News24

Auction kickback scandal revealed

2012-02-19 11:29

Johannesburg - Auction company Auction Alliance has allegedly been colluding with banks, liquidators and attorneys in a money making racket, according to reports on Saturday.

The Saturday Star reported that a 13-year old paper trail revealed that the company had paid kickbacks to attorneys, liquidators, and bank staff to ensure business went their way.

The report claimed CEO and founder Rael Levitt said in e-mails the kickbacks would be paid "in cash".

The paper's sources claimed two staff members at Investec were paid large sums of money to insure the company received preferential treatment.

A former Absa bank manager in Gauteng was "ousted" by employers some years back when a kickback trail revealed him as the alleged recipient.

Kickbacks

The kickbacks were typically 50% of the commission Auction Alliance earned. These rose up to 75% during market slumps - to ensure business in bad times.

The company also reportedly trained auctioneers on how to rig an auction and told them what to do if they were caught.

The newspaper reported five insiders wrote affidavits supporting their allegations, which they said were supported by reams of documents.

Billionaire Wendy Appelbaum was disputing the legality of an auction where she bought the wine estate Quoin Rock.

Appelbaum claimed she later found out she was the only genuine bidder and consequently lodged a complaint with the National Consumer Commission, citing irregularities. Levitt responded by suing her for defamation.

Appelbaum's bid was later rejected by the estate's liquidators. Levitt has denied all the allegations, calling them "defamatory". He said it was not uncommon for law firms to refer auctions to auctioneers and when they did, they could agree to give the attorney concerned a referral commission.

Disclosure

"We leave it to the attorney to make the necessary disclosure to their clients," he said.

He said the practice was long-standing and widely accepted in the industry. Vendor bidding - the practice of a seller bidding on their own stock to drive up bid prices - was "internationally and nationally regarded as an acceptable and lawful auction industry practice", he said. Levitt also published a rebuttal alongside the newspaper's story. He attributed the allegations to the competitive nature of the industry and disgruntled former employees.

In an open letter published in a full page of the newspaper, Levitt said he had approached a high court asking them to interdict the newspaper and prevent them from publishing the story because his side wasn't expressed in his own words. "We do not resort to unethical and corrupt practices to secure business deals," he said.

Comments
  • aniel.soma - 2012-02-19 11:46

    About time these thugs are exposed and placed out of business

      Herman - 2012-02-19 12:36

      The ironic side to this article being here, is that on the very same page to the right, there's an Auction Alliance ad stating; Auction Alliance Leading Commercial & Residential Property Auctioneers NOW we know WHY they are the "leading" auctioneers!

      Kaizer - 2012-04-12 18:11

      I have seen these auctions first hand. The auctioneers pump up the price soo fast , you as a spectator who is just trying to view and monitor who is bidding would be left stumped. You can't even pick the bidder , yet the auctioneer can and still rattle away to higher prices without a hand being raised.

  • Vegi - 2012-02-19 11:53

    I have always maintained that banks are very evil. Currently banks are colluding with very evil people in government to ensure that their evil hold over the ordinary citizen persists. The government wasted money investigating the abuse of customers by banks but nothing has happened ever since. It is for this reason that now the banks are now acting with impunity with the connivance of some evil lawyers. How come a bank will finance a car for R300 000.00 but if you return it a month later it will be auctioned for R150 000.00 or less. Dirty evil people I am sure nothing is going to happen even after this expose because the banks will activate their evil surrogates in government to protect them.

      Irene - 2012-02-19 11:57

      Vegi ~ The minute you drive a car off a show room floor it becomes used ie. second hand. Second hand is never the same price as new. Geddit Vegetable?

      Tanie - 2012-02-19 12:09

      You stupid irene, read before you spit your poison.Vegi never wrote anything about a new car, has he? you vegetable.

      Trevor - 2012-02-19 12:14

      @ Tanie - Wrong, Vegi used it as an example and once again, Vegi's understanding of economics is...well...flawed at best. Banks are a nessesary "evil" in society,you don't like it well, then don't use a bank but I bet Vegi does have a bank account...if not a car loan...unless he lives in a mud hut on state land, a bond as well. So, get over it, big business is here to stay, you can fight it if you want but you will lose,just a fact of life.

