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ConCourt unlikely to overturn Ezulweni liquidation order – but it could buy time for the ANC

ConCourt unlikely to overturn Ezulweni liquidation order – but it could buy time for the ANC
Illustrative image | Sources: ANC president Cyril Ramaphosa outside Luthuli House, Johannesburg. (Photo: Felix Dlangamandla / Netwerk 24) | ANC election posters in Johannesburg. (Photo: Frank Trimbos / Gallo Images) | Luthuli House. (Photo: Gallo Images / Lubabalo Lesolle)

Ezulweni Investments threatened to have the ANC liquidated over a R102m debt, but has agreed to wait for the party’s appeal in the Constitutional Court.

The ANC has little chance of success in the Constitutional Court where it intends to contest several court orders compelling it to pay the R102-million debt, plus interest and costs, it owes to Ezulweni Investments.

This is according to legal expert Mpumelelo Zikalala, who said the decision by the highest court in the land was likely to follow the same trajectory as previous rulings made by lower courts, which all ruled in favour of Ezulweni.    

The small KwaZulu-Natal-based company printed election banners and other campaign material featuring President Cyril Ramaphosa, which helped clinch a win for the party in the 2019 elections.

Ezulwini has now secured four attachment orders against the ANC. Its owners incurred debt to quickly produce the party’s banners before the 2019 election, but have never received payment, while the election material gathers dust in storage.  

To date, three courts have ruled that Ezulweni Investments had a binding contract with the ANC and that the party owes millions of rands for the supply of election banners ahead of the May 2019 general elections.

Asked if the ANC had any merits in heading to the Constitutional Court, Zikalala said the party would have to make a special application to bring new evidence.  

“I think the ConCourt is also going to come back and say we are dismissing your matter…” said Zikalala.

Previously, Ezulweni applied to seize assets worth more than R102-million from the ANC after the party refused to pay it, despite two judgments in the company’s favour: one handed down in September 2020 and an appeal heard by a Full Bench of the Gauteng Division of the High Court in Johannesburg, in June 2022. 

In the latest judgment last week, the Supreme Court of Appeal, Judge Trevor Gorven said the party’s version that it had no contract with Ezulweni Investments was “utterly untenable”.

“The denials of the ANC fall into the category of bald, uncreditworthy denials designed to create fictitious disputes of fact,” said the judge.  

The court also declined an application by the ANC to lead further evidence during its appeal in the form of a forensic report, Daily Maverick reported.

Read more in Daily Maverick: ANC liable for over R100-million in 2019 elections banners fiasco – Supreme Court of Appeal ruling

Zikalala said the move by the ANC to approach the Constitutional Court could be a tactic to buy itself more time – at least until 2024, and to possibly persuade the Ezulweni legal team to enter into some kind of settlement.  

Daily Maverick understands that ANC Treasurer-General Gwen Ramokgopa had previously met the company owners in a bid to settle the matter out of court.

However, the talks fell through as the party offered them a “ridiculous” amount of money on the basis that they would hire the same company for the 2024 elections, and then settle both accounts in small portions.

Attachment order

On Monday, the ANC blocked access to the Sheriff of the Gauteng Division of the High Court in Johannesburg, which sought to attach the party’s physical assets.

National spokesperson for the ANC, Mahlengi Bhengu-Motsiri, hit back at the attempted attachment order, which she said was an attempt to create a  spectacle where none had been warranted.

Read more in Daily Maverick: ANC in trouble as high court sheriff attempts asset seizure over R102-million election banner debt 

“The ANC finds it curious that despite our legal team communicating with their counterparts in Ezulweni Investments to stay the application of the court order pending our appeal, failed attempts were made to proceed with the attachment order.”

Bhengu-Motsiri also poured cold water on suggestions that the party’s finances were once again in a shambles. 

Previously, the party’s website crashed when it failed to pay a service provider, and its archive is now hosted under a different domain name. In 2021 and 2022, staff held regular protests at Luthuli House for unpaid salaries, UIF and pension contributions. 

“For the record, the ANC has since the beginning of 2023 met its financial obligations to staff members and all creditors with whom the party had historical debt. This verifiable information includes paying off the South African Receiver of Revenue debt, bank and municipal bills, and other service providers.”

To support the assertion that the party is in a good financial position, Bhengu-Motsiri said it had held several conferences, including provincial, Youth, Veterans’ and Women’s League conferences, with suppliers fully paid.  

“In relevant instances, we remain committed to paying off any other outstanding debts once payment arrangements are finalised,” she said.  

The party claims it will not pay Ezulwini as a matter of principle, as it believes there were criminal elements in the handling of the contract with the media company.

The ANC commissioned an internal forensic report which it says confirmed its suspicions and has led it to file criminal charges against some of its members.

“In the case of Ezulwini Investments, there are several procurement processes and policy breaches that, on the face of it, are tantamount to irregularities, possible corruption and fraud.

“Therefore, in fulfilment of the ANC’s renewal agenda, as mandated by the 55th national conference, we believe it is pertinent to pursue all possible legal avenues to reverse questionable actions of the recent past,” Bhengu-Motsiri said.

Threats of liquidation

Political analyst Dr Ntsikelelo Breakfast said he was not convinced the party was in a good financial position or could afford to pay Ezulweni, as it needed every cent to strengthen its campaign for the upcoming 2024 elections, and also finance the January 8 statement annual event. 

He argued that the party had not recovered from a major blow in 2021 when the Political Party Funding Act kicked in.

The legislation requires that all parties declare and provide details of all donations exceeding R100,000, loans, membership fees and income, as well as lists of bank accounts into which this money is deposited, to the Electoral Commission of South Africa (IEC). 

The ANC, and other parties, have suggested the law has deterred large donors.

With the ANC’s electoral support expected to drop below 50% for the first time in its history, Breakfast warned that this debacle would cause further problems for the party.  

Ezulweni’s legal team gave the ANC until the close of business on 6 December to pay the full judgment debt into its attorney’s trust account, failure of which would see Ezulweni Investments begin with the liquidation process, which could seriously jeopardise the party’s chances of contesting the 2024 elections.

“This organisation is not going to be liquidated by any stretch,” said Bhengu-Motsiri.

Ezulweni has since backtracked from its plan, pending the outcome of the Constitutional Court application.

Co-owner of the business, Peter Fernando, said: “Ezulweni will abide by the rule of law as it has consistently done over the years and in the proper forum and deal with the ANC’s application for leave to appeal to the Constitutional Court and whatever else the ANC conjures up in its attempts to avoid payment.” DM

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