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IOLProperty - South African Property For Sale
Friday Sep 14, 2012

Top Irish housing developer in court battle over 'earmarked' charity millions

Irishman's Niall Mellon's highly publicised SA housing project is at the centre of a local court clash.

In papers filed at the Western Cape High Court, the Mellon Housing Initiative's (MHI) executive director, James Maasch, claims that Mellon is trying to pull R80 million in what he alleges is mostly public money from the company - some of which was earmarked for low-cost housing in SA townships - and divert it to build houses in Brazzaville in the Congo.

But Mellon has denied this in an affidavit, describing the allegations as a "red herring".

At the heart of the matter is a struggle over control of MHI's board of directors. The MHI and one of its members, Mossel Bay-based Nolan Marsh, have dragged Mellon and six other members of the company to court on an urgent basis to stop a meeting, the aim of which was to discuss governance issues, including the appointment and removal of directors.

The meeting was scheduled to take place last Tuesday. However, attorney Rael Gootkin, representing Mellon, said it had been postponed.

The Niall Mellon Township Trust is renowned for its building blitzes, bringing out Irish volunteers every November to help build houses in poor areas.

But according to Maasch, Mellon had decided to "exit from South Africa" and look for "new frontiers".

He said MHI had built up its R80m reserves through government subsidies. Every time it built a house, it received a part of the subsidy allocated to intended homeowner.

Mellon had sought legal advice, he said, as to whether the funds could be used for charitable purposes outside SA, and had been advised that this was not possible.

He alleged Mellon was now trying to gain control of the company's operations and funds by seizing control of the board of directors.

Mellon acknowledged in his affidavit that it was true

the that he and the other respondents "now wish to obtain control of the board".

"There is nothing unlawful about this desire. The purpose is not to apply [MHI's] funds for some purpose which does not fall within the bounds of [MHI's] powers and objects," said Mellon. He also acknowledged that he had sought legal advice earlier this year as to whether funds in MHI could be used to build houses in the Congo.

When advised that this was not possible, Mellon had "accepted this advice unreservedly".

MHI, Marsh and Maasch are asking the high court to interdict the respondents from holding the meeting, as well as issue an order preventing the company from making any payments outside SA other than its ordinary business dealings.

The matter is expected to be heard in court today.

Cape Times

 
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