into Corpcapital
Tim Cohen
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Editor at Large
TRADE and Industry Minister Mandisi Mpahlwa is considering reopening the investigation into the long-running Corpcapital saga, which has pitted some of SA’s best-known business and legal personalities against one another.
The indication that the door has not been closed on the case, contained in papers before the high court, suggests that the saga is likely to run on for some time. The original probe into the affairs of Corpcapital was ordered by Mpahlwa’s predecessor, Alec Erwin, in terms of section 258 of the Companies Act, and was conducted by senior advocate John Myburgh and academic Keith Prinsloo.
Even though the report was handed in almost a year ago, legal disputes have broken out over its contents and whether it should be released. The dispute started in 2002 with the resignation of Corpcapital founder and nonexecutive director Nic Frangos, who is opposing the release of the Myburgh report on the basis that it is “flawed” by procedural irregularities.
Corpcapital, on the other hand, is pressing for its release, claiming Mpahlwa does not have the discretion to withhold it from them.
Simultaneously, Frangos is seeking to have the investigation reopened to counter certain evidence presented by accounting experts. It has been decided that the two court applications will be heard together later this year.
Mpahlwa has been drawn into the dispute, both to oppose the immediate release of the report and to consider granting Frangos the opportunity to counter evidence.
Central to the dispute is the valuation of an online betting company called Cytech, which was valued in Corpcapital’s books in the 2002 financial year at R228m.
Frangos claims the increased valuation of Cytech boosted Corpcapital’s profits significantly. Following Frangos’ intervention at the time, an independent valuation reduced the company’s value by half.
In his response, Mpahlwa said he was not refusing to make a copy of the report available to Corpcapital, but was required by the act to consider it before doing so.
“Because I have not yet had the opportunity to duly consider the report, I am not yet in a position to determine whether the matter has been fully investigated or whether there are issues which still require further investigation and consideration. If follows that I cannot and will not release the report until such time as any such further investigation has been undertaken…”
Corpcapital nonexecutive director Tom Wixley claimed the process suggested by Frangos would render the investigation “endlessly circular”. Corpcapital accepted Mpahlwa was obliged to consider the report, but it did not follow he was obliged or entitled to withhold it.
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