Zeltdown! Western Province Rugby Football Union on verge of administration
The Western Province Rugby Football Union faces being placed under administration by governing body SA Rugby after a series of catastrophic management decisions by president Zelt Marais.
First published in the Daily Maverick 168 weekly newspaper.
The Western Province Rugby Football Union (WPRFU) could be placed under administration “soon” as it is unable to satisfy requirements that it is a “going concern” because of a series of management failures.
Under the presidency of Zelt Marais, the union has gone from one crisis to another and is now at the point where it faces financial ruin because of a damages lawsuit of more than R500-million.
SA Rugby (Saru) have done exhaustive legal research, at great cost, to make sure that if – which is looking increasingly like when – they step in, there can be no legal challenges.
Clause 29.1 of Saru’s constitution gives the mother body the right to take over the running of a union if it fails to meet several criteria.
The verbose legalese of the clause states: “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.”
On every count in that clause, the WPRFU and, by extension, its professional arm, Western Province Professional Rugby (WPPR), are failing.
Saru’s first step would be to suspend funding to the union, which would add to its already dire position and then to suspend the WPRFU as a member of SA Rugby.
Saru would then assume the responsibilities of running the union and would have the power to invoke “suspension from office of their elected and/or appointed officials, and the appointment by Saru of administrators, who shall assume all decision-making powers of the unions at both governance and operational levels, and who shall have the authority to direct employees, including chief executive officers, on a day-to-day basis”.
In other words, all WPRFU’s governance structures would be removed and Saru would appoint an administrator who would ensure that decisions were made in the best interests of the union.
Staff, suppliers and players would be paid with existing budgets and, if there wasn’t money to pay, the administrator would develop a business rescue plan if needed. Once the administration period was over, and timeframes vary, then the union would be able to hold elections.
Saru are still administering the Border Rugby Union and recently handed back the Eastern Province Rugby Union from administration after it fell into financial instability.
It’s not a step Saru takes lightly, or willingly, and it is only a last resort because it puts more financial strain on the mother body, which is itself buckling under the impact of Covid-19.
Marais was finally called to a vote of no confidence on 20 September, but he refused to allow the province’s 90-odd clubs to vote, fighting the move on procedural grounds. The meeting descended into chaos and the vote never took place.
But on 21 September, five members of the WPRFU executive committee – vice-president Ronnie Bantom, Reuben Riffel, Quintin van Rooyen, Mario Williams and Anele Zita – filed an urgent application at the Western Cape High Court to have Marais removed. The outcome of this move was unknown at the time of writing.
Marais has centralised his power and has become an authoritarian figure who is not only president, but also chairs the finance committee.
He has also acted as a de facto chief executive of the professional arm of the union, further muddying the waters. He has presided over three botched property deals to sell the development rights to Newlands Stadium and a failed equity deal, which has left the union on the brink of financial collapse.
Marais has, in recent days, tried to present himself as a strong leader by appointing a so-called “war room” of experts to help the union out of the malaise it finds itself in. Besides being a completely nonsensical entity filled with people with questionable credentials to “save” the WPRFU, the problems the union faces have almost all come from Marais. It’s like asking the prisoners to guard the jail.
There have been numerous resignations and removals of people who questioned Marais over the years. The establishment of this “war room” has completely bypassed constitutional structures at the union, adding more confusion than clarity.
It has reached the point where Ebrahim Rasool, chairperson of the WPPR, openly exposed Marais’ folly and dangerous grip on power in a letter of scathing clarity: “One year ago, I was invited by Mr Marais to join the board of WPPR as chairperson. When board members started resigning, equity deals failed, players threatened to leave, and extraordinary persuasion was needed to keep sponsors on our side, I realised that the reality confronting me was different from what I had expected. It did not make things easy when I further realised that the president of WPRFU was central to everything that was happening.
“The board and I have done our utmost to serve WP Rugby, but because we have the WPRFU as a sole 100% shareholder, we did not have control of some crucial aspects of the initiatives we started.
“Where we had some control, we worked diligently: we persuaded our sponsors to stay with us, even if the terms of staying were highly conditional. They nevertheless went ahead and invested about R50-million in WPPR,” Rasool wrote.
“For the areas where we did not have influence, we were often just fire-fighting: as we were about to find some agreement with MVM Holdings, the negotiations ended with them going to the Sharks, taking with them two of our key players.
“That was after the WPRFU president [Marais] mischievously inserted a line in a press announcement wrongly quoting Mr Masotti [MVM chairperson] as apologising to him for negotiating in bad faith. A press interview by the president with Rugby365 resulted in us having to apologise unconditionally to former directors who were about to sue us for defamation, promising them that the president would no longer address the matters in question in the media.
“On the matter of property deals, we were helpless spectators for a long time to threats by Flyt/Dreamworld to sue for astronomical damages, while holding the union’s title deeds over all its properties. Our hands as the board were tied, as property matters were in the realm of the shareholder,” Rasool wrote.
In May 2020, Marais walked away from concluding a deal with Investec’s property division for the development rights to Newlands Stadium. There were signed heads of agreement and Investec had already advanced R50-million to the WPRFU.
Instead, in June 2020, Marais unveiled little-known Flyt Property Investment as the WPRFU’s new “partners” in the redevelopment of Newlands and another property called Brookside. The WPRFU’s 11 properties were bonded to Flyt as security for a R113-million loan on signing.
Now Flyt is suing the WPRFU and its trustees for R388-million in damages and also claiming back its loans of more than R113-million, according to court papers lodged this year. The deal turned sour within months because Marais attempted to change the terms of the agreement after Flyt had paid more than the R113-million loan.
If Flyt is successful, the WPRFU would cease to exist, because it simply cannot afford such catastrophic losses.
Subsequent to Flyt’s legal action, a new property development entity entered the equation, the unknown Staytus. It plans to replace Flyt as Newlands’ development partners with the WPRFU. Staytus offered to pay Flyt a settlement fee of R205-million to drop the lawsuits. This was accepted by the WPRFU exco and by Flyt. Marais, though, despite the mandate from his exco, refused to accept the “term sheet”, stalling the deal.
There are no easy options available at this point as Marais continues to ruin every potential deal to pull the WPRFU back from the brink of collapse.
The clubs have failed to oust him and other concerned entities, such as headline sponsor DHL, are on the brink of suspending their support.
Unless there are dramatic developments in the next week, Saru’s intervention appears to be the best way forward if the WPRFU is to survive. DM168
This story first appeared in our weekly Daily Maverick 168 newspaper which is available for R25 at Pick n Pay, Exclusive Books and airport bookstores. For your nearest stockist, please click here.