Firm Cloete Murray investigated survives liquidation bid

Investment holding company Conduit Capital has fended off a winding-up application by the liquidators of its embattled insurance firm Constantia.

Conduit Capital on Friday said it would be business as usual after the court ruled in its favour.

“Shareholders are referred to the announcement released on Sens on April 4 2024 wherein it was advised that Constantia Insurance Company (in liquidation) for orders to provisionally wind up Conduit Capital and its wholly owned subsidiary, Conduit Ventures, given that the applications were opposed, the court had postponed the hearing thereof to August 2 2024,” it said.

“Shareholders are hereby advised that the applications were today, August 2 2024, dismissed by the court with costs.”

Business Day reported in January that insolvency specialist Cloete Murray was shot and killed two days after he launched an urgent application with the high court to invoke section 417 of the Companies Act in his bid to follow the trail of millions of rand siphoned from Constantia.

The section 417 inquiry is an intrusive tool in the hands of liquidators looking to recover misappropriated assets, and whose conclusions can lead to directors being declared delinquent and facing criminal charges.

Murray’s affidavit reveals his concerns about Constantia, whose books he suspected were cooked to hide money siphoned from the company. He asked the court to enable him and the joint liquidator to launch the inquiry, which would give the commissioner of the inquiry the authority to subpoena companies and individuals to “make available documents, books, records and other evidential material in their possession and/or under their control”.

In his 50-page Constantia affidavit, Murray outlined the main objectives of the inquiry. The first was to investigate the reasons behind Constantia’s insolvency. He also wanted to investigate what had happened to nearly R160m missing from the company’s coffers.

Murray’s other interest was in the R60m “high-risk investment” made in the JSE- and Namibia-listed Trustco Group.

In June the Arbitration Foundation of Southern Africa tribunal ruled that Trustco Properties must pay Constantia an amount of R50m plus interest. This is over the failed 2020 deal wherein Constantia wanted to buy Herboths Property from Trustco Properties for R1bn, and paid R50m towards the deal.

The deal fell through in March 2021 after the JSE refused to approve a circular that could have cost shareholders dearly, as reported by Business Day in February.

The JSE, whose primary concern with the circular was the valuation of the property, demanded that Conduit and Trustco release their respective circulars simultaneously and that their shareholder meetings to vote on the deal be convened on the same day. The approval of the circular was material since shareholder meetings to vote on the deal could not be held without such approval.

A report by Property Valuations Namibia, commissioned by Constantia, put the property’s market value at N$783m, noting that it consists of 1,600ha of “sellable land”. However, in its financial statements for the year ended March 2020 Trustco valued the property at N$250m.

khumalok@businesslive.co.za