State throws in the towel on fraud charges against Glodina bosses

A year after they first appeared in court, charges of fraud against the retail director and accountant of KwaZulu-Natal-based towel manufacturer Glodina have been withdrawn.

Fehaaz Eusuf and David Larkan, both from Durban, were advised when they appeared in the Palm Ridge magistrate’s court this week that they were free to go.

In a letter, advocate Gideon Nkoana, deputy director of public prosecutions in Johannesburg, said: “Having objectively and dispassionately” looked at representations submitted by the two men, “there are no reasonable prospects of a successful prosecution”.

When they first appeared, the Hawks said the pair misrepresented themselves and “submitted a fraudulent audit report when applying for funding from the Industrial Development Corporation”.

As a result, the IDC transferred about R35m into Glodina’s business account for development projects.

Glodina did not have a R10m surplus in its bank account as indicated in its audit report, said the Hawks.

The investigating unit added that it was expecting a “well-deserved” conviction in the matter and accused the men of “allegedly stealing from other aspiring entrepreneurs who need funding”.

In his bail application, Eusuf said the company was in liquidation after business rescue.

“I have been advised by the business rescue practitioner to open a charge of fraud against the IDC for R25m. The entire incident, together with various others, is being dealt with by the liquidator and an inquiry into the matters is being held soon,” he said.

In representations to Nkoana, Eusuf’s attorney, SP Pillay, said the IDC — the complainant — came to court “with dirty hands” and the financing of the deal failed due to the IDC’s actions.

Pillay said Eusuf owned La Bomb Investments, which bid for Glodina (a division of KAP Homeware, part of the Steinhoff Group). Eusuf formed a company, Glodina Lifestyle, which would purchase Glodina after being told by then-CFO of KAP that the IDC was interested in providing funding.

Pillay added that the IDC was aware the purchase agreement was altered and that R10m for the brand and equipment could be paid in monthly instalments, rather than in one lump sum.

“The loan agreement does not require that the ... R10m be used for any specific purpose or that it may not be used at all. It was simply to ensure KAP was paid what was owed to them.

“At no time had the IDC indicated to our client this amended agreement was not acceptable.”

Pillay said the IDC had insisted on appointing two of its directors to the company's board.

They then claimed the “agreement had failed” and the IDC demanded the return of the initial R35m.

These directors, Pillay said, without calling a legal board meeting, caused the balance in the bank account of Lifestyle, R25m, to be transferred to the IDC.

“There was no notice of any board meeting given to our client ... neither was there any court order to cause such drastic action. It is respectfully submitted that, on this version, they had stolen the funds from Lifestyle.”

Pillay said the two IDC appointees actively joined KAP to regain control of Glodina.

This was all done “behind our client’s back and without his knowledge”.

“The numerous attempts by our client to resurrect the purchase and to keep Lifestyle alive, coupled with the millions he spent of his own funds, stand in stark contrast to the actions of the IDC.

“We therefore humbly request the withdrawal of charges against our client.”

Eusuf said the case had “put a dent on my credibility and honesty”.

“It has set me back. I believe it was corporate sabotage.”

He said the IDC now owned Glodina and all its former competitors.

Through business rescue, liquidation proceedings and the courts, he intended to take the matter further. He said though, that he would like an amicable solution and to find common ground with the IDC and the government.

TimesLIVE is awaiting a response from the IDC.

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