Gavin Watson paid R5m ‘performance bonus’ a mere two weeks before Bosasa liquidation

Bosasa boss Gavin Watson was paid a R5m "performance bonus" by his beleaguered group of companies — accused of being at the centre of massive government tender corruption — less than two weeks before those same companies were placed under voluntary liquidation.

Evidence of a January 30 payment was contained in documents filed by Bosasa group liquidator Cloete Murray at the high court in Johannesburg last week in response to an application by the Bosasa group (now trading as African Global Operations) to "reverse" the provisional liquidation and wrest control of its 10 subsidiary companies out of the liquidator’s hands.

Acting judge Goolam Ameer ruled in African Global Operations’s favour last week.

The group was placed under voluntary liquidation on February 12 as a result, it said at the time, of a decision taken by its banks, FNB and Absa, to shut down its accounts. According to Murray, the only banking facilities they have — at Standard Bank — were opened by the liquidators.

Ameer agreed with Bosasa group boss Joe Gumede that the special resolution taken by Watson, himself and four other directors to place the group under liquidation was null and void from the beginning.

This, the judge ruled, was because that resolution did not comply with the provisions of the Companies Act.

Crucially, the judge found that there was "no evidence to gainsay" claims by African Global Operations and its subsidiaries that they had "a healthy cash flow at all times" and he refused to consider an "independent report" compiled by Murray that alleged the group might have committed serious financial and tax improprieties.

Ameer said that this was because the report, in which the SA Revenue Service (Sars) confirms that it is "busy investigating the tax affairs" of African Global Operations and its related companies, was "not under oath".

He said that there was clearly a "conflict of interest" apparent in the liquidators’ decision to oppose African Global Operations’s application for a reversal of the liquidation because such a reversal would enable the group to pay its creditors – including Sars – "promptly".

Independence

"I have my misgivings about the liquidators’ self-professed independence in this matter," he said, adding that their opposition to African Global Operations’s bid to reverse its liquidation was clearly a "business decision" as they wanted to earn "not an insignificant fee" by persisting with the liquidation process.

But a Sars specialist in the Illicit Economy Unit states in a letter attached to Murray’s report that the revenue service "supports the appointment of Mr Cloete Murray as liquidator either in [African Global Operations] or on the group as a whole ... based on his experience in dealing with high-priority and high-value estates".

The report rejected by Ameer also contains correspondence which reveals that:

National commissioner of correctional services Arthur Fraser has threatened to sue African Global Operations for "unjustified enrichment" linked to the department’s recently cancelled catering contract with the group.

Chartered accountant Colleen Passano, who conducted an overview of African Global Operations’s financial affairs, notified the group that she was required to report multiple incidents of "noncompliance and/or suspected noncompliance to laws and regulations" in its financial affairs to the SA Institute for Chartered Accountants.

These alleged incidents of financial wrongdoing include payments to suppliers based on false documentation, "as no evidence of any purported service provided is evident", alleged tax violations and unexplained "monthly consulting fees".

Audit firm D’Arcy-Herrman & Co, appointed by African Global Operations to audit the group’s financial results in February, reported that the company had "failed to prepare its annual financial statements within six months of their year end".

In his ruling, which Murray and his fellow erstwhile African Global Operations liquidators are now seeking to appeal, Ameer further said that it would not be appropriate for him to consider that report because, among other things, African Global Operations had not been given time to respond to it.

The judge ordered that Murray and the other liquidators who opposed African Global Operations’s application pay the legal costs incurred in the case out of their own pockets — a sign of extreme judicial displeasure.

The liquidators are now seeking leave to appeal Ameer’s judgment. No date has been set for the hearing.