Cape Town - The “close” relationship between luxury property group Pinnacle Point and Absa Bank came under scrutiny yesterday at an inquiry into the company’s liquidation.
Among the issues probed was that the bank had initiated the appointment of the group’s former chief executive Hendrik Pretorius in 2009, and that it paid half his salary.
The bank paid him R500 000 a month – something that was not initially disclosed to the group’s board.
At the time, Absa had a shareholding of about 27 percent in Pinnacle Point.
Stephen van Coller, head of corporate and investment banking for Absa, now Barclays Africa, was questioned about whether he believed it was considered a usual practice for a bank to find a new chief executive, then pay half his salary.
Van Coller responded by saying that while it was not unusual to ask for a new chief executive, it was unusual to pay half his salary.
His understanding was that Pinnacle Point believed Pretorius’s asking salary – R1 million a month – was too much and that it was not willing to pay that amount.
Advocate Gavin Woodland, SC, acting for Trilinear Empowerment Trust, put it to Van Coller that there was an expectation on Absa’s part that Pretorius would align himself with the bank when it came to board voting.
Van Coller disagreed. He said that the bank needed to break the “stronghold” of two other shareholders for the sake of the group’s viability.
Absa had spent more than R930m for its stake in Pinnacle Point and needed to ensure its acquisition cost was recovered. There were also plans for Absa to pump a further R500m into the group but this never came to fruition.
According to Van Coller, the group had been working on two developments, one in Port Elizabeth and the other outside Hermanus; however, the returns from these projects would just about have covered the company’s debts.
When it came to making a profit, the focus had then turned to two developments in the Seychelles and Nigeria.
However, the Seychelles development never took off and there were land ownership problems with the development in Nigeria.
While the commissioner, retired Judge Meyer Joffe, has already submitted a report on the Pinnacle Point matter, Trilinear requested further inquiry sessions in a bid to determine what Absa’s role had been.
Several South African Clothing and Textile Workers Union (Sactwu) provident funds invested money with Trilinear, which in turn invested about R90m in Pinnacle Point directly.
It bought out further shares from Absa to the tune of R150m in 2010.
Woodland put it to Van Coller that the relationship between Absa and Pretorius had been “close” and at “less than an arm’s length”.
Van Coller said he did not believe this was unusual.
The hearing continues today. - The Cape Times