A multimillion-rand tax bill and shareholder battles could implode the Moroka Swallows Football Club, one of South Africa’s most enduring sporting institutions.
The Dube Birds, as the Swallows are affectionately known, owe the South African Revenue Service R10,5-million in employees’ tax, almost R600 000 in outstanding skills development levies, almost R400 000 in outstanding VAT payments and R235 000 in UIF payments, according to documents leaked to the Mail & Guardian by a club insider.
The club’s tax debts, which have come to light since the death last year of 90% majority shareholder Dieter Bock, are also fuelling a shareholder battle. Disgruntled minority shareholders claim that the documents are proof that the club is being run like a “spaza shop” by its directors.
One of them, Charles Makhubu, said: “The fact that we haven’t been paying tax on employees’ salaries and have been shirking our responsibilities with regard to other obligations to the taxman amounts to fraud. We can’t stomach this happening at Swallows any longer.”
But Leon Prins, the Swallows chief executive, put a different spin on the state of the club’s finances. He said the club had “resolved the tax issues up to 2005 with Sars”.
“The taxes owed in the years following are manageable for a club with the Swallows’ turnover. We are not going anywhere and will not be liquidated,” Prins said. But according to an M&G calculation, which involved subtracting the pre-2006 amounts from the Swallows’ consolidated Sars employee tax account on April 20 this year, the club still owes the revenue service more than R6,5-million.
The Soweto club is second from the bottom in the Premier Soccer League table and is fighting off relegation. Although there has been an upturn in its playing fortunes — the club has won two and drawn another in its past three matches — the club’s off-field antics are proving a bigger danger to its future than any opposition goal poacher.
Minutes of the Swallows’ annual general meetings create the impression that the club has been embroiled in an internecine battle between shareholders since Bock bought his majority stake in 2001.
According to minutes concerns have been raised several times over the “close relationship” between some directors and the club’s auditing firm, Louis E Kaplan and Company.
The shenanigans at the Swallows included the minority shareholders passing a vote of no confidence in the current board in September last year and then forming an alternative board, which has not been recognised by the PSL.
Minority shareholders also claimed this week that they had not been issued with share certificates for the past 10 years. Makhubu said that in October last year he wrote to the league asking it to institute a forensic investigation of the financial affairs of the club and to get clarity on the club’s ownership.
According to the letter, the “directors [have] over the years been issuing cheques to Sars that were returned without payment as there were insufficient funds in the bank account of the club,” Makhubu said.
He claimed that Bock’s estate did not own the club and, instead of pumping money into the club, Bock and his appointees had been “eating up money from player transfers and sponsorships”.
The minority shareholders have called several times for the league to investigate the club’s transfer activities since 1999, the transfer of Swallows’ shares since 1999, the club’s salary bill and payments allegedly made to musician Chicco Twala and television pundit Mike Mangena. Mangena is a former Swallows player, but it is unclear why either he or Twala should have received any payments.
According to Makhubu, attempts to get answers from the PSL about whether Bock or his estate in fact own the club and whether proper procedures were followed in the sale of the Swallows to a non-South African had proved fruitless. The PSL had not responded to the M&G‘s questions at the time of going to press.
Eccentric was also a smooth operator
Dieter Bock, the owner of Moroka Swallows who died in May last year, was an eccentric — but also a smooth boardroom operator with a sharp business sense. A regular on Forbes magazine’s rich list, he reportedly favoured plastic carrier bags, public transport and off-the-rack suits. At his death his financial empire included property and construction interests thought to be worth about £500-million.
Bock, a tax consultant and lawyer born in the East German town of Dessau, had interests in South Africa, Europe and the United States. Advanta, his master company, had a controlling interest in the Kempinski hotel chain and a stake in the German construction giant, Philipp Holzmann. One of his biggest coups was gaining control of the Lonrho group in the early Nineties.
In his obituary last year The Guardian noted: “Working, as usual, with other people’s money — a German bank loan — Bock became the conglomerate’s biggest shareholder in December 1992, paying [Lonrho owner Tiny] Rowland £50-million — and joining the board in February 1993.”
After manoeuvring Rowland off the board Bock went on to sell his controlling interest in Lonrho, which has extensive African mining interests, to Anglo American for a hefty profit.
The Swallows’ minority shareholders complained that they could not nail down the German businessman — often described as secretive and calculating — after he took over the club during the 1998-1999 football season.
“We would try to set up meetings with him but he was always flying somewhere, according to his secretary,” said shareholder Charles Makhubu.
“I finally met him at a restaurant in Cape Town in 2006 and he seemed very distant. Then, a few weeks later, he was unveiled to Swallows fans before a match at Dobsonville,” said Makhubu.
The 71-year-old billionaire is reported to have died after choking on a piece of steak while eating in his luxury Atlantic Hotel in Hamburg (the scene of the James Bond film, Tomorrow Never Dies).