Dodgy SA directors in R1.7bn con

2011-04-17 16:01

Johannesburg - A group of South African businessmen allegedly conned Indian multimillionaire Ali Bagash into investing $20m (about R137m) in property deals by claiming to have assets worth more than R1.7bn.

Bagash claims six local businessmen misled him into investing millions of dollars in 11 properties whose values were artificially inflated.

Their names are known to City Press but cannot be mentioned as they have not been charged with any wrongdoing.

Court papers and a bulky 233-page forensic report, dated December 2010, prepared by investigators appointed by trade and industry minister Rob Davies, show the businessmen, through their group of companies, misrepresented their asset base to Bagash by claiming that it was "in excess of $250m (R1.7bn)" during a meeting in 2005.

The report concludes the actual net assets of the group amounted to just R9m, according to the audited financial statements dated February 28, 2006.

The misrepresentation was intended to entice Bagash and create the impression that the group had a substantial asset base which could help raise finance on the strength of its balance sheet.

Bagash invested the $20m to participate in the buying and development of properties in KwaZulu-Natal located in some of the province's sought-after areas includin La Lucia, Durban Point, Royal Shaka, Shelley Beach and Umhlanga.

His investment was, however, allegedly used by his business partners to purchase properties at artificially inflated prices and then pocket the difference.

According to the Davies report, the businessmen also tried to lure Bagash into buying a property in Durban for $125m (about R860m)  when the owner was selling it for R95m. The deal never went through because Bagash caught wind of the property’s true value from its owner.

“The conduct of the businessmen in deliberately, intentionally and artificially inflating the values of the purchased properties and land is fraudulent,” says the Davies report.

Davies has referred the matter to the National Prosecuting Authority (NPA) for further investigation and prosecution.

At the time of going to press the NPA had failed to respond to questions on whether it would investigate the matter.

Davies launched the probe into the affairs of 36 companies of which the men are directors, after Bagash complained to his department in December 2007 about "bad treatment" by the businessmen and their companies.

Davies's report says Bagash transferred almost $13m to the company between December 2005 and January 2009.

In 2006 he also took over a $7m investment from his UAE business associate, Abdul Rahman Hayal Saeed, in some of the 36 companies run by the businessmen.

Bagash paid Saeed in full for his investment, bringing his investments in South Africa to $20m.

In a bid to recover his lost millions, Bagash launched two separate lawsuits in 2009 and last year. Last year’s lawsuit pertains to the $7m he invested in buying out Saeed, while the 2009 litigation is related to his $13m investment in the company.
The businessmen have hit back, however, demanding R4m in security, which is an estimate of the legal fees they are likely to incur in defending Bagash's $7m claim.

Bagash claims in the Davies report that he was asked by one of the men to sign a shareholder's loan agreement "on the boot of a car" while on a visit to KwaZulu-Natal, under the pretext that the documents were required by the Reserve Bank.

Bagash's lawyer, Saber Jazbhay, said the matter was in the court’s hands. "We expect a trial date soon," he said.

The businessmen’s lawyer, Asif Latif, said he had no instructions to respond to City Press queries.

Latif referred questions to the businessmen, who could not be reached for comment.


  • Snoek - 2011-04-17 16:45

    Why is the minister involved? It's okay if Eskom and the rest mismanage our tax money but just don't steal a buck from a foreigner.

  • FanieWP - 2011-04-17 18:23

    Welcome in South Africa

  • marco - 2011-04-17 19:43

    Corruption in South Africa's ruling ANC Goverment is as follows as was published by professor Micheal Savage,a sociologist,in a survey he conducted in Cape Town entitled "Theft,fraud and violence:South African MPs do it all".He says this:A culture of impunity has made the South African parliament one of the most scandal-ridden in the world whereby MPs are arrested for drunken driving,shoplifting,fraud and corruption offences.Of the 535 MPs,29 have been guilty of domestic violence,7 have been arrested for fraud,19 accussed of bouncing cheques,117 have been involved in at least 2 businesses that have gone bankrupt,71 cannot obtain a credit card 'cause of bad credit ratings,14 have been arrested on drug-related charges,8 arrested for shoplifting,84 arrested for drunken driving.Tony Yengeni,former chief whip in the Anc, who was convicted for fraud in 2003 while chairing the country's defence commitee says this of their ANC elite:"What does the high court got to do with my life?I don't have to ask permission from them to do certain things...When asked about his numurous luxury cars which includes a MASERATI and 2 BMW's he replied "many other people have cars including white people who still have all the wealth of this country".For those brought up in the townships politics becomes the doorway to self-enrichment.Survivalism in SA is seen as political entitlement.Few MP's ever goes to prison.We all remeber Travelgate where dozens of MPs were caught defrauding parliament by exchanging the travel vouchers for cash in collusion with accredited travel agents

      ZACKIE - 2011-04-18 11:32

      It is clear we have a mafia type gang in charge of SA there is zero governance in ANC

  • Sword&Cross - 2011-04-17 22:53

    One of the very first bricks of BRICS collapses under excessive ANC style conning. We welcome the Gupta whinging next.

  • Cui Bono - 2011-04-18 08:46

    Sad sad sad .. corruption is becoming so ingrained in South Africa that we are now running 419 scams like the Nigerians

  • Jacques van der Spuy - 2011-04-18 11:52

    he he he, oh the greedy. It's so funny, how much money could you possibly want!!! I guess if you don't know how to handle money you'll always want money because you'll never have money. Damn just bought that island, sorry can i con anyone out of a few billion? What's the use, you're going to die sometime and then what? and the years you spend in jail before you die, is it really worth it??? Guess it is hey.

  • DandyLion - 2011-04-18 11:55

    Why was this "Indian" investing so much money in South Africa when India is also and emerging country and desperately in need of investing as well. Oh well, I guess the Indian govt is just as corrupt as SA;)

      Greg - 2011-04-18 23:28

      Stupid comment. You put your money where the possible returns are higher. In this case it turned out to be a con.

  • DeonL - 2011-04-18 12:15

    It is not a sin in wanting to be rich, buit a lot of people are trying short cuts to riches, this rarely works or very rarely these riches stay with a person. Rather accumulate wealth steadily over 30 years.

  • Blikskottel - 2011-04-26 06:46

    I cannot wait to see the names of those businessmen and their political affiliations.

  • Peter - 2011-06-02 15:12

    Isn't it the charras that normally con other people? Now for a change the shoe is on the other foot.....hahahahaha.

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