Bosasa tells court: We are being hijacked by liquidators

Lawyers representing corruption accused company Bosasa, which has entered into a court battle to have its own decision to enter into voluntary liquidation set aside, claim it is being hijacked by liquidators.

The Johannesburg high court in  heard arguments in the matter on Wednesday and Judge Joolan Ameer has reserved judgement.

Bosasa, represented by advocate Mike Hellens, SC, argued that special resolutions the company’s board of directors took on February 12, to place the company under voluntary liquidation, should be declared null and void.

Bosasa changed its name to African Global Operations (AGO) in 2017.

To try and convince Ameer that the application Bosasa chairman Joe Gumede filed on March 4 was indeed urgent, Hellens argued that provisional liquidators Cloete Murray and Ralph Lutchman had “hijacked” the company.


Decisions the liquidators took, such as the firing of certain staff, including Lindsay Watson, kicking directors out of the offices and moving ahead with the search for potential buyers for certain assets, were having an adverse effect on the company and its staff, he submitted, and the court needed to grant a declaratory order to set aside the special resolutions.

The resolutions taken, Hellens argued, were null and void because the shareholders had not been properly notified of the meeting and the incorrect section of the Companies Act of 1973, which has since been repealed, was used to enforce the resolutions.

It then follows, Hellens submitted, that the entire process and appointment of the liquidators was in effect irregular.

“We would argue to anyone…that these companies are not in liquidation,” Hellens said. “Our starting point is that if there was no resolution, there was no appointment [of the liquidators]. There is no valid resolution triggering any provision of the Companies Act,” he added.

Ameer questioned Hellens about how he could claim there was no special resolution meeting as set out in the Companies Act, when all six of the directors of Bosasa/AGO were present when they signed the resolution documents, which set out that a proper meeting was indeed held and that the directors waive the notice period requirement.

“These are seasoned directors of a financially substantial company,” the judge pointed out.

Hellens argued that the same directors, which included Bosasa chairman Joe Gumede and chief executive officer Gavin Watson, only became aware of the irregularity in the process they followed in commencing the liquidation proceedings after the fact. They simply signed documents presented to them by an attorney.

Advocate Werner Luderitz, acting for Murray and his colleagues, argued that the application should be dismissed on the basis that the liquidators were not given appropriate time to draft responding papers, but advanced some form of argument against Hellens’ submissions.

Luderitz submitted that the 1973 version of the act was still enforceable in terms of winding up an insolvent company.

Nowhere in their papers, he argued, did Bosasa provide proof the companies were still solvent.

Luderitz also pointed out that Bosasa’s issues were an after-the-fact attempt to find technical loopholes because the liquidator they wanted to be appointed, was not initially appointed.

This is in reference to Lutchman. Luderitz told the court that Gumede had been instrumental in going to various employees and creditors to ask them to sign requisitions that supported the appointment of Lutchman.

“It was always intended by the applicant [Bosasa/AGO] that this company should be placed under liquidation,” Luderitz said. “Where the plan backfired was when the person they had in mind to be appointed was not left alone to take charge.”

Luderitz added that Gumede and Hellens had not explained where the sudden urge to relook the resolutions came from. “Mr Murray takes charge, and does his work as he is required.

“Then miraculously there is this urgent need to find some technical issue with the resolutions…that is the reason why we are here. The plan didn’t work out,” Luderitz said.

When Bosasa communicated the decision it took to be placed under voluntary liquidation in February, the company stated in a press release that the reason for this was the closure of its banking facilities by FNB and then ABSA bank.

The company was unable to find alternative banking accounts — a situation Murray described in his affidavit as a “commercial death sentence”.

Hellens did not argue this point, but maintained that the companies were solvent for reasons set out in Gumede’s founding affidavit.

This affidavit completely ignores the fact that the main sources of revenue for Bosasa/AGO, being two contracts with the Department of Correctional Services, have been cancelled.

It is not clear when Ameer will give judgment. — News24

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Kyle Cowan
Kyle Cowan

Kyle Cowan is an investigative journalist at News 24.

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