ASSHETON-SMITH INCORPORATED IN DIE BURGER 27 JUNE 2013
June 1, 2013

Masterbond-man erken dat hy al weer bedrieg


Translation:


Masterbond man once again admits that he committed fraud


Yesterday one of the masterminds behind the Masterbond case admitted to committing fraud and not paying tax.


Yesterday, Ernst Coetzee appeared in the Stellenbosch Civil Court where there was an enquiry held in relation to the affairs of 1Mobile.


The Company, 1 Mobile, which was registered under the name of Red Sunset Trading 14 (Pty) Ltd, was liquidated in October 2012.

Coetzee, who served a prison sentence after being found guilty of fraud in the Masterbond case in the 1990’s, was sequestrated. He was one of the managers of 1Mobile. A total of 94 investors invested money with 1Mobile for the purchasing of cellphone terminals which one would be able to purchase airtime from.


The concept of the Company was that the investors would pay R6000.00 per terminal which terminal would be installed, managed and maintained by 1Mobile.

1Mobile promised a return of 40% per year (on the R6000.00), if an investor was to conclude a joint venture agreement with 1Mobile, such investor would be able to earn 50% on the turnover which the investor’s terminal would generate.


The terminal is a small machine, just bigger than a regular office telephone landline, which can be installed in any shop where airtime for a cellphone can be purchased.


According to court documents approximately R84 000 000.00 flowed through the Company’s bank statements.


According to Ryno Engelbrecht, the liquidator of the Company, it still remains to be determined exactly how much money investors lost, since the forensic audit has not yet been completed.


Shortly after Red Sunset Trading 14 was liquidated, a handful of investors requested that an enquiry be conducted into the affairs of the Company.


Attorney Craig Assheton-Smith, who conducted the enquiry, put various aspects of the venture to Coetzee. He wanted to know, inter alia, about Dirk Joubert a director of 1Mobile, and if he was aware that the Company financed various payments of a personal nature to Mr Coetzee. Such payments included payments in relation to Coetzee’s wife- and son’s motor vehicles, their cell phone contracts, DSTV and groceries. Coetzee advised that Joubert had been aware of this.


Assheton-Smith further examined Coetzee as to if he ever paid any tax on the aforesaid payments.


“No”, Coetzee answered. He further admitted that the Company also paid for the rental; of a farm near Franschoek (were Coetzee and his family lived) but that these payments were in arrears because of the fact that the Company went into liquidation.


“The landlord had to get an eviction order to remove you from the premises because you did not want to move”, Assheton-Smith said. Coetzee admitted same.


Finally Assheton-Smith questioned him if any of the promises made to one of the investors, Theo Oosthysen, were fulfilled by the Company. Coetzee admitted that not all the monies Oosthyzen had invested were allocated to buying terminals.

PROCEEDINGS IN SOUTH AFRICA LEAD TO PROCEEDINGS IN THE NETHERLANDS

February 19, 2024
Client Background: Client Profile: Our Client, a Dutch Shipbuilder and his companies, owns and manages a shipyard as the second generation of the family that started the shipyard. The shipyard is one of the oldest shipyards in the Netherlands. The business, situated in Sliedrecht in the southwest of Holland, began as a small shipyard offering general repairs and maintenance services to various shipping companies and has expanded to a large shipyard over 90 years with two floating docks and offering in addition to repairs and maintenance, conversion, construction, and design of new parts for ships. Challenges Faced: In mid-2009, 12 barges, a pontoon and two halves of floating dock that the Dutch Shipbuilder and his companies had ordered the construction of in China, were stranded at JacobsBaai on the West Coast of South Africa and were lost. This loss arose from the tugboat operator and owner’s negligence in towing these items from China to Rotterdam. The Dutch Shipbuilder had arranged financing from his bank for the purchase of these items. His bank assisted him with the negotiation of the contracts for the construction, the arrangement of insurance, as well as the final arrangements for the towing of the constructed items from China to Rotterdam, representing themselves as experts in doing so. The Dutch Shipbuilder completely trusted his bank with whom he had a relationship for numerous years. Given the bank’s failure to inter alia put proper insurance in place, a settlement agreement was then concluded between the Dutch Shipbuilder and his companies, and his bank, following the calamity, in which the bank agreed to assist him in pursuing an action in South Africa against the tug-boat operator and owner to recover the loss. The key component of the items constructed was the two halves of a floating dock, which was destined to be moored and operated in Sliedrecht Holland to expand the operations of the shipyard, which was fully supported by the local, regional and state authorities. Action was instituted against the tugboat operator and owner for damages in an amount of €42 million, which included a claim for loss of profits suffered from the loss of the two halves of the floating dock. By the beginning of 2015, some 6 years later, the attorneys who had been appointed by the Dutch Shipbuilder had not progressed the action to a point where it was ready to go to trial. ASG was approached by the Dutch Shipbuilder to take over the case from the existing attorneys. ASG took over the case in May 2015, and the action was settled in September 2016. The Problem: Legal Issues: What did not form part of the settlement was the loss of profit claim in respect of the two halves of the floating dock as the bank refused to assist the Dutch Shipbuilder in providing evidence that he had applied for finance to order a replacement of the two halves of the floating dock to mitigate his loss. However, the Dutch Shipbuilder had indeed done so and, as such, the bank’s refusal to assist him breached its obligation to do so in terms of the settlement agreement and its duty of care as banker to its customer in terms of the Dutch laws. In 2017, on advice from ASG the Dutch Shipbuilder agreed to pursue his bank for damages arising from their breach of the settlement agreement in the Dutch Courts. ASG was instructed to formulate the claim and work with Dutch advocates to do so. The amount claimed from the bankers was €10,609,527 alternatively, €6,293,046. The Dutch Shipbuilder’s bankers raised a counterclaim of €2.75 million plus interest and costs claiming that it was entitled to be paid this amount in terms of the settlement agreement it had concluded with the Dutch Shipbuilder and his companies. In 2018, the Dutch Shipbuilder and his companies were ordered to pay €2.75 million plus interest and costs in terms of judgments of the Central Netherland District Court Utrecht. Impact: The many years of legal proceedings in South Africa, without support from the bank who had undertaken to provide the financial support for the proceedings, had taken a major toll on the Dutch Shipbuilder both financially and personally. The Dutch Shipbuilder, now diagnosed with cancer, and his wife who had supported much of his legal costs financially, were determined that ASG should appeal the judgment to preserve what little relief to their financial loss the settlement in the tugboat operator case in South Africa had brought. Our Approach: Strategic Analysis: ASG knew that to win an appeal, they would need one of the senior employees of the bank to confirm that there was an agreement by the bank to fund the litigation in South Africa to recover the cost and loss of income incurred by the shipyard from the tugboat owner. Solution: Through thorough investigation and unearthing vital correspondence, it was discovered that a former senior employee of the bank that had been approached previously to provide a witness statement, was willing to do so, as the Dutch shipbuilder had in fact approached him to seek financing to procure a replacement floating dock. He had been prepared to provide a witness statement previously, but had been forbidden by the bank to do so. Execution: Legal Actions Taken: Subsequently in 2018 notification was given of an appeal being raised. This was followed by witness hearings in November 2019 and in January 2020. The evidence given by witnesses at the witness hearings provided vital evidence to establish that the bank had indeed prevented evidence being provided with regard to the assistance for the Dutch shipbuilder in the South African proceedings, and that the bank had also lied to the court in Utrecht.  Pleadings were then filed in the appeal to deal with the merits of the appeal and not the quantum of the claim. Results Achieved: At the hearing, the judges of appeal expressed their disapproval of the way in which the bank had conducted itself and suggested the parties attempt to reach a settlement. A settlement agreement was concluded in terms of which the bank agreed to waive its claim against the Dutch Shipbuilder and his companies in full and final settlement. Sadly, the Dutch Shipbuilder had passed away before the outcome of the appeal. May he rest in peace as he was much loved by all who came across him.

