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Wednesday Nov 27, 2013

ABSA boss roasted over Pinnacle Point

An ABSA boss was grilled yesterday over the bank's failure to disclose 'crucial' information to the Trilinear Empowerment Trust - an investment vehicle for millions of rand in provident fund money - before it bought a R100 million stake in property developer Pinnacle Point Group.

The trust invested a total of R250m in the company before it went under in 2011.

In October 2009 it bought about R100m in shares directly from Pinnacle Point, then later bought Absa's 27 percent shareholding for R150m.

At an inquiry into the liquidation, Gavin Woodland, senior counsel for the trust, said that when his client invested its first R100m, it had been told it would make 'lots of money'.

He put it to the bank's head of corporate and investment banking, Stephen van Coller, that even though Absa already knew there were problems with the 'jewel' in Pinnacle Point's crown - the Lagos Keys in Nigeria - the bank did not diclose this to the trust.

The commission heard how the group's survival hinged on the Lagos Keys going ahead.

At that point, however, the company was yet to get the necessary land rights and environmental approvals.

Woodland said the trust might have 'reconsidered its position' if it had access to this 'crucial piece of information'.

But Van Coller said any new investor's relationship was with Pinnacle Point, not Absa. While Absa had probed the company's affairs and had the information, this due diligence had been done for the bank and it was not its responsibility to hand it over to the trust.

Van Coller said the bank had been under the impression that the necessary rights and approvals were simply a matter of procedure and would be forthcoming.

He said there had been 'a lot of trust' between the bank and the group's management at that stage, which was why Absa had given the company a R55m bridging loan.

The inquiry has been extended at the request of Trilinear, which is seeking to determine Absa's role in the Pinnacle Point matter.

The trust had been an investment vehicle for several Southern African Clothing and Textile Workers Union provident funds.

Regarding the trust's second investment in the group, Woodland questioned Van Coller about being approached by Trilinear asset manager Sam Buthelezi and union consultant Richard Kawie.

On February 8, 2010, an agreement was concluded between Absa and the trust, which took over Absa's stake for R150m.

The bank had initially paid R931m for it.

Woodland put it to Van Coller that there was 'no downside' for Absa in this deal because in essence it was making a difficult problem go away.

Van Coller responded that there had not been an upside either.

Buthelezi and Kawie face criminal charges in the Bellville Specialised Commercial Crimes Court for their roles in the Canyon Springs affair, in which millions of rand in provident fund cash went missing.

Cape Times


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