      Irene - 2012-02-19 12:17

      Tanie Sariekie, the wannabe white person, try reading Vegi's second paragraph ie. the one in the middle if it helps you. Read it slowly because I know you can't understand fast.

      Malans - 2012-02-19 13:02

      So Irene works at a bank or one of these shady auction companies that prey on people's misfortunes. She is very happy when someone loses R150k like in the example, probably a nice portion of that ends up in her pocket. And then she is racist too. Good going Irene. Then Trevor chips in with his predictable "if you don't like banks then don't use them". He knows full well that it is almost impossible in modern society to live without a bank account. However, Trevor, that does not mean one should condone the really bad things that banks have been up to. One should not just accept it as a "fact of life", that is what got us into all this trouble in the first place. We should all complain and fight it in any way possible. Where do you think we shall end up if big business can do whatever it wants? Ag nee man, skrik wakker!

      Irene - 2012-02-19 13:35

      Malans ~ Sorry, wrong again. I don't work for a bank, nor do I work for an acution house and nor do I take pleasure in anybody losing money or the banks ripping people off. In fact I despise banks and their ridiculous banking charges. BUT having said all that, what part of the initial finance deal was the car dealer's profit? What part of it was the finance charged by the bank? Are you too stupid to realise that car dealers do not sell cars for the fun of it? You need to skrik wakker pal and while you're doing that, please tell me where my comment was racist? Prick!

      Irene - 2012-02-19 14:44

      Margie ~ gee-wiz and you've only been reading my comments? Use your other eye as well and see what I'm responding to.

      Elton - 2012-02-19 15:14

      Vegi, a bank will action a bank off at a price to limit their own loss. It is just business. Don't buy a car for R300 000 if you cannot afford it. Even better, buy a car cash. The banks are not the greedy ones, it is the person who cannot afford a R300 000 car and bought it.

      Sipho - 2012-02-20 05:04

      tanie sarikie - "hello, troll, my old friend". nice profiles pic - r dat from yur drivers license????!!!

  • John - 2012-02-19 11:58

    Revisit all financials of Auction Alliance. "Kickbacks in cash".....hmmmm. If auction company fails to show how those commisons was paid...it will be more court cases. SARS would love to know if those referral commissions was declared by recipients also.... Levitt, why high court must interdict the newspaper and prevent them from publishing the story? You kinda special?

      Winston - 2012-02-19 12:31

      John, Levitt believes his bank account qualifies him as being someone special because he probably falls into the category (under the radar) of being in the top 10 richest people in SA.. If you fall in that category that makes you very special indeed. The wealth distorts their sobriety.

  • Ken - 2012-02-19 11:59

    Auction Alliance is not the only firm of auctioneers to allegedly operate in this alleged way. I have personally seen other similar firms do exactly the same "shady" business.

      Trevor - 2012-02-19 12:21

      True, even the ANC operates in this manner, they will take prime beachfront municiple land that is leased out on long term, let it fall into dis-repair when the present tenant is not able to meet their "obligations", then sell it off to a "bidder",normally a municiple official who will then inturn sell the land off at a HUGE profit to ANOTHER "developer" with ANC connections...who will then promote a whole new venture with many job oppertunities...then they will sell the plan off to ANOTHER developer at a nice profilt who will build manage the business venture...in the end, it starts with the ANC run municipality and ends with a person with ANC connections. Want proof....goto PE's beachfront and check out the "business's" there, what has happend the last 4 years.

      Tuner - 2012-02-19 15:28

      Agree with you 100%. Many of them are dishonest sharks, out to rip off the public and basically steal their money. All the big auctioneers should be investigated. I believe many will be astounded if their crocked dealings are exposed.

  • Jason - 2012-02-19 12:00

    All auction houses pull bids, its not illegal but in my view its very immoral!