REPRESENTING JOINT CURATORS OF A PENSION FUND IN THE GAUTENG HIGH COURT

February 19, 2024
Client Background: Client Profile: Our client, a senior attorney who is very experienced in curatorship of Pension Funds and the various acts that impact the administration of pension funds, was appointed as the provisional curator of a pension fund in December 2010. The Fund was placed in provisional curatorship following an investigation by the Financial Services Board given irregularities in the conduct of the business and affairs of the Fund by its trustees and improper use of the Fund’s monies. The provisional order, granted on 21 December 2010, provided for the former trustees of the Fund to pay the costs of the curatorship, and appointed a provisional curator to administer and investigate the affairs of the Fund. Challenges Faced: After the provisional order was granted, the former trustees of the Fund resigned, and newly appointed trustees brought a counter application to seek the removal of the provisional curator on the basis that he was conflicted. They, however, did not oppose the necessity of the Fund being placed under curatorship, and nominated persons not experienced in pension fund administration to be appointed as curators of the Fund. During the proceedings, it was found by the High Court that the newly appointed trustees had brought the counter-application at the behest of the former Chairman of the Fund that had always controlled the affairs of the Fund prior to it being placed into provisional curatorship. The High Court in Johannesburg granted an order placing the fund into final curatorship, confirming the final appointment of the provisional curator as the curator (our client), and confirming that the former trustees of the Fund were obliged to pay the costs of the curatorship. The Problem: This judgement was then taken on appeal to the Supreme Court of Appeal where the final appointment of the curator was hotly contested. At the hearing, the parties agreed to an order that two curators be appointed together with the original curator appointed by the High Court, and that all issues of costs were referred to determination by the High Court afresh. The above process took some seven years at substantial cost to the Fund and its members. Our Approach: Even though the Financial Services Board was the applicant in the original application to place the Fund into curatorship, it had not taken steps to set the matter down in the High Court for the issue of costs to be determined as per the order of the Supreme Court of Appeal. These included the curatorship costs already awarded by the High Court, but which had been referred for determination by the High Court afresh by the Supreme Court of Appeal. On advice from ASG, the curators of the Fund instructed ASG to set down a determination of the costs in the High Court in 2021, including the curatorship costs, which at that stage was some R45 million. Execution: The Judge allocated to the matter raised at the first hearing the question whether the issue of costs was not to be determined by the Supreme Court of Appeal. The Supreme Court of Appeal then subsequently stated the obvious - that it had referred the issue of costs to the High Court to determine the same afresh. Rather unfortunately, thereafter, the Judge postponed the matter and called for a report from the curators on the costs. Despite having postponed the hearing yet again, the Judge subsequently in the further hearing, confirmed his error in requesting such a report from the curators which was not at all relevant to the determination of the matter. On 19 May 2023 the High Court confirmed that the former trustees of the Fund are obliged to pay all the costs of the curatorship, which at the time of the final hearing amounts to in excess of R60 million, primarily arising from extensive litigation that has arisen at the hand of the former Chairman of the board of trustees of the Fund, who plundered the Fund for his own benefit prior to the Fund being placed in curatorship. The judgment of the High Court is currently the subject matter of applications for leave to appeal which have not yet been heard.
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