Liquidators of the embattled Regiments Capital have taken the African National Congress to court in a bid to recover R50-million that the company channelled to the party in 2016.
The ANC is being sued alongside Regiments’ owners, Niven Pillay and Litha Nyhonyha, for what liquidators have labelled a disposition under insolvency law.
The money was paid into an attorney’s trust account, allegedly to “hide” the donation.
Attorney Naheem Raheman, at the ANC’s instruction, used the money to settle outstanding debts incurred by the party during its 2016 election campaign.
Those payments included R1.3-million directly to the ANC for “human resources” and R8-million allocated with beneficiary details noted as “ANC TG Fund”.
TG is a common reference to treasurer-general, a position then occupied by Zweli Mkhize.
Liquidators, in an affidavit filed at the Gauteng Division of the High Court in Pretoria in November 2023, charge that the overall payment by Regiments and a move to record it as a share-sale agreement were done recklessly and with the intent to defraud the company’s creditors.
They want this agreement to be set aside and for the parties to pay back the money, with interest.
The sale of the shares involved prime land near Sandton’s Gautrain station that the Regiments-led consortium acquired from the City of Joburg more than a decade ago. Read amaBhungane’s exposé of the deal here.
Details of the lawsuit come as election fever takes off and mere weeks after the ANC averted the threat of liquidation by entering into an out-of-court settlement with Ezulweni Investments over a R100-million debt relating to a different election campaign, that of 2019.
Read more in Daily Maverick: ANC in trouble as high court sheriff attempts asset seizure over R102-million election banner debt
Regiments Capital was liquidated in September 2020, but related litigation continued until the Constitutional Court brought finality to the case in August 2023.
The donation to the ANC was allegedly done at a time when Regiments’ liabilities of nearly R2-billion exceeded its assets.
Daily Maverick revealed details of the payment last year when the joint liquidators, Jaco Venter and Kagiso Dinaka, subpoenaed Raheman — the KwaZulu Natal-based attorney whose trust account was used to move money to the party — to appear at an insolvency inquiry.
Read more in Daily Maverick: You ANC nothing yet: Liquidators subpoena lawyer over R50m donation from Regiments Capital to party’s 2016 election campaign
Raheman at first tried to block the subpoena on the grounds that an appearance to produce anything beyond initial disclosures to liquidators would place him in breach of attorney/client privilege, but later abandoned the application.
At the time, he told Venter and Dinaka that the cash — at the instruction of the ANC — was used to pay ANC creditors who were owed money for work on the party’s 2016 election campaign.
And, while the ANC had permitted him to release this information, the rest, Raheman argued, would have to be obtained from Regiments.
It is unclear whether he eventually appeared at the confidential hearing and attorneys for the liquidators, Tintingers Inc, declined to comment.
But liquidators have now issued summons for repayment and are holding the ANC liable along with Nyhonyha and Pillay as well as the Education Policy and Research Trust.
This good-causes trust of which Pillay and Nyhonyha were the trustees, was a member of what was known as the Kgoro Consortium.
Regiments was the major shareholder of the politically connected consortium, which in turn owned 100% of Cedar Park Properties 39, the company that owned the valuable Sandton property.
‘Fraud’
Nyhonyha and Pillay have claimed that shares in the consortium were allocated for the benefit of the trust and that the R50-million was an advance payment for Regiments acquiring that allocation.
But liquidators are not buying this and have deemed it fraud, partly due to some missing paperwork to back up a “recordal agreement” setting out the specifics.
They say Regiments did not pay the money to the trust, which was seemingly entitled to the allocation of shares, and instead moved the money to the ANC’s lawyer who then disbursed it for the party’s benefit.
They view the donation as a disposition, one made to the prejudice of creditors.
While the company held R747-million in assets at the time and/or immediately thereafter, it had liabilities of just over R1.9-billion that included additional tax liabilities of R679-million to SARS, VAT of R124-million, R580-million for the Transnet Second Defined Benefit Fund (TSDBF) and another R245-million to Transnet.
Read more in Daily Maverick: Exclusive: Regiments Capital puts up R500m in Capitec shares in lieu of ‘State Capture’ claims
Regiments’ owners settled the TSDBF debt through a sale of Capitec shares in 2019.
Nyhonyha has filed an intention to oppose the application and Daily Maverick has not had sight of such a notice in respect of Pillay or the ANC.
The payment to the ANC took place in June 2016, a time of heightened awareness of State Capture.
The Public Protector’s investigation into the fraud and corruption in the public sector and the role of former president Jacob Zuma and the Gupta family was in full swing. (This investigation ultimately led to the establishment of the State Capture inquiry chaired by Judge Raymond Zondo.)
In the same year, Regiments Capital, once regarded as a beacon of black success in the financial sector, became embroiled in the scandal when it emerged that the company had paid kickbacks to Gupta-linked front companies such as Homix in exchange for deals at state-owned companies.
Nyhonyha and Pillay have since been caught up in a punishing flood of litigation and are among a group facing criminal charges relating to an advisory contract linked to Transnet’s acquisition of 1,064 locomotives. They have yet to plead to charges.
Daily Maverick couldn’t immediately get comment from the ANC but the story will be updated should the party respond. DM