      Anthony - 2012-02-19 12:13

      It doesnt have to be "illegal" for the Estate Agency Affairs Board to pull their licence opnly "unethical". Lets see if they do anything about this.

      Ken - 2012-02-19 13:09

      @ Jay. Agreed. In my opinion this practice is tantamount to fraud.

      pws69 - 2012-02-19 14:33

      Legality is dependent on interpretation. It is fraud if the other bidder has no intention to buy, only to push the price up. Any kind of "fix' is fraud, when the other party is unaware of it happening.

  • Herbert - 2012-02-19 12:26

    C'mon Rael, do the right thing!!! Disclose how much the mafia, of your ilk, made with this shady business practice.

  • zaid.personal - 2012-02-19 12:29

    Ever under-declared on your tax return? Offered a cop a bribe so that you don't get a fine? Downplay the faults in a car you sold second-hand to get a better price? Didn't declare your full expenses when applying for a loan? And so much more...if any of these scenarios apply to you, then you're part of this system of corruption and greed that plagues the world and robs people of their dignity and hard earned cash. If this doesn't apply to you, you're a rare find. Auctioneers are the tow truck drivers of the property industry.

      John - 2012-02-19 13:00

      Well said.... Give yourself a Bells!!!

      Abongile Mbauli - 2012-02-19 14:02

      Everyone is shady boet. The only real crime is getting caught.

      Garth - 2012-02-19 14:16

      Well zaid. `Let he who has not sinned, et al.'

      Dave - 2012-02-19 14:27

      And maybe your attitude would be slightly different if had been run over by a tow truck...

      pws69 - 2012-02-19 14:36

      Zaid, Under declared tax? Tax Fraud. Go to jail Offered a cop a bride? Corruption. Go to jail. Didn't declare honestly to get a loan? Fraud. Forclosure. Levitt is claiming that what they do is not punishable. So, your example is moot in the context.

  • ian.bosch - 2012-02-19 12:31

    scumbuckets

  • jacques.koorts - 2012-02-19 12:38

    where there is smoke in south africa, there is usually a forest getting burned down.

  • Nicholas - 2012-02-19 13:00

    Rael Levitt is very defensive regarding all this. I read his open letter yesterday completely denying all the allegations against him. It seems incredulous that there can be such a yawing gap between the detailed damning allegations spanning years against his company and his complete denial of it all. Are all these allegations just made up simply to make headline news and to defame him at the risk of being sued? Highly unlikely!!

  • Cracker - 2012-02-19 13:20

    Fraud consists in unlawfully making, with intent to defraud, a misrepresentation which causes actual prejudice or which is potentially prejudicial to another. Of course if you voluntarily participate in a commercial activity which you know to be fraudulent in nature you have consented and the misrepresenters will not be guilty of fraud. BUT if you are compelled by the legal process/contractual agreement to participate in an auction process because you have no other way of getting your previous goods/property back, or your interest in the outcome of the process is prejudiced by misrepresentations at the auction, IT IS FRAUD on the part of ALL who have conspired in the outcome. It doesn't matter if it is accepted practice. You did not agree to that accepted practice. You don't have to be a trained lawyer to recognize abhorrent and punishable conduct. If you are unaware of such so-called accepted practices being used to undermine bidders it should also qualify as FRAUD on the part of the dishonest parties. Auctioneers will have to make it clear in their notices that they allow and condone the unacceptable practices or they must run the risk of prosecution. Otherwise time for the legislature to decisively and speedily step in.

      Fidel - 2012-02-19 13:36

      The less you suspect corruption, the more it'll happen. And even when there is corruption, it's not like the corruption you see on T.V. where people knowingly become very evil and purposely ignore others' sufferings. It appears to be very 'light' for the person who is corrupt, because all actions of someone who is corrupt are completely rationally understandable, and it is hard for people to think corruption as understandable and very damaging at the same time. People who do wrong actions will think about it, but each time they restart thinking about what their are doing, they forget reasons whether it's wrong/right from last time. Eventually there will be a point when, by coincidence, they have more reasons it's correct in their minds that it is incorrect, and they'll tell themselves they're done thinking about it. This is the way the human mind thinks.

