Watsons in last gasp bid to halt auction, liquidation of Bosasa

2019-12-03 21:45
(File, Supplied)

(File, Supplied)

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On the eve of the first day of a massive three-day auction to sell the assets belonging to corruption accused company Bosasa, recently appointed director Jared Watson has filed court papers seeking to have the companies placed under business rescue.

The effect of this, Watson's lawyers told News24 via email, was that it suspended the liquidation - with the effect of halting the planned auction.

Despite this, one of the liquidators, Cloete Murray, said the court application was not urgent and the auction would go ahead as advertised "notwithstanding Mr Jared Watson's attempts to send out confusing and misguided messages to the market".

"As far as we are concerned, the documents [court papers] filed are a nullity as they do not comply with the requirements of the Companies Act, therefore the auctions will proceed as advertised," Murray told News24 on Tuesday evening.

"This is just another attempt by the Watson family to preserve whatever it is they are trying to preserve and stifle the liquidators in their attempts to investigate the affairs of this company." 

Attorneys for the companies, Goodes and Seedat Incorporated, emailed a hefty set of court documents to numerous media houses just after 18:00 on Tuesday.

Urgent application

The application, which is marked as urgent, is supported by an affidavit by Watson, the late Bosasa CEO Gavin Watson's nephew.

Watson was appointed director of African Global Operations (AGO), previously Bosasa, on November 7, 2019, and together with Lindsay Watson (Gavin Watson's daughter) have taken over the shareholding of the company.

Watson argued in the court papers the companies were factually solvent and should be placed under business rescue instead of the voluntary liquidation initiated by Bosasa's directors in February 2019.

The planned auction, Watson contended, would be contempt of a court ruling on October 26, 2019, which expressly stated the assets "shall be sold in consultation with and with the consent of the board" of AGO.

No such consent was given, Watson argued - the result being that any sale would be null and void.

Watson said in his papers his attorneys had written to the liquidators requesting that the "hastily arranged auctions" be cancelled.

Attorneys for the liquidators responded, referring Watson to the Supreme Court of Appeal (SCA) order handed down in November which overturned a March 2019 High Court order setting the liquidations aside.

The net effect of the SCA order, the liquidators' lawyer argued, was to set aside the October 28 order, and placed the companies firmly within the control of the liquidators and as such, remained committed to proceeding with the auction.

The liquidators further indicated they had consulted extensively with the directors of AGO and it was agreed the best way forward would be to sell its assets.

Startling revelation

Watson made a startling revelation that despite earlier not being able to obtain bank accounts, the group was now able to do so - putting paid to the main reason behind the companies being placed under voluntary liquidation in February.

In January 2019, two major banks communicated to Bosasa it would be closing the company's various accounts due to the reputational risk associated with having it as a client following nine days of bombshell testimony by former Bosasa chief operations officer Angelo Agrizzi.

"A fire sale of the individual movable and immovable properties will achieve nothing but a dismantling and destruction of assets and the inevitable loss of capability to create and sustain employment," Watson's affidavit read.

AGO, Bosasa Properties, Global Technology Systems, Leading Prospect Trading 111, Bosasa Youth Development Centres, Blackrox Security Intelligence Services, Bosasa Supply Chain Management, Bosasa IT, Rodcor, Watson Corporate Academy, On-It-1 are the 11 companies that were placed under voluntary liquidation.

Watson is seeking that six of the 11 companies under liquidation be instead placed under supervision and business rescue proceedings.

This will also have the effect of stopping a liquidation inquiry Murray plans to convene. Liquidation inquiries have far-reaching powers to compel individuals, such as Jared and Lindsay Watson, to appear before the inquiry and to answer other financial benefits they may have accrued.

In addition, the South African Revenue Service (SARS) has initiated a full audit of Bosasa's financial affairs following a months-long tax inquiry during which numerous damning allegations over financial misconduct involving the Watson family and others came to light.

Watson argued in his affidavit that Murray's intended liquidation inquiry would constitute fruitless and wasteful expenditure, as it would raise issues already highlighted by SARS during the tax inquiry.

Liquidators, however, have the power to recover funds or benefits individuals are deemed to have been gained illegally.

Watson further revealed the shareholders of Bosasa (AGO) have multimillion-rand claims, including a R73m claim by GRLM Investment Holdings, a company through which the Watson family holds its shareholding.

Read more on:    bosasa  |  gavin watson
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