The content of a letter from lawyers for the liquidators of Regiments Capital sent businesspersons Litha Nyhonyha and Niven Pillay into a tailspin ahead of a vital court hearing on Wednesday.

The two desperately need money to fund several expensive court cases, and yesterday’s expedited hearing was expected to deal with an application by four of their companies for access to cash from their restrained estate to pay for lawyers.

It includes their battles against the South African Revenue Service (SARS), the National Prosecuting Authority (NPA), Capitec Bank Holdings, the City of Johannesburg and Lebashe Investment Group.

Damning letter

But instead, the NPA struck back with a postponement application due to the emergence of startling information contained in the liquidators’ letter. The NPA submitted, into the court record, the damning 15-page letter from the law firm Tintingers Inc, acting for the liquidators, Willem Jacobus Venter and Kagiso Surprise Dinaka.

Dated 31 October 2022, it had been sent to curator Eugene Nel, as well as the NPA, which is opposing the funding application by Regiments Fund Managers, Regiments Securities, Ash Brook Investments 15 and Coral Lagoon Investments 194.

Nel oversees assets belonging to Regiments, its owners, their respective family trusts and subsidiary companies due to a restraint order that the NPA obtained in terms of the Prevention of Organised Crime Act.

The letter levels damning allegations against the Regiments companies and accuses them of having money only for litigation that suits them, of litigating for ulterior purposes and of trying to keep liquidators from properly scrutinising Regiments Capital’s income and payments to Gupta-linked front companies.

The liquidators, who are party to some of the matters in which money is sought by the four Regiments companies, also accuse them of having made misrepresentations and of material non-disclosures based on affidavits submitted to court for legal fees. 

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An affidavit by the Asset Forfeiture Unit’s Richard Chinner, in a summary of the letter, says Regiments Capital, in liquidation, is the sole shareholder of Regiments Fund Managers (RFM), one of the applicants in the case. 

“I respectfully submit that all the matters raised by the liquidators bear directly on the merits of the application which is currently before this court,” states Chinner.

And the liquidators are of the view that at least some of the litigation for which they seek funding is unnecessary, reckless and aimed solely at delaying matters.

Chinner says the letter states that Regiments Capital does not endorse the funding of RFM’s litigation as it achieves nothing except to delay processes in the long run.

“The liquidators do not consent to the funds of RFM being used in respect of High Court litigation embarked on for ulterior purposes,” says Chinner.

He highlights a number of those cases, including an application for the removal of the liquidators, and another, to review SARS’ audit findings of Regiments Capital. The removal application is, court papers state, an attempt by the Regiments entities and/or those who control them to keep liquidators from investigating, inter alia, Regiments Capital’s income and payments to various letterbox companies and associates, in what is alleged to be an unlawful and corrupt scheme.

Besides, even if the liquidators were to be removed, this would not take away the SARS claims, as the litigation for which funding is sought relates only to a procedural issue.

‘Avoidance manoeuvres’

Liquidators believe the review application is aimed at avoiding an investigation into the real nature of the underlying transactions which form the basis of the SARS assessments.

SARS contends that the transactions in issue were fraudulent or corrupt payments made to so-called letterbox companies for services that were never rendered.

This was allegedly done simply to assist Regiments Capital in siphoning off, under various false facades, funds unlawfully obtained as part of the greater State Capture theme for, ultimately, Gupta allies.

“It is unconscionable that assets should be released to further this litigation,” reads Chinner’s affidavit.

Even if the review is successful, the only consequence of that will be that SARS will then immediately deliver a letter of findings on Regiments Capital, and the liquidators will then have to deal with that letter of findings, by imploring the directors to provide them with sufficient facts to deal with the underlying bases of the assessment.

There is no indication that the directors intend to cooperate in that process. They have failed to tell the court (in the funding application) that they have steadfastly refused to meet the liquidators to discuss the SARS claims.

Pillay’s answering affidavit

While the letter makes highly damaging claims about those who control Regiments Fund Managers, Pillay, in a hurriedly filed answering affidavit for the postponement application, accused the NPA of trying to derail their efforts at acquiring funding for the various ongoing legal cases.

The letter in question, Pillay said, was never even directed at them and was only brought to their attention in early November when the NPA sent it to their lawyers. He said it was reckless of a state litigant to institute a last-minute postponement application based on the mere hearsay claims of persons who were unprepared to commit to their veracity under oath.

“The postponement application is not made in good faith but seeks an en passant postponement of the matter given the timing of the postponement application itself. A postponement is not in the interests of justice,” said Pillay.

Geoff Budlender SC, for the NPA, told the court the National Director of Public Prosecutions (NDPP) had a duty to make the “bombshell” letter available to the court. The allegations contained in the letter go to the heart of one of the matters for which they seek funding. Budlender said it would have been irresponsible for the NDPP to ignore this information or not bring it to the court’s attention.

The NPA had initially, via correspondence, tried to get the Regiments directors to agree to a postponement of Wednesday’s hearing to allow them to respond to the content of the letter. However, those efforts came to nought, prompting the application for a postponement. 

Judge Dario Dosio granted the postponement, ruling it was indeed in the interest of justice for the liquidators to provide an affidavit to confirm the content of the letter. He gave the NPA until 7 December to obtain and submit this. The Regiments owners will have until 1 February 2023 to file their answering affidavit, and a new date for the hearing will likely flow from there.  

The letter is “material” to the main application for funding, Judge Dosio said.

Regiments Capital was placed into liquidation in 2020 by creditor  Vantage Mezzanine Fund, and its owners continue their legal challenge of this decision.

Pillay and Nyhonyha have always argued that the liquidation was not warranted because there was more than enough cash in the estate to satisfy all creditors had it not been for the restraint obtained by the Investigating Directorate of the NPA. DM