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Monday Sep 14, 2015

Police to resume Auction Alliance investigation

Nine years of auctions carried out by the embattled Auction Alliance group are to come under scrutiny as police prepare to dig through mounds of documents and electronic records in their mammoth investigation into the group and its former chief Rael Levitt.

A 32-page search warrant was recently filed at the Western Cape High Court as part of an application by the auction giant's attorneys, Smiedt & Associates, and it has laid bare the full extent of the probe, which an industry expert said would "take three lifetimes to complete".

The warrant includes five annexures and authorises a team of eight police officials, under the leadership of Colonel Devandri Pillay, to open 121 boxes and sealed evidence bags, stored at the offices of auditing firm KPMG.

The boxes and evidence bags contain items seized from the the group's offices during a countrywide raid in August 2012, including premises in Port Elizabeth, Bloemfontein, Cape Town, Joburg, as well as the offices of Accountants@Law and Levitt's Mouille Point home.

Shocked at the extent of the investigation, industry expert Heinrich Koorts questioned where the police would find the manpower and resources to conduct an investigation of such proportions.

Koorts said Auction Alliance was the largest auction house in the country and carried out huge volumes of work.

"We must be talking about thousands upon thousands upon thousands of auctions... What do they want to achieve with this?"

Auction Alliance made headlines in 2012 when heiress billionaire Wendy Appelbaum accused the auction house of a ghost bidder against her at the Quoin Rock wine estate sale in December 2011.

The group and Levitt have been in and out of court in civil cases that stemmed from the saga.

Later, additional allegations emerged of kickbacks paid to liquidators, attorneys and bank staff to pull business in the auction house's direction.

It led to the massive criminal investigation and the raids.

Shortly afterwards, Auction Alliance went to the High Court to challenge the constitutionality of the police's initial search warrant.

It ended in a police undertaking that led to the seized items being stored until a fresh application for a search warrant was lodged.

The fresh warrant was obtained on May 2 last year but has not yet been executed, while police iron out kinks relating to the appointment of a custodian.

However, it has detailed that the group was not only being investigated for fraud and money laundering related to the Quoin Rock sale, but also for all auctions it handled between January 2003 and February 2012.

Police have undertaken to use a five-stage process to dig through the masses of documents to find extensive information relating to the 2011 Quoin Rock sale, including records of all communication relating to the auction, the particulars of those who made challenges to its validity, a list of items not sold, the details of any reserved price and letters of authority of those who attended to bid on behalf of others or on behalf of companies.

Information on Levitt's financial situation as well as that of the group is being sought, including obligations to banks and third parties, details of foreign bank accounts held in their names and trusts which Levitt and and his associates may have an interest in.

Other information wanted for the investigation are tax returns.

Weekend Argus (Sunday Edition)

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