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Saru unfazed by disgruntled WPRFU faction litigation threat

Saru unfazed by disgruntled WPRFU faction litigation threat
WP executive committee member Ronald Bantom, seen here during Coca-Cola U16 Grant Khomo Week gala dinner on 6 July, 2011 in Queenstown, South Africa. (Photo: Lee Warren / Gallo Images)
Craig Ray
By Craig Ray
3 Mar 2023
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The South African Rugby Union this week issued an unusually strong and detailed letter about the situation at the Western Province Rugby Football Union.

An organised protest calling for the end of the South African Rugby Union’s (Saru) administration of the Western Province Rugby Football Union (WPRFU) by a minority group of clubs planned for 4 March, was met with a powerful rebuke.

The group of about 11 clubs is unhappy with the situation, especially with Saru’s appointed administrator Rian Oberholzer, whom they describe as a ‘dictator’.

This group has also threatened legal action, although on what grounds remains unclear, as Saru invoked its constitutional rights when the WPRFU faced financial collapse in October 2021.

“We are on the steps of the high court,” Ronald Bantom, one of the leaders of the disgruntled faction, told News24 this week.

“That shows the seriousness we take this thing with. It would be nice if there can be an acknowledgement from SA Rugby (Saru) to give us back the union and assist us to have an AGM on a particular date.

“We have a team of advocates who are available to assist us because of the injustice they see taking place.”

Ronald Bantom, WPRFU WP executive committee member Ronald Bantom, seen here during Coca-Cola U16 Grant Khomo Week gala dinner on 6 July, 2011 in Queenstown, South Africa. (Photo: Lee Warren / Gallo Images)


Divide


The position does not seem to be shared by the majority of the 102 clubs that make up the WPRFU’s General Council.

On Friday Oberholzer confirmed to Daily Maverick that he had already received “20 signed letters from club presidents denouncing the protest and position of the small faction,” and that he “expected to have more than 50 letters by the end of the day.” 

Bantom and his group believe that Oberholzer and Saru are hollowing what remains of the WPRFU.

“We fought against a dictator [presumably meaning former president Zelt Marais] but SA Rugby gave us another dictator, so we are worried about that,” Bantom, who was WPRFU vice-president when the union went administration told News24 this week.

“We are worried about what is happening at Western Province because we will end up inheriting our own empty WP shell.

“The way money is being spent is … I don’t know where it comes from. Just the mere administration; we don’t know how much the administrator owes and that’s for Western Province's account.

“There’s a lot of money going out. There’s a huge level of concern amongst many people, hence the action we are trying to take on Saturday, to show the world we are not happy with what is happening.

“We write to these people, and we don’t get a response or an acknowledgement of our letters. We are forced to stand up.”

Details of “the way the money is being spent”, what it’s being spent on and how exactly Saru and Oberholzer are hollowing WPRFU out, were not offered.

An opposing view came from Tygerberg Rugby Club Kevin Kiewitz, who told sarugbymag.co.za: “It’s important to say that these people who are talking in the newspapers are not talking about my club.

“I am the president of Tygerberg Rugby Club. We have supported the appointment of an administrator to resolve the legal and financial issues of Western Province. We have the support, in writing, of many clubs of Western Province. We have sent that to Saru.

“This demonstration on Saturday is not in the name of my club or the clubs that have supported this process.”

Hit back


Saru also hit back in a lengthy open letter, which gave details of the chain of events, which Daily Maverick has been reporting on for three years.

“The remit of the administrator was to return the WPRFU to financial stability, while untangling the legal complications of the myriad of putative property deals that the former administration contemplated,” Saru’s statement read.

“The claims now being made by individuals — some of whom were part of the executive which traded the entity to the brink of bankruptcy and now wish to reclaim control — are erroneous, misleading, and needlessly distracting.

