The liquidators of Regiments Capital have raised worrying concerns about an alleged conflict of interest on the part of Eugene Nel, curator of more than R1-billion in restraint assets belonging to the company’s owners, their family trusts and subsidiaries.  

The assets are under a Prevention of Organised Crime Act restraint order pending the outcome of criminal proceedings.  

The liquidators, Willem Jacobus Venter and Kagiso Dinaka, say Nel handed power of attorney to Smit Sewgoolam Inc at the first meeting of creditors, held over several days in early October.  

The law firm manages many of the legal battles involving companies in the Regiments group and their owners, Litha Nyhonyha and Niven Pillay, following revelations that the company had allegedly paid kickbacks to Gupta-linked letterbox companies to secure public sector work. 

While Regiments Capital is in liquidation and under the care of Venter and Dinaka, Nel is the court-appointed curator tasked with overseeing the broader estate under restraint.

Details of the liquidators’ claims are contained in an extraordinary lawyer’s letter they sent to Nel on October 3. They also deemed it necessary to send the letter to the National Prosecuting Authority (NPA).

It reads: “Further, there was a material development of which you are fully aware, which we believe the NDPP [National Director of Public Prosecutions] does not know about. This is namely that the first meeting of creditors of RC [Regiments Capital] has taken place in the meantime and was concluded on 6 October 2022. 

“At this first meeting of creditors you have, inexplicably, provided a power of attorney to Smit Sewgoolam to, in your name, attend the proceedings and vote on behalf of various claims.” 

Visit Daily Maverick’s home page for more news, analysis and investigations

The liquidators say it emerged at the creditors’ meeting that the National Director of Public Prosecutions was unaware that Nel had given a mandate to Smit Sewgoolam Inc. It was with much concern, they say, that they noted Nel’s mandate to the law firm to, inter alia, attack the claims of creditors, including one from the SA Revenue Service. (Regiments is involved in ongoing litigation against the SA Revenue Service).  

They believe Nel’s decision to hand power of attorney to the law firm representing various Regiments entities placed him in a position of conflict. How the law firm could have accepted Nel’s mandate to ensure that his interests (as curator) were protected at the creditors’ meeting while also acting for Regiments entities whose assets Nel is tasked with preserving would need to be explained by the law firm in due course, the letter states.  

However, they said it was not clear who had paid for the “expensive legal team” that attended the first creditors’ meeting for Regiments in view of claims by four Regiments companies that they do not have money for litigation.  

Venter and Dinaka, in their letter, said they were “perturbed” by Nel’s decision to sit out a high court challenge by the four: Regiments Fund Managers, Regiments Securities, Ash Brook Investments 15 and Coral Lagoon Investments 194. 

The directors of Regiments have been engaged in a prolific wave of litigation and now, through the application filed by the four companies, seek money to fund their legal battles against the South African Revenue Service, the City of Johannesburg, Capitec Bank Holdings and Lebashe Investment Group as well as the NPA.

Given Nel’s decision not to oppose the application, the liquidators took it upon themselves to compile a comprehensive account of various court cases the Regiments companies are involved in, their status and their views on their prospects. 

They also highlighted cost concerns, given that the Regiments parties have suffered several defeats at court and have racked up cost orders that may ultimately land up at their door, as liquidators. 

The NPA used the letter in support of its application for a postponement of the court hearing at which the funding application was to be heard on Wednesday, 16 November. But while the content of the letter is worrying and indicative of serious tension between the liquidators and Nel, it is not in affidavit form.  

The court gave the NPA until 7 December to obtain an affidavit from the liquidators so the claims can be responded to and tested as evidence in court. The liquidators charged that the Regiments owners are engaged in reckless litigation and appear to disagree with Nel’s approach to simply abide by the court’s decision in respect of the funding application.  

“We are of the view that the supine attitude adopted by you by simply abiding, is not what your appointment as a curator requires. At the very least, an enquiry into the merits of the various matters, your independent view as to whether such matters may be funded, or not, (to the extent that this is legally permissible considering the contentions advanced by the NDPP), and an evenhanded and objective approach was necessary. Your decision to simply abide, exposing the protected assets to costs orders being granted against them, needs to be reconsidered.” 

The Regiments restraint order dates back to November 2019 and is still hailed as one of the most significant early strikes by the NPA’s Investigating Directorate, then in its infancy. It has been a relentless battle between the parties since then and it’s far from over.  

The NPA only recently initiated charges of fraud, corruption and money laundering against Regiments Capital’s owners and some of their companies. Only upon a successful prosecution can the State bring an application to confiscate assets, and given the Regiments owners’ appetite for litigation, it might take years before the entire matter is concluded. DM