. In November 1999, Nell and two of his deputies, Charles Stewart and Eugene Januarie, were suspended with immediate effect. To this day, none of the prosecutions that Maduna promised have materialized. On the contrary, Powell has won two major court cases this year, and orders that every last thing seized from him be returned. Powell’s final big case will see him suing – in their present and/or previous capacities - Maduna, Jan Swanepoel (then head of the Scorpions, now of PricewaterhouseCoopers), Basil Nel (then of PricewaterhouseCoopers) and a former Sunday Times journalist, Amanda Vermeulen, for R60-m. It has hardly escaped attention that when Motala was arrested on July 2, 2004, his arraignment, following search and seizure, was by the Serious Economic Offences Unit (SEO), an elite unit of the South African Police Services.

The Scorpions and SAPS are as chalk and cheese. In full, the Scorpions are the Directorate of Special Operations, National Prosecuting Authority (NPA). The NPA national director, Bulelani Ngcuka, has been in his position since mid-1998, and was thus Scorpions overlord when Powell’s business and personal life were ruined. Two weeks ago, news emerged that Ngcuka was resigning after only six years of his ten-year contract. Ngcuka reports to the new justice minister, Brigitte Mabandla. In another world, national police commissioner Jackie Selebi reports to the Minister for Safety and Security, Charles Nqakula. It is clear that Motala has not been investigated by the Scorpions. On the contrary, Motala has on more than one occasion publicly advertised that he was working with the Scorpions (for example, in the RAG and Krion cases), and has even been described in some media reports as the “Scorpions liquidator.”

The rivalry between the Scorpions and the SEO is hardly a secret. Maduna’s apparent protection of Motala may yet be countered by Maduna’s potential nemesis, in the form of Mike Tshishonga, a deputy director general in the justice department. In October 2003, Tshishonga blew the whistle, alleging that his political boss had a nepotistic relationship with Motala; further, that Maduna had “abused the infrastructure and staff of the justice department for the purposes of advancing his personal interests,” and that Maduna had endangered South Africa’s criminal justice system.

Beyond the criminal charges that Motala faces, his nemesis may well prove to be Garveni Creations, fast on its way to being the most infamous South African bankruptcy ever. This week, John Cameron, attorney to one of Garveni’s major creditors, PG Bison, released an independent report on the Garveni estate. It contained shocking new information, of a most detailed kind, on and around the behaviour of Motala, whose appointment to Garveni was voided by the High Court on April 29.Cameron alleges that “as has been suspected, the estate of Garveni has been maladministered by Motala and Frans Langford [the co-liquidator], their conduct being highly unprofessional, irregular and improper and deserving of the highest censure and in due course, will be the subject matter of various complaints and civil proceedings.” In earlier court papers, Cameron had alleged that the conduct of Motala in and around the Garveni case had been “prima facie suggestive of fraudulent conduct . . . the existence of fraudulent conduct is fortified and substantiated;” that “[Motala’s] appointment was sought and obtained under a very unusual set of circumstances, all of which are suggestive of fraud.” Among the more-alarming disclosures in Cameron’s new report, is that Neville Shifren, previously the CEO and major shareholder in Garveni, met Motala early in May this year; that is, after Motala had been removed as a Garveni liquidator. Motala presented Shifren with accounts of Knowles, Husein Lindsay, Inc (KHL), a prominent Johannesburg law firm. One of its senior partners, Mohamed Junaid Husein, had acted for Motala throughout the Garveni matter (and apparently continues to act for Motala). Shifren was presented with KHL accounts in an amount “in excess of R500 000.”Cameron states that, in regard to such accounts, Motala, after making certain calculations, demanded that Shifren “pay 50% thereof.” To this, Shifren reacted that “he would consider no such payment, to which Motala reacted that if that was the case, he would be locking up the premises and would prevent GOF [Garveni Office Furniture] from removing any further items therefrom.”The KHL account would have eaten a big chunk out of the Garveni estate, which had been valued initially at R4-m. Cameron’s new report shows that Rothbart also submitted “one account” to the Garveni estate. Rothbart’s “invoice does not indicate exactly what services were rendered and in regard to what matter and naturally, as Motala has failed to provide the relevant information, it is uncertain as to what professional services were rendered.” The Garveni estate also made out cheques to Motala’s brother, and to the son of Simon.

The nepotism first emerged at the “417” enquiry into RAG. There, the Masters Office is represented by Stephan du Toit, senior counsel, assisted by Rafik Bhana (apparently a relative of Motala) and Soraya Hassim (previously, or perhaps still, Motala’s fiancée, and the only apparent female member of the cast), and Husein. In the RAG matter, Rothbart represents Motala.Déjà vu. In the latest big liquidations event, the R1-bn-plus bankruptcy of MP Finance, more popularly known as Krion, a giant pyramid scheme, four liquidators were originally appointed in August 2002. On January 6, 2004, Lategan appointed two further Krion liquidators. One of them was Motala. One of the original liquidators Koos van Rensburg, of Negota KVR, asked Lategan to supply his reasons for appointing the new liquidators. Lategan failed to respond. Instead, Rothbart replied in writing that he now acted for Lategan and that further correspondence must be addressed to him. Rothbart’s letter appeared to have been the clearest admission that it is Motala, and not Lategan, who was making the Master’s decisions. There has been similar evidence that Motala stage-managed the RAG matter, and perhaps others, directly through Maduna’s offices.

Source: Money Web