How a ‘cabal’ allegedly rigged liquidation appointments - TimesLIVE

An explosive Special Investigating Unit (SIU) investigation has uncovered evidence that a “cabal” of master’s office officials, liquidators and insolvency practitioners allegedly captured South Africa’s lucrative liquidation system, rigging appointments, engineering creditor support and, in some cases, committing fraud and corruption to channel lucrative insolvencies to a favoured few.

The details of the SIU’s investigation, which the Sunday Times is making public for the first time, are documented in a report that the elite corruption busters submitted to President Cyril Ramaphosa in September 2023.

Three years on, however, the National Prosecuting Authority (NPA) has yet to act on the report. Its spokesperson, Kaizer Kganyago, failed to respond to repeated requests for comment about what happened to the 47 cases referred to prosecutors by the SIU.

Justice & constitutional development minister Mmamoloko Kubayi said this week she was aware that there was a lot of interference in the appointment of liquidators and insolvency practitioners.

Kubayi said that, following the SIU report, the department subjected two employees to disciplinary hearings, one of whom was fired but later reinstated by the Commission for Conciliation, Mediation and Arbitration (CCMA). The department has referred other cases to the Directorate for Priority Crimes Investigation, commonly called the Hawks, for further investigation.

In one case, an employee opted to resign after being threatened and pressured to illegally facilitate the employment of a specific liquidator, Kubayi said.

Among the most serious SIU findings were allegations that senior master’s office officials interfered in the appointment of preferred liquidators; that fraudulent creditor claims worth hundreds of millions of rands were allegedly manufactured to rig appointment processes; that insolvency practitioners cultivated corrupt relationships with important officials; and that bribes and other improper inducements were allegedly used to influence the allocation of some of the country’s most lucrative liquidation appointments.

The SIU investigated 273 matters, identified irregularities in 28 of them, and ultimately made 47 criminal referrals to the NPA after uncovering evidence of what investigators described as fraud, corruption, bribery, forgery and other criminal conduct allegedly committed by a network of master’s office officials, liquidators, attorneys and private actors.

Whoever is appointed liquidator controls the disposal of assets, litigation, creditor claims and professional fees attached to collapsed companies, making appointments among the most valuable and fiercely contested decisions in the insolvency industry.

Former acting chief master at the master's office in Pretoria, Theresia Bezuidenhout. At the centre of the findings is former acting chief master (ACM) Theresia Bezuidenhout, whom the SIU found had improperly interfered in at least two critical liquidator appointments.

In one of the report’s most controversial chapters, the SIU found that Bezuidenhout allegedly pressured officials to appoint the late liquidator Cloete Murray in the Bosasa liquidation despite lacking the authority to direct the process.

In another matter involving Duro Pressings, the SIU found that Bezuidenhout allegedly instructed officials in the Johannesburg master’s office to proceed with the appointment of liquidators in a process that was later struck down by the courts.

The report also highlights the activities of Kaap-Vaal Trust, a controversial firm of liquidators whose practitioners became embroiled in multiple SIU investigations. In one matter, the SIU cited court findings that the company’s officials appeared to have fabricated claims worth about R345m to engineer the entity’s appointment as preferred liquidator, a finding that ultimately led to criminal referrals.

The SIU’s investigation found that on February 25 2019, Bezuidenhout departed from the established way of appointing liquidators, assembled a team of officials from different master’s offices and instructed them to specifically appoint Murray as Bosasa’s provisional liquidator.

At the time, Murray — who was assassinated with his son in Midrand in March 2023 — was working at Sechaba Trust, a company he co-owned with ANC veteran Mathole Motshekga. Murray was widely regarded as one of South Africa’s most influential insolvency practitioners, having handled some of the country’s largest and most politically sensitive corporate failures, including Comair and a number of Gupta-linked entities.

