Developer ‘duped’ investors out of millions

A businessperson hounded by local and international creditors has managed to land a slice of a R1-billion low-cost housing project in the City of Tshwane Metropolitan Municipality.

Faizal Motlekar faces a flood of creditors after the liquidation of one of his companies revealed how he allegedly duped investors to pump more than R100-million into his “insolvent” empire.

Court papers in a number of cases against him claim that Motlekar not only pulled the wool over the eyes of investors, he also “deceived” the National Empowerment Fund (NEF) into giving him a R50-million loan for a roof tile company he co-owned.

The 49-year-old businessperson was for years seen as a trailblazer in the low-cost housing sector and is credited with landmark mixed-income housing developments such as Johannesburg’s Cosmo City.

Now Investec, the NEF and several private investors have brought separate legal proceedings against him or some of his companies in a bid to claw back hundreds of millions of rands.

He faces sequestration over a credit card bill of more than R1-million. Motlekar is opposing the sequestration bid brought by Investec, saying it is premature because he has applied for the original judgment against him to be rescinded. The bank disputes this.

In March Motlekar quietly resigned from Group Five Motlekar, an empowerment partner of the JSE-listed construction and engineering giant. Group Five Motlekar is jointly owned by Motlekar Developments and Group Five.

Motlekar did not respond to detailed questions, save to say that he was opposing the various court cases and could not comment as they were “sub judice”. Group Five declined to comment.

How it unravelled

In 2014, in an interview with a property magazine, Motlekar spoke of some R7-billion in “planned, signed and sealed” projects that included building 18 000 houses, 70% of which were fully subsidised.

His businesses, clustered under the banner of Motlekar Holdings, span property, coal and aviation. Things began to unravel when a roof tile manufacturing company he co-owned, Cyclocor Motlekar, was liquidated in August 2014.

This company was supposed to manufacture tiles made from plastic and glass waste for use in low-cost housing. But it never took off because the product did not have government approval. Motlekar had committed Group Five Motlekar as a buyer without having had the authority to do so, court papers allege.

Lawyers for Aviwe Ndyamara, liquidator of Cyclocor Motlekar, have reco­mmended that his conduct be reported to the police in terms of the Prevention and Combating of Corrupt Activities Act.

They also want him investigated under the Companies Act to have him declared a delinquent director. A decision on this is yet to be signed off by liquidators, who need the various creditors to fund further litigation.

Court papers put the claims against Cyclocor Motlekar in excess of R112-million.

The NEF confirmed that it has gone to court to recover the outstanding balance of the R50-million loan.

The foreign bailout

In 2014, as his tiling company was going belly up, Motlekar presented a Middle Eastern-based family with elaborate details of Motlekar Holdings and Motlekar Capital. This would lead to another R120-million claim against him after he offered them a stake in the business.

He told them he owned a private jet and that these companies were collectively worth R400-million and produced a net profit of R100-million a year, court papers state.

Impressed, the family and a few other investors subscribed to a 50% stake in the holding company under a special purpose vehicle called Saifa Investment Holdings.

Three payments of more than $9-million, 5.9-million dirham and R6-million were made to “various third parties” on the instruction of Motlekar, it is claimed.

When the investors finally laid eyes on the company’s financial reports, they found that, at the time Motlekar presented them with the deal, one of his companies owed the NEF R50-million, something he had allegedly concealed from them. Plus, the company in which they had acquired a stake was already insolvent.

They wanted out. A Christmas Day 2014 email captures the essence of this termination deal: Motlekar had to repay R120-million and present them with a short-term payment plan by January 2015.

Motlekar wrote back: “Your email is noted and I will discuss the repayment once I have full forecast from all my subsidiaries on how we will pay this amount back, Inshallah.”

Five months later, there was still no sign of a payment plan. The investors believed they had been duped. “Put differently, Saifa was induced by various fraudulent misrepresentations to conclude the deal,” papers state.

The investors claimed that Motlekar’s conduct was “knowingly dishonest” from the beginning and “this dishonesty” continued until they had to go to court to try to get their money back. The judge agreed and ruled in their favour.

Dodging the sheriff

In the latest case, Investec has obtained a provisional sequestration order against Motlekar. He is opposing the case and denies owing Investec or that his liabilities exceed the value of his assets. Motlekar, in an affidavit, added that other civil judgments obtained against him were as a result of him having stood surety.

An affidavit by Investec details how the bank obtained a judgment against him in 2015 for an amount of just over R1-million.

Last year, when attempts were made to serve a writ of execution, the sheriff of the court was unable to pin him down over the course of about a month.

“The sheriff made no less than nine attempts to effect service of the writ,” reads an affidavit by Francis van der Walt, the bank’s legal adviser in charge of

When he was finally tracked down at a property in the upmarket Johannesburg suburb of Dainfern, Motlekar informed the sheriff he had no moveable or immovable assets with which to satisfy the writ.

Van der Walt, in his affidavit, said the fact that Motlekar remained an “active businessman” was worrying because he was technically able to incur further debt to run his affairs, thereby diminishing the value of his estate.

Housing bonanza continues

Despite his woes, Motlekar companies have seemingly still been landing plum government housing deals. In September he was photographed, spade in hand, alongside Tshwane metro officials for the sod-turning ceremony of the Fort West development.

The city confirmed that Group Five Motlekar had been awarded a R15-million deal to build social housing.

He also remains a director of Motlekar Cape, a company awarded an R80-million project by the Western Cape human settlements department in December 2015 to provide bulk infrastructure and 200 affordable houses.

The Gauteng human settlements department confirmed that it had contracted Group Five Motlekar for a R102-million housing project at Princess Plots in Roodepoort, west of Johannesburg.

The Western Cape department of housing said it was not aware of Motlekar’s legal issues but was satisfied that it’s project was on track. The other two departments did not repond to queries on this issue.

l In an unrelated development, Group Five is scheduled to have an extraordinary shareholders’ meeting on Monday to thrash out squabbles over a bid by key shareholder Allan Gray to effect board changes.

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Jessica Bezuidenhout
Jessica Bezuidenhout joined the Mail & Guardian as an investigative reporter in March 2016 after 20 years at the Sunday Times working on news and investigations. She has been the joint winner of several local and international journalism awards, including Nat Nakasa, Mondi, Vodacom regional journalist of the year and Misa, and runner-up for the 2003 Natali Prize.

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