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Auction Alliance slammed

Apr 01 2012 13:39 Antoinette Slabbert

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Pretoria – Auction Alliance’s malpractices are so serious that the authorities need to consider closing it down, said national consumer commissioner Mamodupi Mohlala.

On Friday Mohlala announced that the National Consumer Commission (NCC) had imposed the maximum administrative fine of 10% of turnover on Auction Alliance, following a complaint by Wendy Appelbaum about a December auction of the Quoin Rock Wine Estate in Stellenbosch.

The NCC had found that former Auction Alliance chief executive Rael Levitt had, in violation of the provisions of the Consumer Protection Act, held a fake auction using a ghost bidder to push up the price.

According to the NCC the Auction Alliance board of directors cannot distance themselves from Levitt’s actions and they bear joint and several responsibility.

Apart from the administrative fine, Levitt could be fined up to R1m in his personal capacity.

On April 10, when he returns from overseas, the NCC will confer with him as to whether what he did on the day of the auction amounted to fraud and whether it should be referred to the National Prosecuting Authority for criminal prosecution.

The NCC said Levitt wilfully and knowingly “lied” and the commission would employ a criminal process to look for the maximum penalty of a R1m fine and/or 12 months’ imprisonment.

The NCC will also request the Estate Agencies Affairs Board (EAAB) to investigate the possibility of suspending Auction Alliance’s Fidelity certificate with a view to its permanent cancellation. This would effectively shut the business down.

Asked whether this would be wise in the light of job losses, Mohlala said a strong message had to be sent regarding actions that violated consumer rights. She said the EAAB would have to weigh up the issues against one another after thorough investigation.

Mohlala said there was a great need for a code of conduct guiding relations between attorneys, liquidators and auctioneers, and other authorities should also investigate allegations of corruption and kickbacks.

Appelbaum, who was present at the announcement, said she was pleased that law and justice had prevailed “after three very difficult months”.

The NCC will attempt to return her to the position she should have been in had the ghost bidding not taken place.

According to Appelbaum, her first bid of R35m had been the only bona fide offer. Had she taken legal steps, she would have been able to claim from Levitt the difference between this offer and her final offer of R55m.

Since December, she said, the liquidators have received no further bids. Confusion however exists as to whether there was a reserve price. “If there was no reserve price, they should have awarded it to me for R35m.”

She will nevertheless be satisfied with the pre-emptive right that the NCC is attempting to negotiate on her behalf.

On Friday afternoon Auction Alliance delivered a short statement saying its legal team was studying the NCC’s decision to determine whether there were grounds to take it on review.

On the same day Mohlala said the group had to indicate, within 14 days, whether it planned to contest the decision before the Consumer Tribunal.
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