The report states: “The evidence suggests that Ms Bezuidenhout had assembled a team of masters from different master’s offices to make an appointment on Bosasa despite them lacking jurisdictional authority and thus that she may be guilty of contravening section 2 of the Estates Act.”

It states that the established practice is that once liquidation files are lodged, the master gives creditors two days to nominate their own preferred provisional liquidators. Where there is a need for an urgent appointment, the master can use his or her discretion to appoint a previously disadvantaged individual (PDI) as a provisional liquidator.

“It is the SIU’s view that the purported discretion said to have been exercised by Ms Bezuidenhout in her capacity as ACM in appointing Mr Murray is non-existent in law and thus invalid,” states the report, adding that she had no authority in law to appoint or nominate a preferred insolvency practitioner for appointment in the administration of estates.

The SIU’s finding echoes allegations made by former Bosasa executive Angelo Agrizzi, who claimed in an affidavit in 2022 that a network of officials and liquidators had worked behind the scenes to secure control of the Bosasa liquidation. He alleged that Cloete Murray held meetings with whistleblowers and employee representatives before his appointment was finalised and used the access to cement his position as the preferred liquidator.

On the Duro Pressings matter, the SIU found that in August 2017, Reuben Maphaha, then deputy master in Johannesburg, parachuted Gert Lourens Steyn de Wet of Kaap-Vaal Trust and Johan Engelbrecht of Icon Insolvency Practitioners into the estate as additional liquidators.

The liquidators already administering the Duro Pressings estate fought back in court, successfully challenging the appointments of De Wet and Engelbrecht, with the court ultimately setting aside the appointments and removing them from the matter.

In an interview with the SIU, Maphaha said he had been instructed by Bezuidenhout to appoint De Wet and Engelbrecht.

“The SIU’s investigation revealed that on September 29 2017, Ms Bezuidenhout as the ACM had sent an e-mail to Mr Maphaha as well as Mr Leonard Pule (master of the South Gauteng High Court) stating, ‘We need and have the power to correct.’ She had also instructed, ‘Please proceed to appoint the chosen liquidators,’” says the report.

The SIU found that, in other cases, insolvency practitioners allegedly bypassed the need for official intervention altogether by engineering their own appointments through the inflation of creditor claims and requisitions intended to create the false impression of overwhelming support for preferred liquidators.

Investigators found that two Kaap-Vaal Trust directors, De Wet and Olga Kotze, as well as a Mandla Madlala, allegedly created fraudulent requisitions and inflated creditor claims worth about R345m to engineer Kotze’s appointment as provisional liquidator. The SIU concluded that evidence pointed to the trio having committed fraud by manufacturing requisitions designed to influence the allocation of lucrative liquidation work.

Further, the SIU investigated a R3,000 payment allegedly made by Kaap-Vaal employee Aubrey Moitjiwa to former assistant master William Sekete, concluding that the payment may have been intended to influence insolvency appointments involving the firm.

The SIU also found that a loan advanced by Icon Insolvency’s Engelbrecht to Sekete may have been used to cultivate a relationship that influenced liquidation appointments involving Icon Insolvency Practitioners. Engelbrecht and Sekete were involved in a corrupt relationship, the unit said, adding that “this relationship influenced Mr Sekete’s actions in respect of an inquiry held in terms of Section 381 of the Companies Act against Mr Engelbrecht, as well as possibly influencing appointments of Mr Engelbrecht to several liquidations at the Pretoria master’s office”.

On his website, Engelbrecht lists Aurora Empowerment Systems and the ANC Youth League among the notable liquidations his company has handled.

Investigators also found evidence suggesting that Engelbrecht represented on a CV that he had a BProc degree through the University of Pretoria, despite never having enrolled there. The SIU referred to this as a potential fraud issue.

Over and above referring cases to the Hawks, Kubayi said she had specifically facilitated a meeting between her department and NPA boss Andy Mothibi, where all parties agreed to collaborate in order to fast-track cases referred to prosecutors by the SIU and the Zondo commission of inquiry into state capture.