The family of the late Bosasa CEO Gavin Watson is not ready to give up on the corruption-accused group of companies.
On 11 and 12 March, the Gauteng High Court in Johannesburg is expected to hear arguments in an application by Jared Watson, Gavin’s nephew, to have the beleaguered group of companies placed under business rescue instead of the liquidation process that has been under way for months.
Watson is bringing the application in his capacity as a director of African Global Holdings, the parent company of the Bosasa group. He was appointed a director in November 2019.
Gavin’s children, Roth and Lindsay Watson, have also put their weight behind the application, which is being opposed by the host of liquidators led by Ralph Lutchman and Cloete Murray.
Murray states in his affidavit that Watson’s application is destined to fail because Watson contends that the businesses could be rescued considering a R70-million cash balance in an account operated by the liquidators and a further R150 million due to the company from the sale of its shares in JSE-listed Ntsimbintle mining, without considering a R500-million tax liability assessed by SARS.
Murray further contends that the rehabilitation is impossible because the company’s assets were auctioned off in December last year.
Meanwhile, Watson filed a separate application (which will be heard on the same day as the business rescue application) seeking a declaratory order pronouncing the sale of the assets null and void.
Watson points to a previous court judgment, which the liquidators obtained with the consent of the African Global Holdings board, which extended their powers. The liquidators are still acting in a provisional capacity.
The October 2019 order stated the liquidators must obtain consent from the Bosasa board to sell any assets.
Watson argues that this consent was never obtained, and as such, the entire auction was “illegal”. He has asked the court to decide on this application before it hears the business rescue issue.
Murray relies heavily on the argument that the assets have now been sold, making any hope of resuscitating the companies pointless.
Watson accuses Murray of not being educated enough to make a proper determination on the financial position of the companies.
Much of the argument in the papers turns on whether the companies were factually or commercially solvent at the time the board placed them under voluntary liquidation in February 2019.
The board’s decision was subsequent to notifications from their banks, FNB and Absa, that the companies’ bank accounts would be closed as a result of the reputational risk associated with Bosasa.
Watson contends that some of the companies, such as Global Technology Systems and Blackrox Intelligence and Security Services, are capable of being resuscitated if they are used for business in the private sector.
Sunworxs, Roth Watson’s company and the second applicant, Watson says, has managed to secure a bank account and can operate as a “treasury” for the other companies.
Murray argues that SARS has, after a tax inquiry headed by advocate Piet Marais, issued a letter of finding indicating that it had identified around R500 million which the Bosasa group owes.
This figure is likely to rise, News24 understands.
Watson points out that this is not an assessment of taxes owed and as such, SARS cannot yet claim to be a creditor of African Global. He also points out that the audit finding relates only to one company, Bosasa Supply Chain Management.
The Bosasa board previously challenged its own decision to place the companies under liquidation in court and was initially successful.
The Supreme Court of Appeal overturned the high court order setting aside the board resolution for liquidation in November 2019, effectively placing the companies under liquidation once more.
Since then, the liquidators approached the court for an order granting the establishment of an insolvency inquiry.
The inquiry is set to get under way on 9 March and News24 previously reported that Jared, Roth and Lindsay Watson were subpoenaed to appear before the inquiry to answer questions over the financial affairs of the Bosasa group.
The inquiry is being headed by retired judge Meyer Joffe.
“Ultimately this application is persisted with the clear ulterior motive to neutralise the appointment of truly independent liquidators to the subject companies under circumstances where the Bosasa protagonists had a clearly intended plan in mind when they placed the said companies in liquidation on day one,” Murray’s affidavit reads.
Jared Watson’s recent appointment to the board of directors resulted in “the obvious and unassailable conclusion that he himself does not have primary personal knowledge of any facts the precede his appointment as such, thereby rendering the bulk of the founding affidavit inadmissible hearsay and documentary hearsay evidence of no probative value whatsoever”, Murray adds.
Watson has brought an interlocutory application to strike out parts of Murray’s affidavit, which he states are slanderous and designed to impugn his character.
He also argues that the liquidators’ fees would ultimately far exceed the fees of a business rescue practitioner and as such, it would be advantageous to the creditors to have the companies rescued.
In a supplementary affidavit, Watson reveals that shareholder companies of Bosasa, namely Mela Womans Investments and GRLM Investment Holdings have claims of R8.7 million and R73.,3-million respectively.
GRLM Investments holds the Watson’s shareholding in Bosasa. GRLM stands for Gavin, Roth, Lindsay and Megan – the late Bosasa boss and his three children.