“Most important to note is that any property or equity deal that the Executive Council (Exco) of the South African Rugby Union believes has sufficient merit to be presented to the General Council of the WPRFU, cannot be completed without the approval of that General Council. The decision will be Western Province’s; no one else’s.”



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Saru then laid out a comprehensive timeline of events.

Timeline



  • 2019: WPRFU signed heads of agreement with Investec’s Property division for the redevelopment of the Newlands stadium. Investec advanced an R50-million loan to the WPRFU.

  • 2020: WPRFU declined to sign the final documents to conclude the sale of Newlands development rights to Investec.

  • 2020: WPRFU received R112-million Flyt Property (secured on 11 properties owned by the Union), which was appointed as developers of the Newlands.

    • Notwithstanding the value of the loan to repay the previous loans; it was secured by bonding the properties to the value of R250-million, encumbering all the properties (worth almost R450-million) without performing due diligence and exercising its duty of care;

    • WPRFU’s auditors highlighted serious concerns regarding the arrangement.

    • The WP executive failed to de-risk the organisation and did not act with the duty of care by not conducting a formal due diligence exercise.



  • 2020: Flyt, via its parent company Dreamworld, paid R52.97-million to Investec Bank and R57.76-million to Remgro to clear WPRFU’s debts.

  • 2020: Six WPR board directors resigned or were removed from the board in October.

  • 2020: The players met the Union leadership in November to express their concerns

  • 2020: Also, in December Flyt declared a dispute with the WPRFU over the valuation of Newlands.

  • 2021: Dream World (Flyt) filed a suit against the WPRFU in the Western Cape high court, claiming R3880-million in damages and the repayment of its R112-million loan plus interest.

  • 2021: A term sheet was signed with Staytus by a member of the Exco, without performing a formal due diligence exercise and once again failed in its duty of care, furthermore breaching Clause 13 of the WP constitution and failing to get a mandate from the General Council.

  • 2021: In June Saru, deeply concerned about the WPRFU’s operations — established a joint “Steering Committee” with WPRFU — comprised of representatives of both organisations to assist in managing the mounting legal and financial challenges.

  • 2021: In September Saru exited the Steering Committee because of a lack of transparency among WPRFU’s officials, making it impossible for Saru’s representatives to perform any useful function.

  • 2021: Also in September the WPRFU President established what was described as a “war room” of ad hoc appointees of his choosing tasked with resolving WPRFU’s issues.

  • 2021: Five members of the WPRFU executive committee — including the vice president — filed an urgent application at the Western Cape high court to have the president removed.

  • 2021: In October, Saru Executive Council of Saru determined that the WPRFU failed to meet the requirements of Clause 29 of its constitution. Western Province Professional Rugby was in a terrible financial position, the Union’s auditors, BDO Inc, had noted several reportable financial irregularities and Western Province Rugby was facing several legal battles, was unable to pay Sars or salaries and was in imminent danger of being liquidated. Saru was left with little choice other than to take the WPRFU into administration. Clause 29 requires that:


“All unions have to conduct their business affairs in such a way that, at all times, they are in a sound financial position, comply with the laws of the Republic and adhere to the requirements of good governance inter alia as expounded in the King Report on Governance for South Africa, 2009 (“the King Report”) and the King Code of Governance for South Africa, 2009 (“the King Code”) which came into effect on 1 March 2010, and to ensure that their commercial companies, if any, similarly conduct their business affairs in such a way that, at all times, they are in a sound financial position, comply with the laws of the Republic and be guided by the requirements of good governance inter alia as expounded in the King Report and the King Code.”

“Saru looks forward to ending Western Province’s unfortunate period of administration in the coming months with a solution approved by its clubs.

“The path taken has so far brought stability on and off the field while the process being followed to ensure the Union’s financial sustainability has been rigorously vetted from a legal and governance perspective.

“We would urge all stakeholders that the greatest service they can do to WPRFU right now is to allow the proposed solutions to come to its General Council without sideshows and interference where the membership will be able to decide their own fate.” DM

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