Cops face huge auction probe

Auction Alliance's Rael Levitt File picture: Cindy Waxa

Auction Alliance's Rael Levitt File picture: Cindy Waxa

Published Sep 13, 2015

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Cape Town - Nine years of auctions carried out by the embattled Auction Alliance group are to come under scrutiny as police prepare to dig through mounds of documents and electronic records in their mammoth investigation into the group and its former chief Rael Levitt.

A 32-page search warrant was recently filed at the Western Cape High Court as part of an application by the auction giant’s attorneys, Smiedt & Associates, and it has laid bare the full extent of the probe, which an industry expert said would “take three lifetimes to complete”.

The warrant includes five annexures and authorises a team of eight police officials, under the leadership of Colonel Devandri Pillay, to open 121 boxes and sealed evidence bags, stored at the offices of auditing firm KPMG.

The boxes and evidence bags contain items seized from the the group’s offices during a countrywide raid in August 2012, including premises in Port Elizabeth, Bloemfontein, Cape Town, Joburg, as well as the offices of Accountants@Law and Levitt’s Mouille Point home.

Shocked at the extent of the investigation, industry expert Heinrich Koorts questioned where the police would find the manpower and resources to conduct an investigation of such proportions.

Koorts said Auction Alliance was the largest auction house in the country and carried out huge volumes of work.

“We must be talking about thousands upon thousands upon thousands of auctions .... What do they want to achieve with this?”

Auction Alliance made headlines in 2012 when heiress billionaire Wendy Appelbaum accused the auction house of a ghost bidder against her at the Quoin Rock wine estate sale in December 2011.

The group and Levitt have been in and out of court in civil cases that stemmed from the saga.

Later, additional allegations emerged of kickbacks paid to liquidators, attorneys and bank staff to pull business in the auction house’s direction.

It led to the massive criminal investigation and the raids.

Shortly afterwards, Auction Alliance went to the High Court to challenge the constitutionality of the police’s initial search warrant.

It ended in a police undertaking that led to the seized items being stored until a fresh application for a search warrant was lodged.

The fresh warrant was obtained on May 2 last year but has not yet been executed, while police iron out kinks relating to the appointment of a custodian.

However, it has detailed that the group was not only being investigated for fraud and money laundering related to the Quoin Rock sale, but also for all auctions it handled between January 2003 and February 2012.

Police have undertaken to use a five-stage process to dig through the masses of documents to find extensive information relating to the 2011 Quoin Rock sale, including records of all communication relating to the auction, the particulars of those who made challenges to its validity, a list of items not sold, the details of any reserved price and letters of authority of those who attended to bid on behalf of others or on behalf of companies.

Information on Levitt’s financial situation as well as that of the group is being sought, including obligations to banks and third parties, details of foreign bank accounts held in their names and trusts which Levitt and and his associates may have an interest in.

Other information wanted for the investigation are tax returns.

 

History of a mammoth investigation

In December 2011, then-Auction Alliance CEO Rael Levitt conducted the auction of David King’s Quoin Rock wine estate in Stellenbosch.

The highest bidder was wealthy heiress Wendy Appelbaum, the daughter of insurance and property tycoon Donny Gordon.

She later disputed the auction process, claiming that Levitt and Auction Alliance used a ghost bidder to drive up the price.

She did not get the farm because the liquidators rejected her R55 million bid.

In February 2012, Levitt stepped down as CEO of Auction Alliance.

There have been several court applications stemming from the much-publicised saga.

Investigations were also launched into claims of staff receiving kickbacks for preferential treatment.

It soon emerged that Auction Alliance and Levitt were being criminally investigated and in August 2012 a police task team raided the group’s offices across South Africa.

The search warrants also became the subject of court proceedings in the Western Cape and led to the seized items being held at the offices of KPMG for safekeeping.

Last year a fresh search warrant was obtained and it is this warrant that is currently under scrutiny in the Western Cape High Court.

Weekend Argus

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