      Louise - 2012-02-19 14:53

      Exactly the issue here: all Levitt's so-called "accepted practices." His skin has become so thick over time that he can no longer tell the difference between honesty and lies.

  • Hugo - 2012-02-19 13:22

    had they been black...

      crazearte - 2012-02-19 13:55

      Mixed!

      Nico - 2012-02-19 13:57

      What then......... and your point is...........????

      Garth - 2012-02-19 14:21

      . . . we would never have heard about it! The useless anc would have brushed it under the carpet, just as they do with all their corruption.

      Sipho - 2012-02-20 05:11

      den it kouldnt be a crime!!! bleks cant be racist (read Andile MNXhsgs;s book), and osso bleks cant do crime!!!!! Its true and I see it on TV ads - the thief kriminal is always a WHITEy!!!!

  • crazearte - 2012-02-19 13:48

    and they also bid down on houses that was on auction for banks. it was always the same people at the auctions then it go for cheap they then fix the houses and sell it for more.

  • slenkoe - 2012-02-19 13:56

    I bought a house at Auction and only to find the person that was competing the house with was an attorney from the bank. Did not know what to do and bought the house with high price than its value. Let them pay back our money. I did not knew he was from the bank and only realise when i have to sign offer to purchase he was the man competing with me on the house.

  • Nicolaas - 2012-02-19 13:57

    I knew it, these bastards were in in cohoeds!!!!!! No wonder so many people lost their possesions. Common ANC, now launch and investigation to all assets that was repossed by scrupolous and kniving laywers and banks and being sold way under the actual value.

  • Dennis - 2012-02-19 14:06

    Another "bigboy" is going down !!! Hope he squeels like a pig !!

  • Kim Botha - 2012-02-19 14:15

    ABSA Manager threatens repossion of property or they will "assist" in selling property through Auction Alliance. Customers only find out after bid that there was no set min bid and that their properties were sold for 70% below market value and still indebted to the bank. None of these people have any concious!!

      pws69 - 2012-02-19 14:40

      Its a mafia. The other trick is to not advertise correctly. I know a guy who was fired from a big 4 bank for colluding in this. Made a few million before he was caught. Bought his own house on "auction" for a quarter of market value this way.

  • pws69 - 2012-02-19 14:31

    When, not if, found guilty, fine both Levitt and the company 50% of every single "sale', to be paid to the buyer. Hurt them where it hurts most, in the pocket. Then fine the other 50% to the "commission" earners, to be ceded to the state to finance the investigations. This is the second high profile case in 6 months. Time to clean up the industry.

  • whusselmann - 2012-02-19 14:39

    Astonishing the levels of corruption we have achieved in this country.So it is an international practice to bid on your own stock in order to drive the prices up.It should be an international norm to execute auctioneers that is this dishonest and corrupt.Banks which are supposed to be trustworthy and which we do indeed trust with our money,seems to be the last people you should trust.Attorneys seems to dance only to the tune of money.Where are the days of the honest attorneys or were there never such days.

  • hein.huyser - 2012-02-19 14:46

    It is just plain immoral for a bank to bid against you. If the market are willing to pay a certain ammount on an item and property, that price is deemed "market related". Now what the banks do, is to artificially inflate the price of an item, thereby boosting false economies and "property bubbles"

  • Graham - 2012-02-19 14:46

    Guilty Politicians, bankers and liquidators should be dragged into the street and flogged! Then cut off those thieving hands!

  • Hugh - 2012-02-19 15:00

    Slowly we are learning about these "tricks of the trade(s)" For far too long have we citzens regarded price fixing and price rises as being part of life. Time we stood up and are counted. That also goes for the way government stampedes over our privacy rights.

