The SA Clothing and Textile Workers Union (Sactwu) wants the High Court to order former union consultant Richard Kawie to explain to an inquiry how R8 million from Sactwu provident funds ended up in his accounts.
Sactwu general secretary Andre Kriel said in court papers that Canyon Springs Investments 12 had paid R8.1m to Kawie or his businesses.
Canyon Springs was liquidated last week, and an ongoing liquidation inquiry is looking into how the business lost more than R100m that came from Sactwu workers’ provident funds. Canyon Springs is partly owned by Deputy Minister of Economic Development Enoch Godongwana.
On October 21, Kawie filed an application in the Cape Town High Court aimed at overturning a subpoena ordering him to give evidence at the liquidation inquiry.
Sactwu is opposing Kawie’s application and also brought a counter-application, calling for the Cape Town High Court to order Kawie to turn up at the liquidation inquiry on November 9. Kriel made the founding affidavit for Sactwu in this.
The applications will be heard on Thursday in the Cape Town High Court.
“Kawie is a central witness as far as the affairs of Canyon Springs are concerned,” said Kriel.
“Based on evidence… at the commission, he controlled its affairs, directed its business activities, funds were disbursed on his instructions, and Kawie himself, or entities controlled by him, received millions of rand of Canyon Springs money.”
Kriel called it “essential” for Kawie to be available to the inquiry so that liquidators could recover whatever possible of the money.
He said Kawie broke previous undertakings to appear and was improperly trying to delay matters and evade examination.
Kawie said five Sactwu provident funds had handed over R417m to the Trilinear Empowerment Trust to invest.
Without the knowledge of the funds’ boards, the trust gave one of the Trilinear companies – separate to the trust – the authority to manage the funds. By early this year, the Trilinear company had lent R100m of this to Canyon Springs, resulting in a debt of nearly R130m, with interest. Trilinear did not have the authority to make the loan, said Kriel.
He said the inquiry heard that money for Canyon Springs, ultimately from the provident funds, was “either stolen or squandered”. By February, Canyon Springs had an accumulated loss of nearly R47m, and “it seems unlikely that this amount can or will be repaid by Canyon Springs”.
The rest of the R417m provident fund money is also mostly gone. “Most of these funds which were ‘invested’ by the Trilinear Empowerment Trust in Canyon Springs and other entities, such as the Pinnacle Point Group Ltd… appear to have been irretrievably lost,” said Kriel.
“It hardly needs pointing out that these funds are the pension monies of thousands of workers in the clothing, textile and related industry. These workers are the lowest paid in the whole of the domestic manufacturing industry.”
Kriel said the investment decisions were not made by Sactwu, but by the provident funds’ boards.
Kriel said the inquiry heard that Kawie was the corporate controller of Canyon Springs, and that the business was used to channel the workers’ provident fund money from Trilinear to Canyon Springs subsidiaries and interests, including Kawie connections.
The Trilinear companies are controlled by Sam Buthelezi. Kawie’s associate, Erwin da Gama, a debarred attorney, also benefited.
“It emerges from the evidence thus far before the commission that Kawie and Buthelezi allegedly orchestrated a scheme by which provident fund monies, lent to the Trilinear Empowerment Trust, were utilised for impermissible purposes,” said Kriel.
Buthelezi and Kawie “pocketed a substantial portion” of the money.
“Canyon Springs was central to this scheme,” said Kriel.
“Canyon Springs’ sole function was to hold interests in certain companies in which it had acquired a stake. Loans were made to these companies and to other entities controlled by Kawie and Da Gama. The amounts so disbursed have been dissipated by Canyon Springs are probably irrecoverable, and Kawie has to explain to the commission why this is not the case,” said Kriel.
Godongwana was an executive director of Canyon Springs from October 2007 to March 2009, when his wife took over, although her appointment was backdated to December 2006.
Kriel said that in terms of his letter of appointment, Godongwana was to be paid R1.584m a year, and more than half of this was paid to him through Kawie’s businesses.
Kriel said Sactwu wanted to know why Kawie’s companies, using money from Canyon Springs, made payments to Godongwana, his wife, to Buthelezi’s trust, for a property owned by Kawie, and to a Da Gama business.
The trust’s chairman at the time, Graig Philander, was recruited by Kawie, said Kriel.
Philander, an advocate who is not a member of any Bar as he failed the Bar exams, received R500 000 for going to trust meetings, but investments were never discussed, and Philander could not explain what he’d done to justify the payments, said Kriel.
Buthelezi is due to appear at the inquiry next week. Kriel said a subpoena to attend the Canyon Springs inquiry had been issued for Da Gama but not yet served, “as he is proving to be very elusive”. - The Star