Parliament ‘cover-up’ in court

Creditors of travel agency Bathong are to tell the Cape High Court that senior officials at Parliament colluded with liquidators from two prominent audit firms in an illegal effort to halt the recovery of money from MPs involved in the Travelgate scam.

Jackson & Neethling Chartered Accountants and Flare Beverages filed an urgent application on Thursday for an interdict to stop a planned meeting of creditors on Friday.

They fear Parliament will use the meeting to force through a resolution ‘not to pursue any action” in connection with ‘uninvoiced tickets, levies, and/or service fees [and] to cease all other litigation as against members of Parliament in relation to all ‘vouchers’ that may have been utilised by Bathong travel”.

Because Parliament is the major creditor, it is in a position to vote through the resolution in the teeth of the protests of other parties to the ­liquidation.

As the Mail & Guardian reported last week, this move would mean dropping about R6-million in claims against MPs — including several senior African National Congress figures — and Parliament would potentially be saddled with a large legal bill.

It may also mean that other creditors of Bathong, including Flare, SAA, the South African Revenue Service and Avis would be unable to recover debts owed them.

Documents filed in the application make it clear that the resolution was instigated by the Secretary to Parliament, Zingile Dingani, and formally proposed by liquidators Corrin Holgate, of PricewaterhouseCoopers and Jonathan Jacobs of SAB&T.

Attorney for the applicants Arno Schippers says in his founding affidavit: ‘Quite clearly, the liquidators have subordinated their discretion to the influence of a single creditor in the estate, namely Parliament.”

As the M&G has previously reported, Dingani was extremely reluctant to pursue the liquidation of Bathong from the outset and succeeded in delaying the process by nearly 10 months.

According to the affidavit, once the liquidation was under way, he tried to frustrate it further — first by setting up a ‘help desk” to assist MPs facing claims.

Auditors Ernst & Young were engaged, ‘no doubt at great cost running to hundreds of thousands of rand” to investigate claims against MPs, and in particular those involving ‘uninvoiced tickets”, the affidavit says.

Then, in mid-2007, ‘meetings were — held between the liquidators or their representatives and the secretary — at which he requested that a moratorium be placed on claims against members of Parliament pending further ­investigation”.

The liquidators agreed without clearing it with the other creditors.

They then got opinions from three senior counsel, who told them they could go ahead with the claims, the affidavit says. Other MPs have already paid back substantial sums calculated on a similar basis.

The resolutions, Schippers says, ‘are not being submitted for adoption in the bona fide belief that they will best serve the interests of the estate or for the benefit of creditors, but more particularly, the interests of Parliament and the individual interests of members of Parliament”.

That, he points out, ‘would result in a breach in the letter and spirit of the Companies Act [and] the Insolvency Act — and involve an infringement of [creditors’] rights”.

Correspondence annexed to the affidavit details an extraordinary series of evasions and apparent untruths by the liquidators and Parliament’s attorney, Derek Wille, who was responsible for the plan to stop action against MPs.

Wille initially told Flare and Jackson & Neethling: ‘Parliament did not place the advert calling for the meeting in the Government Gazette. The advertisement was placed by the ­liquidators.”

The effect of this version, says the affidavit, was to suggest that ­Parliament played no role in calling for the meeting.

But Wille’s account is directly contradicted by the record.

On March 26 he, acting on behalf of Dingani, faxed the draft resolutions to the liquidators and asked them to convene a formal meeting of the creditors.

‘It is, to say the least, remarkable that the secretary to Parliament’s attorney declined to disclose — the fact that the resolutions had been prepared for submission by the Secretary to Parliament and its legal advisers,” Schippers says.

PwC’s Eileen Fey, acting as the agent of the liquidators, has so far recovered R4,79-million through the Bathong investigation, after incurring costs of R1,87-million, the affidavit says. About R2,7-million has so far been paid out to creditors.

A status update listing all the MPs implicated in the Bathong affair is annexed to the court papers, providing for the first time a consolidated list of those involved.

A total of 74 claims against MPs remains outstanding, with a total value of R5,9-million and a legal bill of R500 000. Debts are still owed by Home Affairs Minister Nosiviwe Mapisa-Nqakula, Free State Premier Beatrice Marshoff and sports committee chair Butana Khompela, among others.

Fey has since been benched by PwC and told to have no further involvement in the Bathong affair, say informed sources at Parliament. They insist the move had its origins in Dingani’s unhappiness with her dogged pursuit of claims against MPs.

Dingane’s legal adviser, Anthea Gordon, told the M&G that only one side of the story had been aired. She said that Parliament would reply in full before the case goes back to court in August.

PwC denies this, saying it is simply closing down its liquidations arm.