An insolvency practitioner René Bekke says African Global Operations, formerly known as Bosasa, should not blame the media for the reputational damage it has suffered.
Earlier on Monday, the embattled company announced that it would apply for voluntary liquidation, after Absa and FNB formally notified it that it would sever ties with it.
In a statement, the company’s Board of Directors said the banks had indicated that they wanted to distance themselves from the company due to serious corruption allegations that have emerged from the Commission of Inquiry into State Capture.
The bank has given African Global Operations until the end of February to find another banking partner.
“I think the Zondo Commission was clear, and I don’t think one can blame the media. The evidence was clear and the reputation damage, I think, is done by the witnesses at the Zondo Commission. So, I’m not sure if we can blame the media. There is definitely reputational damage and the banks have made their decision to shut their accounts at the end of February. The banks in RSA or even internationally, have a high deity of transparency,” says Bekker.
African Global Operations says the extensive reputational damage from the negative media reports in the past few months have led to financial institutions cutting ties with the company.
The company has been in the spotlight following testimony at the State Capture Inquiry by members of the group implicating it in serious impropriety.
However, the company says it is solvent and the decisions made by the financial institutions are not based on the group’s liquidity status, financial stability or operational performance.
The group says without banking accounts, it will not be able to trade. The company says more than 4 500 employees stand to lose their jobs.
Liquidation expert, Christopher Roos, says there will most probably be a ripple effect affecting more stakeholders.
FNB and Absa have declined to comment on the matter, citing client confidentiality.
“It can take anything from one year to two years to finalise. In terms of the workers, they have rights in terms of Section 38 of the Insolvency Act that says that they can claim for salaries, leave and retrenchments pay. An amount which is more will form part of all other creditors,” says Liquidation Expert, Christopher Roos.
According to a statement released by the company’s Board of Directors, the bank had indicated that it wanted to distance itself from the group due to serious corruption allegations that have emerged from the Commission of Inquiry into State Capture.
Technical Executive of the South African Institute of Professional Accountants Faith Ngwenya says the liquidation of the company will add to the already high unemployment rate in the country.
“The African Global Group has got a few subsidiaries and we have not yet heard from these subsidiaries (as to) how they’re going to be affected, because they are also tainted. Everything that has come out, it paints everyone that’s linked to Bosasa. So, what is going to be happening to these employees? Can they be placed at any of these subsidiaries? Will the subsidiaries continue to exist or are they also going to be round up? So, those are all issues that need to be decided upon.”
Company law expert, Professor Tshepo Mongalo, says it is interesting that the company portrays itself as a caring citizen.
“What is interesting is the way in which the company paints itself as a responsible citizen, which is contrary with what has been expressed during the state capture inquiry.”
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