  • David - 2012-02-19 15:32

    Estate Agents are not allowed to pay "referral commission" to attorneys for business leads but the Auction industry(I wonder why the mainstream selling avenue is not used????) is allowed to do this at will ..... it seems. Lawyers, bank officials, liquidators.... they then charge the buyer or seller 10% and sell the asset often at a hefty discount to market. and we all wonder why big business are Mr Levitt's best friends... Aunty Wendy is only pissed because she didn't steal Quoin Rock for less..... SARS has said nothing on the matter and the taxpayers/ average joe's loose all the way. regulate these thieves some more!....

  • Garth - 2012-02-19 15:48

    Aside from the moral implications here, I would like to see some commentary from legal experts. It is not illegal to share commissions and this is common practice in the industry, however, as we understand it, these are subject to the Estate Agency Affairs Act: Whilst an agency may pay for services rendered, anything over 10% of the commissioned earned can be deemed to be commission; not services rendered. So if 50% or more of the commission was paid, then this cannot be claimed to be for services rendered; In order to receive commission, the recipient firstly needs to hold a valid Fidelity Fund Certificate (FFC) with the EAAB and secondly, must be able to show effective cause to the transaction. Furthermore, whilst conveyancing attorney do hold valid FFC’s, it is not likely that the Banks do, let alone their employees. The question now arises as to whether these payments were made to the banks or direct to their employees without the bank’s knowledge. Since it is illegal to PAY or RECEIVE commission on a property transaction without a valid FFC, if this is the case, both parties are in contravention of the law and face prosecution. We sincerely hope that the correct procedures and legalities were put in place and followed as the industry does not need another high calibre incident to further enhance the poor perception it holds. I am afraid, though, that “ghost bidders” pushing up prices cannot be condoned even if it is not illegal.

  • hein.huyser - 2012-02-19 16:07

    It is just plain immoral for a bank to bid against you. If the market are willing to pay a certain ammount on an item and property, that price is deemed "market related". Now what the banks do, is to artificially inflate the price of an item, thereby boosting false economies and "property bubbles"

  • Daft - 2012-02-19 16:34

    What should be investigated as well is a wheels bank with light blue corporate colours also use their own staff appraising repossed vehicles. They don't make use of in-depended appraisers so that the client's rights are also protected. They then appraise the vehicles at a very low price, knowing that it will fetch that price on an auction and no-one can dispute that these figures don't influence the auctioneer. By law the minimum amount to obtain at an auction is the appraisal figure..

  • Sean - 2012-02-19 17:10

    Levitt,Applebaum....do I see something here???

  • johan.schoeman1 - 2012-02-19 18:51

    Kry vir jou boetie! Ek hoop hulle sluit jou toe saam met al die ander soos jy wat gewone mense indoen om jou agterwereld met diamante te versier. Pap en swart tee vir jou!

  • Assis - 2012-02-19 20:35

    The lowest of the low used to be used car-sale person and estate-agent..a new bottom level of the barrel has been reached ! Welldone auctioneers.

  • Matt - 2012-02-19 22:12

    Wonder if he got investment advise from Arthur Brown.

  • brionyl.french - 2012-02-20 06:01

    and more truths of dirty dealings come out.

  • Noa - 2012-02-21 11:51

    Anybody wondered why this story is no longer on the "homepage" of NEWS24? I have been to quite a few auctions, mainly cars and property. It is all a scam with people bidding against you that work for the auction houses. If you do back down on your bidding then a "little man" stands in front of you and tells you..."come on what is another R5000?....bid bid bid"....then "their" bidder wins and at the next auction the car is on the floor again. Very unethical and surely must be illegal. All auction houses have one thing in common...

  • Abilio01 - 2012-02-22 07:03

    The auction industry already has enough of a "bad stigma", now this... I offer clients auction services to attend auctions on their behalf and bid on any item that they need someone to represent them as a lot of clients are unaware of all the auction ins and outs. Thats why I have structured my business www.Bid4Me.co.za to make maximum comm should we win the item for our client under the clients mim value. Thus my client spend less and I get more comm. Pitty the rest of the industry cant do the same for their client???

  • Mulaudzi - 2012-02-23 12:44

    i also wondered hw thy end up geting alot of work n of course thy fix the prices thy main dominate in th country i hop thy dne coz thy vry corrupted

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