Mystery govt officials figure in Pinnacle Point hearings
Two officials may soon have to explain how they became involved in two struggling companies in which clothing workers' pension money was invested.
A government ambassador and a deputy minister may soon have to explain at high court liquidation hearings how they became involved in two struggling companies in which R360-million of clothing workers’ pension money was mysteriously invested.
The chances of recovering a substantial portion of the retirement money belonging to workers of the South African Clothing and Textile Workers’ Union (Sactwu) now looks slim following the provisional liquidation of six subsidiaries of luxury property developers Pinnacle Point in the Western Cape High Court last week.
About R260-million of Sactwu pension fund money was sunk into Pinnacle, making thousands of pensioners unwitting majority shareholders in this listed company.
It emerged at the liquidation hearings that Pinnacle Point was chaired by George Johannes, South Africa’s ambassador to Switzerland, while two other unnamed senior government figures and ANC leaders—described merely as “Mr X” and “Mr Y”—were also recommended for appointment to its board in a failed attempt to save the company.
The outcome for pensioners is worrying, as the courts placed three of Pinnacle’s luxury property developments - Lagos Keys in Nigeria and the Chestnut Hill and GR-Equity properties in South Africa—in a business rescue plan last month.
The business rescue practitioner, Michael Lane, declined this week to discuss how the provisional liquidation of six of Pinnacle property assets last week would affect the company. “I’m not going to be speaking to the press,” he said.
The second company under scrutiny is the provisionally liquidated Canyon Springs Investments 12, in which the family of the deputy minister of economic development, Enoch Godongwana, has a 50% stake.
About R100-million of the pension fund money was handed as an unsecured loan to Canyon Springs. It is expected that Godongwana will be called to court, in an urgent liquidation hearing, to explain how some of the retirement money was spent.
An attempt to hold the hearing last month was halted due to a lack of funds, but the Mail & Guardian has learned it is to be rescheduled.
Renewed concern about the involvement of high-flying government officials in the risky investment of the pension money was heightened last week after the court applications by Investec, which claims it is owed R115-million by Pinnacle Point. Other creditors are also lining up to be paid by the company.
Among the papers submitted to court was a settlement offer made to Investec on behalf of Pinnacle Point in February, which indicated that recommendations had been made for the appointment to its board of two ANC leaders and senior members of the South African government, “Mr X” and “Mr Y”.
This caught the attention of the presiding judge, Nathan Erasmus, who asked who these people were. No one in the courtroom could provide an answer.
The settlement offer further indicated that the “government and the ruling party have taken an interest in ensuring that this company prospers”. “Among the shareholders are thousands of pensioners, who would benefit immensely if the company is allowed an opportunity to survive: the opposite is true if the company does not survive,” it said.
The company was “now well led” by its chairman, Johannes, and its newly appointed chief executive, Sibusiso Gamede.
At the time the settlement offer was submitted, Gamede was chief land claims commissioner and adviser to Minister of Land Affairs Gugile Nkwinti.
Gamede said this week that all posts at Pinnacle Point had been suspended under the business rescue plan.
Wilfred Tshuma, who was responsible for writing the settlement offer sent to Investec after he joined Trilinear Investment Managers as its chief executive, said the idea had been to sell the concept of a black-owned listed property company that could have been “spectacular”.
“Pinnacle was its primary investment and I wrote that settlement offer to Investec,” Tshuma said. “There had been some informal discussions, but Mr X and Mr Y had not been formally approached, which is why I was guarded about them in the proposal.”
Johannes had been a wonderful chairman at Pinnacle, despite being based in Switzerland, said Tshuma. “He was not distant at all. He would hold meetings and teleconferences,” he said. “He rubbed shoulders with all the right people and he was critical to playing a positive role in the company.”
Investec group risk manager Cairan Whelan said none of the promises made by Pinnacle Point to settle its debt had materialised.
The fact that pension money had been used to buy up shares in Pinnacle Point presented another “minefield”, he said.