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Cape Town - Trustees of a clothing workers’ investment body are suing Absa for R195 million.
They want to recover money meant for their retirement, which was lost through dodgy investments.
The Barclays-owned Absa, however, is defending the action and has also instituted its own claim.
The trust’s action relates to property developer Pinnacle Point, into which it pumped millions before the company went under in 2011.
The trust was created as an investment vehicle for several provident funds established for the benefit of Southern African Clothing and Textile Workers Union (Sactwu) members. Clothing workers are among the lowest paid.
The trust concluded two agreements a few years ago, forking out R195m, in terms of which it acquired a stake in Pinnacle Point.
The trust first bought R100m in shares from Pinnacle Point in October 2009, then later bought over Absa’s shares – the bank had a 27 percent shareholding – for R150m, although, only R95m of this amount was paid.
In an attempt to recover the money, three trustees lodged a claim in the South Gauteng (Johannesburg) High Court on February 4.
The gist of the trust’s action is similar to allegations that emerged in an inquiry late last year into Absa’s role in the demise of Pinnacle Point.
At the time, at least one Absa official was questioned about the bank’s alleged failure to disclose “crucial” information that might have stopped the trust from investing in the ailing company.
The trust’s advocate Gavin Woodland, SC, put it to the bank’s head of corporate and investment banking Stephen van Coller that even though Absa already knew there were problems with the necessary land rights and environmental approval for the “jewel” in Pinnacle Point’s crown – the Lagos Keys project in Nigeria – the bank had not disclosed this to the trust.
The commission heard how the company’s survival hinged on the Lagos Keys project going ahead.
According to Van Coller’s testimony before the commission, a new investor’s relationship was with Pinnacle Point, not Absa.
And, while Absa had done due diligence on the company’s affairs, this had been done for the bank and he did not see it as their responsibility to hand it over to the trust.
There had been a lot of trust between the bank and Pinnacle Point’s management at that stage, Van Coller said at the time. The bank had been under the impression that the rights and approvals for Lagos Keys were simply a matter of procedure and were forthcoming.
In an e-mail response to a request for comment, Absa confirmed that legal proceedings had been instituted against it by the trustees of the Trilinear Empowerment Trust.
“Absa will defend the action. Additionally, Absa has instituted a separate and distinct claim against Trilinear,” it said. The details of the bank’s action, however, are not being revealed.
Andre Kriel, general secretary of Sactwu and one of the trustees who lodged the action, said in an SMS: “The matter is now before the court and I have no further statement to make at this stage.”
Meanwhile, Sam Buthelezi, the former chairman of Trilinear Holdings, has taken issue with his name being “dragged” into the trust’s court action.
This is according to Rooshdeen Rudolph, a lawyer representing Buthelezi.
Buthelezi is mentioned in the trust’s court papers.
The Trilinear Empowerment Trust does not form part of the Trilinear group, but it appointed Trilinear Capital, under the Trilinear group, to manage its investments.
“Our only interest in this Absa matter is that my client’s name is dragged into this,” said Rudolph. He held “the right to use any legal remedies available to him against any or all of the parties.”
Rudolph said that while Buthelezi was portrayed as a “thief” in the separate matter of Canyon Springs, in which millions in provident fund money had gone missing, a “lily-white image” had been painted of him in the court papers filed against Absa in the Pinnacle Point matter. - Cape Times