Africa-Press – South-Africa. Rugby governing body SA Rugby has hit back at the protesting Western Province-affiliated clubs by releasing an explosive statement saying that their claims were “erroneous, misleading, and needlessly distracting”.
In the statement released on Thursday, SA Rugby also revealed a timeline of events that took place from 2019, which forced them into placing Western Province Rugby Football Union (WPRFU) under administration in October 2021.
Around 11 clubs broke away from a meeting held by WP administrator Rian Oberholzer in September last year and a protest has been organised against SA Rugby’s administration. The protest is set to take place at 12:30 on Saturday, two hours before the Stormers host the Sharks at Newlands in the United Rugby Championship.
The clubs also threatened legal action against SA Rugby should their demands not be met. These include the “suspension of financial decisions” and “an immediate investigation into who decided on inviting the Israeli club (Tel Aviv Heat) to play in our tournaments”.
“It is felt necessary to do so at this time to remind the public of the calamitous sequence of actions and inactions by the former executive that led to the WPRFU being reluctantly taken into administration,” said the SA Rugby in the “open letter”.
“The remit of the administrator was to return the WPRFU to financial stability while untangling the legal complications of the myriad of putative property deals that the former administration contemplated.
“The claims now being made by individuals – some of whom were part of the executive which traded the entity to the brink of bankruptcy and now wish to reclaim control – are erroneous, misleading, and needlessly distracting.
“Most important to note is that any property or equity deal that the Executive Council (Exco) of the South African Rugby Union believes has sufficient merit to be presented to the General Council of the WPRFU, cannot be completed without the approval of that general council. The decision will be Western Province’s; no-one else’s.”
The statement proceeded to detail what went wrong at Western Province from the time they signed a heads of agreement with Investec’s property division for the redevelopment of Newlands Rugby Stadium and accepted a R50-million loan in the process.
The WPRFU was then unable to repay Investec after reneging on that deal and sourced financial assistance from another property developer, Fly/Dream World, who advanced them a R112-million loan.
With that loan, Western Province paid Investec R52.97 million and R57.76 million owed to previous equity partners Remgro.
SA Rugby then determined that the Flyt agreement, signed by suspended WPRFU president Zelt Marais, bonded WP’s properties “to the value of R250 million, encumbering all the properties (worth almost R450 million) without performing a due diligence and exercising its duty of care”.
When things went sour, Flyt then instituted legal action to reclaim R388 million in damages against Western Province and their R112 million loan, including interest.
“WPRFU’s auditors highlighted serious concerns regarding the (Flyt) arrangement,” said SA Rugby.
“The WP executive failed to de-risk the organisation and did not act with the duty of care by not conducting a formal due diligence exercise.”
On top of this Flyt deal, another deal was signed with Staytus Properties by “a member of the WP executive committee (Ronald Bantom) … without performing a formal due diligence exercise and once again failed in its duty of care”.
News24 contacted Zelt Marais and Ronald Bantom to offer them their right of response, which will be included in this article once received.
Read the full SA Rugby open letter:
SA Rugby has noted plans to picket a forthcoming DHL Stormers match by elements of the Western Province Rugby Football Union (WPRFU) club structures and wishes to remind the rugby community of certain facts.
It is felt necessary to do so at this time to remind the public of the calamitous sequence of actions and inactions by the former executive that led to the WPRFU being reluctantly taken into administration.
The remit of the administrator was to return the WPRFU to financial stability, while untangling the legal complications of the myriad of putative property deals that the former administration contemplated.
The claims now being made by individuals – some of whom were part of the executive which traded the entity to the brink of bankruptcy and now wish to reclaim control – are erroneous, misleading, and needlessly distracting.
Most important to note is that any property or equity deal that the Executive Council (Exco) of the South African Rugby Union believes has sufficient merit to be presented to the General Council of the WPRFU, cannot be completed without the approval of that General Council. The decision will be Western Province’s; no-one else’s.
