What was supposed to be a retirement benefit for 62 Namibian freedom fighters, imprisoned on Robben Island during the apartheid era, has turned into a legal quagmire after the collapse of United States-based Wextrust and its South African and Namibian affiliates.
Documents filed in the Windhoek High Court last week highlighted how the former anti-apartheid guerrillas, including Herman Toivo ya Toivo, have been hit by the Wextrust scandal, in which US investors were swindled out of about $250-million (about R2,5-billion at the time).
Of this, R400-million was to be invested in diamond mines in Namibia and South Africa through Pretoria-based Pure Africa Holdings, a web of companies run by former Armscor manager Michael van der Merwe.
The Namibian Former Robben Island Prisoners’ Trust entered a joint venture agreement with Pure Africa Holdings on a diamond property — Block 3 — it held on the Orange River, via a Namibian subsidiary called Deva Investments.
Wextrust had raised about R110-million to invest in developing the mining property. But very little, if any, of this cash appeared to have reached Block 3. The trust for the 62 freedom fighters was to receive 30% of profits from this mine. To date they have not seen a cent.
Trust chairperson Helao Shityuwete, a veteran liberation fighter who spent 18 years on Robben Island, said he was shocked to discover a large portion of the shares in Block 3 was sold to another US investor, an Iraqi security contractor called Larry Costa. ”Our deal was with Pure Africa Holdings. We know nothing of Costa,” he said.
Wextrust owners Steve Byers and Joe Shereshevsky were arrested in August last year and charged by the US Securities Exchange Commission for operating a Ponzi scheme. Both face criminal and civil charges.
Van der Merwe told the Mail & Guardian his accountant, Sybrand Hanekom, faces an ongoing inquiry in Pretoria under section 417 of the Companies Act, in which the liquidators have been trying to establish what happened to the money.
The liquidation application for Deva showed that instead of investing the US funds directly in the mines as directed, Van der Merwe created a web of subsidiary companies that used commercial loans to finance the equipment. These companies were registered in the names of Van der Merwe’s family members and close associates, according to company records.
A month after the bomb burst over Wextrust in August, Van der Merwe used one of these, a labour-hire outfit owned by his sister Euzita Henning, to liquidate Pure Africa Holdings for an unpaid bill of R1,7-million. Transcripts of the section 417 inquiry attached to the Deva liquidation application show that Van der Merwe denied that this was an ”arranged liquidation”. But a sworn affidavit by former employee Carlos du Plessis, who ran one of the South African mines, suggests otherwise.
After Wextrust was put into liquidation, Van der Merwe wanted to block the liquidators from accessing confidential company information ”and decided that Euzita Henning should use Storm to liquidate [Pure Africa Holdings subsidiary] Pure Africa Minerals”, Du Plessis told the liquidators.
Pure Africa Holdings appears to have gone through vast amounts of cash in three years: documents attached to the application for Deva Investments’ liquidation indicate that Pure Africa Minerals’ liabilities exceeded its assets by N$55,7-million.
In a balance sheet submitted by Van der Merwe in the latter’s liquidation, long-term loans of only R220,7-million were recorded — leaving the question of where and how the R180-million balance was spent.