A commission of inquiry into investment company Canyon Springs, which loaned and lost R120million of clothing workers' pension funds, has found that the former deputy minister of economic development, Enoch Godongwana, and his wife Thandiwe were among those who "were party to the carrying on of the business of the company, either fraudulently or at least recklessly".
"It is to be noted that any person who is a party to the fraudulent or reckless conduct of the business of the company incurs not only civil liability, but also commits a criminal offence in terms of section 424 (3) of the Companies Act," a hard-hitting report compiled by the inquiry examiner, advocate Gavin Woodland SC, states.
The commission released its report this week. Others held accountable with the Godongwanas are Canyon Springs director Mohan Patel and former trade unionist Richard Kawie, who is already facing criminal fraud charges in connection with the missing pension money.
The inquiry successfully followed the trail of the misappropriated money with the help of Tony Canny, head of the forensics division at Eversheds law firm, but it remains to be seen how much of it can be recovered.
Godongwana declined to comment when the Mail & Guardian contacted him to discuss the report.
"I don't want to say anything about this at all," he said.
The Godongwanas held a 50% interest in Canyon Springs through a family trust, Tyalibongo Investment Holdings, but in an interview with the M&G last year the then deputy minister denied any knowledge that pension fund money had been invested in the company. When Godongwana resigned from Canyon Springs as a director to take up his government post in 2009, his wife became a non-executive director of the company.
However, following the collapse of Canyon Springs and the scandal over the missing pension fund money, Godongwana quit his ministerial post in January this year. Senior government officials told the M&G the situation had become "untenable" and he had resigned in the face of growing outrage in government circles about his involvement in Canyon Springs.
By February, Fazella Mahommed, registrar of Parliament's joint ethics committee, said Godongwana had also stepped down as a member of Parliament. His resignation meant he avoided a misconduct probe by the ethics committee for allegedly not properly declaring his business and financial interests. The commission of inquiry's report will come as a further blow to Godongwana.
The report states that in his testimony to the inquiry, Godongwana said Kawie was the corporate controller at Canyon Springs and Patel had followed his instructions. Godongwana had also "conceded that there had been improper manipulation of the various structures in order to obtain funding for Canyon Springs".
The provident funds had been misled into putting money in an investment vehicle, the Trilinear Empowerment Trust, and in the hands of the investment manager of the Trilinear Group, Godongwana told the inquiry. "In hindsight, he candidly admitted, he had not exercised properly his fiduciary duties as a director of Canyon Springs," the report states.
When Godongwana was questioned at the commission in September last year, he was asked whether he had received remuneration from a source other than Canyon Springs. "This was because the payments that he had, in fact, received from Canyon Springs could not be reconciled to his annual remuneration package of R1.584million, which was referred to in his letter of appointment. He denied on more than one occasion that he had been paid from another source," the report states.
A forensic investigation later contradicted his evidence and revealed that Godongwana and his wife had received funds from Kawie's companies, which had drawn on the pension fund money.
The secretary general of the South African Clothing and Textile Workers' Union, André Kriel, said he had not yet received any of the promised repayments from Godongwana following the collapse of Canyon Springs. The union will now decide whether to pursue any civil claims or criminal charges. It funded the inquiry on behalf of members who lost their pension fund money.