Below is a timeline of events that led to the SARU Exco’s constitutionally appropriate application of the power to take a dysfunctional union into administration:
• 2019: WPRFU signed heads of agreement with Investec’s Property division for the redevelopment of the Newlands stadium. Investec advanced an R50-million loan to the WPRFU.
• 2020: WPRFU declined to sign the final documents to conclude the sale of Newlands development rights to Investec.
• 2020: WPRFU received R112m Flyt Property (secured on 11 properties owned by the Union), which was appointed as developers of the Newlands.
• Notwithstanding the value of the loan to repay the previous loans; it was secured by bonding the properties to the value of R250m, encumbering all the properties (worth almost R450m) without a performing a due diligence and exercising its duty of care;
• WPRFU’s auditors highlighted serious concerns regarding the arrangement.
• The WP executive failed to de-risk the organisation and did not act with the duty of care by not conducting a formal due diligence exercise.
• 2020: Flyt, via its parent company Dreamworld, paid R52.97-million to Investec Bank and R57.76-million to Remgro to clear WPRFU’s debts.
• 2020: Six WPR board directors resigned or were removed from the board in October.
• 2020: The players met the Union leadership in November to express their concerns.
• 2020: Also, in December Flyt declared a dispute with the WPRFU over the valuation of Newlands.
• 2021: Dream World (Flyt) filed a suit against the WPRFU in the Western Cape High Court, claiming R388m in damages and the repayment of its R112-million loan plus interest.
• 2021: A term sheet was signed with Staytus by a member of the Exco, without performing a formal due diligence exercise and once again failed in its duty of care, furthermore breaching Clause 13 of the WP constitution and failing to get a mandate from the General Council.
• 2021: In June, SARU deeply concerned about the WPRFU’s operations – established a joint “Steering Committee” with WPRFU – comprised of representatives of both organisations to assist in managing the mounting legal and financial challenges.
• 2021: In September, SARU exited the Steering Committee because of a lack of transparency among WPRFU’s officials, making it impossible for SARU’s representatives to perform any useful function.
• 2021: Also in September, the WPRFU President (Zelt Marais) established what was described as a “war room” of ad hoc appointees of his choosing tasked with resolving WPRFU’s issues.
• 2021: Five members of the WPRFU executive committee – including the vice president (Ronald Bantom) – filed an urgent application at the Western Cape High Court to have the president removed.
• 2021: In October, SARU’s Executive Council determined that the WPRFU failed to meet the requirements of Clause 29 of its constitution. Western Province Professional Rugby was in a terrible financial position, the Union’s auditors, BDO Inc., had noted several reportable financial irregularities and Western Province Rugby was facing several legal battles, was unable to pay SARS or salaries and was in imminent danger of being liquidated. SARU was left with little choice other than to take the WPRFU into administration. Clause 29 requires that:
“All unions have to conduct their business affairs in such a way that, at all times, they are in a sound financial position, comply with the laws of the Republic and adhere to the requirements of good governance inter alia as expounded in the King Report on Governance for South Africa, 2009 (“the King Report”) and the King Code of Governance for South Africa, 2009 (“the King Code”) which came into effect on 1 March 2010, and to ensure that their commercial companies, if any, similarly conduct their business affairs in such a way that, at all times, they are in a sound financial position, comply with the laws of the Republic and be guided by the requirements of good governance inter alia as expounded in the King Report and the King Code.”
In conclusion, SA Rugby looks forward to ending Western Province’s unfortunate period of administration in the coming months with a solution approved by its clubs. The path taken has so far brought stability on and off the field while the process being followed to ensure the Union’s financial sustainability has been rigorously vetted from a legal and governance perspective.
We would urge all stakeholders that the greatest service they can do to WPRFU right now is to allow the proposed solutions to come to its General Council without sideshows and interference where the membership will be able to decide their own fate.
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