Amigo’s royal woes

2011-11-24 00:00

THE “amigo” who owns one of Pietermaritzburg’s favourite watering holes, the City Royal Hotel, has been given a couple of months to come up with R12 million or face losing the business to a creditor.

Blue Serenity Investments (Pty) Ltd, which belongs to KZN’s former head of treasury, Sipho Shabalala, and his wife Beatrice was placed under provisional liquidation by Judge Fikile Mokgohloa in the high court yesterday. The couple have been charged with corruption.

Interested parties have until January 16 to give reasons why a final winding-up order should not be granted.

The court order was obtained by the Development Bank of South Africa (DBSA) to which Blue Serenity Investments Pty Ltd (trading as the City Royal Hotel) owes R12 176 234, according to court papers.

Blue Serenity Investments is one of the companies that was placed under restraint by the Asset Forfeiture Unit in August 2010 arising from a probe relating to tenders secured by the Health Department in respect of water purification plants and medical oxygen supplies.

The investigation has since led to the arrests of numerous high-profile people in business and politics, including Shabalala and his wife, KZN’s Tourism and Economic Development MEC, Mike Mabuyakhulu, KZN Legislature speaker Peggy Nkonyeni, the retired head of KZN’s Health Department, Ronald Green-Thompson, and Uruguyan businessman Gaston Savoi of Cape Town.

During the case Savoi, Busi Nyembezi (also a former head of the Health Department) and Shabalala earned the nickname “amigos”, the term they allegedly used to refer to one another in personal SMSes.

The prosecution drafted a 72-page indictment detailing charges of racketeering, fraud, corruption, money laundering and contravening the Public Finance Act against 23 accused, including five companies, one of which is Blue Serenity Investments. Two of the accused listed on the charge sheet have since entered plea bargains with the state.

The National Director of Public Prosecutions, who was cited as one of the respondents in the application to wind up Blue Serenity Investments, has decided to abide by the decision of the court and did not oppose the application.

In an affidavit the senior legal advisor of the Development Bank of SA, Lukas Ernst, said Blue Serenity Investments was not able to repay its debt of over R12 million to the bank and submitted its liquidation would benefit all creditors.

He submitted that the company is trading in insolvent circumstances, which is “reckless and negligent” and needs to be stopped.

A liquidator will be able to ascertain the whereabouts of assets, which could also (if the liquidator decides it is necessary) be sold on auction and could yield a substantial dividend for all creditors.

Ernst said in his affidavit that since the restraint order was granted over the hotel and other assets, the DBSA has started receiving reports indicating “serious dereliction of operational and business responsibilities relating to the City Royal Hotel”.

The business is clearly in a “dire financial situation”, he said, and cannot pay its debts, including the loan repayment.

He alleged that since April certain employees and other creditors have also not been paid.

Ernst said Shabalala and his company’s representatives are reportedly not co-operating with agents appointed by the court-appointed curator in providing financial information to enable them to take proper care of the business in order to preserve its assets.

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