/ 21 October 2011

Charges pile up for Canyon Springs

Charges Pile Up For Canyon Springs

Bank records subpoenaed this week by the closed liquidation inquiry into Canyon Springs Investments 12 indicate that former union organiser Richard Kawie used borrowed pension-fund money to fund a lavish lifestyle. It paid for overseas trips, shopping at the popular British department store House of Fraser, dining at top restaurants and the purchase of properties and luxury vehicles.

In another development, Minister for Economic Development Ebrahim Patel was subpoenaed on Tuesday to appear at the inquiry.

Attorney Barnabas Xulu from the firm Xulu Liversage, who is representing the investment vehicle Trilinear Empowerment Trust, wanted Patel to be subpoenaed because he was the general secretary of the South African Clothing and Textile Workers’ Union (Sactwu) in 2007 when the pension money was invested in Canyon Springs.

Patel has previously told the Mail & Guardian that he has no knowledge of the movement of provident funds.

Reliable sources who have seen bank records of Kawie’s companies alleged that his spending spree was funded from R100-million of provident-fund money that belongs to members of Sactwu. The money was controversially loaned to Canyon Springs and never repaid.

Sactwu employed Kawie as a union organiser before he left “under a cloud”, union workers claimed, and they were mystified by his reappointment as a pensions consultant.
However, Sactwu general secretary André Kriel said Kawie had not been fired but resigned.

Although a forensic investigation into the money trail is still under way, it has been established that the bulk of the pension-fund cash was transferred from Canyon Springs to Kawie’s companies, which the M&G was told included Empirax Investments and Eclipse Capital.

A companies search indicated that Eclipse had been a dormant company until Kawie became its director in 2007, shortly after the first deposit of R30-million of pension-fund money was made into the Canyon Springs account.

Kawie was subpoenaed to give evidence at the inquiry this week, but failed to appear and therefore could not be questioned about the flow of pension money to his companies.

On Monday morning, the inquiry commissioner, Jan Reitz, ruled that Kawie and his assistant, Spencer Witten, could face criminal charges if they did not arrive at the inquiry by 2.15pm. Sactwu representatives expressed their approval on hearing that the pair faced charges.

What the records show
The loss of the pension-fund money affects up to 25 000 clothing workers who earn R700 a week on average and contribute 6.5% of their salary to provident funds.

Sources said that, according to his companies’ bank records, Kawie had travelled to London and France using a Scandinavian airline. The records indicated that he bought properties in Bantry Bay and Noordhoek. His cars include a Land Rover Discovery, for which he has a driver.

“The bank statements look like Kawie got lost in the sweets shop,” said a shocked source close to the case. “Those statements tell a significant part of the story.”

Attorney Bulelani Mbeleni, who has represented Kawie in separate matters, could not be reached for comment on his behalf.

Confronted by the M&G this week, Kawie declined to comment substantially.

Large payments were also made from Kawie’s companies to the deputy minister of economic development, Enoch Godongwana, who with his wife, Thandiwe, owns 50% of Canyon Springs in a family trust.

Godongwana received about R2-million in different payments from Kawie’s companies, as reflected in the bank statements subpoenaed by the inquiry. Thandiwe also received some payments, the M&G understands.

Responding on behalf of the couple, their attorney Andrew de Vos said: “Our clients are simply not in a position to comment until such time as they have had the opportunity to assist the commission in answering questions related to any evidence and have been excused from further testimony in the inquiry.”

Explanation of payments
Further payments were also made from Kawie’s companies to Sam Buthelezi, the owner of Trilinear Capital, who authorised the loans.

Buthelezi did not respond to calls or an email to him and his lawyer that asked for an explanation of the payments made to him. Buthelezi is expected to appear at the inquiry.

Tony Canny, a director of law firm Eversheds, which is representing Sactwu, said the evidence would be handed to the inquiry when the forensic investigation was completed.

“We’re doing a forensic trace of the flow of the funds,” said Canny. “Numerous bank accounts have been subpoenaed relating to companies in which Richard Kawie was involved, as well as others.”

Reitz also told the M&G that the inquiry had accessed the bank statements of Kawie’s companies, but declined to disclose further information because of the secretive nature of the section 417 and 418 liquidation inquiry.

“At this stage we are progressing and I think these bank statements will assist the legal teams involved,” said Reitz. “It appears that we will get to the bottom of this matter.”
In another development, the trustees of the Trilinear Empowerment Trust laid charges of fraud against both Buthelezi and Kawie on Monday, based on the new evidence contained in the bank statements gathered by the inquiry.

It is understood that a decision on whether to lay charges against others will be made only after the inquiry is complete.

Xulu said the charges laid so far related to the alleged fraudulent use of R40-million. It was also learnt that the suspended deputy general secretary of Sactwu, Wayne van der Rheede, would be subpoenaed because he was the union’s national secretary responsible for retirement fund management.

The inquiry will continue on November 7.

It’s all lies, says former union pensions adviser
After former union pensions adviser Richard Kawie failed to show up at the Canyon Springs liquidation inquiry, the M&G tracked him to an up­market, modern block of flats in Cape Town.

Metropolis in Chiappini Street, where Kawie now lives, has an imposing marble entrance hall and a security guard at the front desk.

Speaking to the M&G, sources with access to the records of Kawie’s companies have alleged that forensic investigations showed that the deposit on this flat could have been paid with clothing workers’ pension-fund money.

The man whose no-show at the liquidation inquiry this week caused a stir among clothing workers looked noticeably stressed. Although he allowed the M&G up to his floor, he met us outside his flat and declined to answer questions about the pension-fund matter.

“I’ve already been hung,” he said in the corridor. “I’ve been advised not to say anything.”

Asked why he had not appeared at the inquiry, Kawie said he was not allowed to discuss the matter or any of the allegations against him.

“It’s all lies,” said Kawie, without disclosing what he was referring to.

“I’m here in Cape Town,” he said, referring to a previous M&G article in which forensic investigators hired by the South African Clothing and Textile Workers Union said they feared he had left the country with his Swedish wife and children.

Neatly dressed in a crisp white cotton shirt, he said he had been “traumatised” by the scandal.

Escorting the M&G down in the lift, he said: “Can you imagine, I have five children. How do you think they feel? They have also been traumatised.”

Reliable sources told the M&G that the sheriff of the court had visited the block of flats and taken away Kawie’s flat-screen television and carried out other belongings.

To add to his problems, photographer David Harrison met a man outside the flat who said he had come to repossess Kawie’s Land Rover.

Kawie is believed to be living in the flat without his wife and children.

Sources close to the case said the removal of his goods from his flat could relate to the fact that Standard Bank last week secured a summary court judgment against him for R1.2-million, after he defaulted on a mortgage loan on the sectional title development in Chiappini Street.