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Wednesday Jul 22, 2015

Nedbank wants property liquidation inquiry to be stopped

Nedbank and its chief executive Mike Brown have lodged a High Court application to stop a confidential Section 417/418 Companies Act inquiry into the liquidation of a property company and set aside the summons ordering Brown to testify.

This follows Brown being subpoenaed to testify last month at the inquiry into the liquidation and subsequent deregistration of Waterkloofspruit Projects, the developer of a 211-stand upmarket residential project known as Waterkloof Boulevard in Waterkloof in Pretoria in 2001.

The inquiry relates to an alleged property scam and was being held as part of the process of a more than R500 million damages claim.

Brown did not appear at the inquiry last month.

The bank's legal representative told the inquiry commissioner Charles Stewart that they intended to bring a High Court application to set aside the inquiry and the subpoena issued to Brown.

Brown was subpoenaed because he was previously the head of BOE's property finance division, the bond holder over certain properties in the Waterkloof Boulevard project.

BOE, which was taken over by Nedbank in 2002, placed Waterkloofspruit Projects under a winding up order because it could not pay its debts.

It is alleged BOE conspired and colluded with liquidators Arno Cronje and Enver Motala and Sterling Auctioneers to acquire, during the liquidation sale, the 137 unsold stands in Waterkloof Boulevard for a total of R100 000.

This amounted to an average price of R730 a stand.

An offer of R20 million for the stands was allegedly made prior to the liquidation sale and it was claimed the collective real market value of the individual properties was more than R40m.

It previously also alleged the auction was a sham and was not advertised in the Government Gazette as required by law.

Both Nedbank and Brown previously denied the allegations of wrongdoing.

Waterkloofspruit Projects was previously wholly-owned by former listed property company Gilboa Properties, which in May 2001 ceded all its rights, title and interest and all claims it had in Waterkloofspruit Projects in respect of the Waterkloof Boulevard project to the CMT Trust, a family trust.

Hillcrest Village, now in liquidation, was the owner of the Gilboa Building.

The liquidators of Hillcrest Village were granted an order in the Pretoria High Court in 2010 to convene an inquiry in terms of Section 417/418 of the Companies Act.

This inquiry commenced in 2010 and was postponed indefinitely but has been reconvened.

Edward de la Pierre, the former chairman of Gilboa and former director of Hillcrest Village and trustee of the CMT Trust, has accused BOE through the actions of certain of its employees of colluding with liquidators Cronje and Motala.

De la Pierre also alleged that BOE and certain of its employees masterminded a property repossession scam that was responsible for the demise of Waterkloofspruit Projects and Gilboa Properties, which in turn caused the damages suffered by Hillcrest Village and the CMT Trust.

De la Pierre confirmed yesterday that Nedbank and Brown had lodged a High Court application against the liquidators of Hillcrest Village in liquidation, the commissioner of the inquiry, and the Master of the North Gauteng High Court in Pretoria.

"It is really a pity the matter is yet again being delayed. It will, however, not change what occurred in the past.

"Eventually Nedbank will have to face and accept the truth of their rogue employees' actions," he said.

De la Pierre added that instead of attending the inquiry to answer questions regarding the demise of Waterkloofspruit Projects in 2001, which he claimed was done illegally, and the subsequent repercussions on Hillcrest Village by parties that no longer worked for Nedbank, Brown had again chosen to take the long route by bringing a High Court application.

Judge NM Mavundla in a 2008 judgment declared the dissolution of Waterkloofspruit Projects void and found "overwhelming evidence" of fraud or collusion.

The Supreme Court of Appeal in 2009 upheld Nedbank's appeal against this judgment.

Nedbank shares on the JSE were yesterday quoted at the close up 1.54 percent at R257.80.

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