Tycoon loses luxury home

2012-10-27 18:04

High Court issues R17 million default judgment against embattled Mzi Khumalo

Businessman Mzi Khumalo is about to lose his luxury Zimbali home, but he says he knows nothing about the court case that RMB Private Bank brought against him.

This after the South Gauteng High Court issued a default judgment against the 57-year old businessman, his family trust and its trustees for the non-payment of about R17 million on three bonds.

The mining magnate now risks losing the house owned by his Mawela Family Trust, but has vowed to fight the judgment.

Lawyer Tayob Kamdar, who represents Khumalo and the other respondents, said his clients were unaware of the legal proceedings against them.

“Our clients definitely intend challenging the default judgment,” Kamdar said.

He denied that Khumalo and the trust owed RMB money.

“We have been instructed to investigate the matter and to bring an application rescinding the judgment,” Kamdar said.

He said Khumalo and the trustees have a loan agreement with the bank.

“All payments due by our clients were being made. Our clients take these allegations seriously and believe some mischief-making is afoot,” said Kamdar.

Khumalo has now instructed his lawyers to get to the bottom of the matter.

South Gauteng High Court Judge Lotter Wepener found Khumalo and the other trustees – including Khumalo’s wife Makhosazana; Constitutional Court Judge Ray Zondo; and Khumalo’s business partner, asset manager Charles Graham – were liable for failing to settle the debt on September 27.

The bank was demanding R10.1 million from the trustees and another R6.5 million from Khumalo.

The R6.5 million to be paid by Khumalo was for suretyship, which he signed in his personal capacity.

RMB sent the Khumalos, Zondo and Graham letters of demand in March and April last year.

The trust secured three bonds with the bank, totalling R11 million between 1998 and 2004, but by June this year they were in arrears by nearly R2.9 million.

In court papers, the bank says they ignored the letters, leaving it with no choice but to take legal action against them.

“The first to fourth defendants (trustees) did not react to the letter of notice and failed, refused and/or neglected to settle the amount within the required seven days or at all,” read RMB’s court papers.

The bank’s lawyers, Mendelow Jacobs Attorneys, sent the letters to the trustees on March 30 and April 29 last year.

They warned the trustees their behaviour risked being classified delinquent, slow paying or absconded, which could lead to legal action.

Last year, Khumalo forfeited some of his assets to the Reserve Bank after allegedly breaching exchange control regulations.

The trust was among 15 companies Khumalo, a former political prisoner who spent 12 years on Robben Island, was forced to forfeit to the central bank.

Khumalo has vowed to fight the Reserve Bank’s decision, saying it acted outside of its mandate, scope and authority.

The RMB default judgment is the latest in a string of court setbacks to hit Khumalo.

He was forced to pay Execujet Flight Operations R1.3 million on outstanding charter flight bills, and his company Metallon went into final liquidation in June last year and moved to Zimbabwe.

Zondo was appointed to the Constitutional Court in August. His spokesperson Lulama Luti said Zondo resigned from the trust some time ago. She said: “Zondo was not aware of the case ... and wasn’t ever served with any summons relating to the matter.”

According to her, Zondo did not receive any letters of demand from RMB. “When he was a trustee of
Mawela Trust, he was not entitled to any remuneration and did not receive any,” she said.

Kamdar confirmed that Zondo had resigned as a trustee more than two years ago.

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