Report 68 Business Practices Committee6. Subsequent Events |
| 6.1) | The section 4(1)(c) investigation resumed |
On 14 July 1998 the Committee resolved that the section 4(1)(c) investigation into the business practices of GCI be resumed. The reason for this resolution was that GCI failed to comply with the requirements set by the Committee on 28 May 1998. The following serves to illustrate the apparent reluctance of GCI to cooperate with the Committee.
The Committee wrote to Van Wyk, by that time non-executive chairman of GCI, and reminded him about the resolution taken by the Committee at its meeting on 28 May 1998. The outstanding issues were the non-availability of the latest audited financial statements and the unresolved issue about the 400 million shams held by the directors. This letter was also delivered by hand at the offices of GCI. GCI did not respond to this letter. It was later learned that Van Wyk was preparing for examinations and was absent from office.
The Committee wrote to Botha. He was informed about the resolution of the Committee at its meeting on 14 July 1998 that the section 4(1)(c) investigation into the business practices of GCI be resumed.
The Committee received a letter from de Beer. Included in this letter were unaudited management accounts and not the audited financial statements. The question of the 400 million shares was not properly addressed.
The Committee again wrote to Botha and stated that the two issues were still unresolved. He was asked to call an official urgently to arrange for a meeting. This letter was faxed to GCI at 08h31 on 31 July 1998 and delivered by hand to GCI at 12h00 on the same day. The official, when delivering the letter, was told by the secretary of Botha that he was in the office but was having discussions with "people".
The Committee received a letter from Botha stating inter alia:
"Your letter has been delivered at our offices on Friday morning 31st July 1998 and I really did not have the time to attend to it during the day since I was not at the office. Mr. JF de Beer, the financial manager and myself will not be available until the 18th August 1998. I wish to advise that on our return my office will call (the name of an official if the Committee) of the Business Practices Committee to arrange a meeting as soon as possible".
Botha said in his letter that he was not at the office, but his secretary told an official that he was having discussions with "people".
An official called a's secretary and left a message for Van Wyk to call him back. He called the official at 12h50 and a meeting at 11h00 on 7 August 1998 at the offices of GCI was arranged.
The official held discussions with Van Wyk and again reminded him of the two outstanding issues. Van Wyk said that that audited financial statements were not available because of a change in the company's financial year end. The official also explained the Committee's subsequent concerns to him about the investments in some companies made by GCI as reflected in the "management accounts". The official told Van Wyk that the Committee would want to know more about these investments, such as the names of the others shareholders and the directors.
The Committee received a letter from Van Wyk. He stated inter alia that he learned with regret about the experience of the Committee in communicating with the management of GCI. Van Wyk requested that all correspondence be directed to him via the secretary of Botha. He further stated that Burger did not have all the information about the investments in the companies and Botha and de Beer were overseas. He therefore awaited the return of Botha. He also stated that he was communicating with the auditors regarding the allocation and values of the shares. He ended the letter by saying: "I have conveyed your concerns to Mr. Burger. Mr. Burger has expressed a sincere desire to set things right and do it the correct way".
The official called the secretary of Botha at 09h45. He referred her to the letter of Botha dated 3 August 1998 in which Botha stated: "I wish to advise that on our return to my office I will call (the name of an official of the Committee) of the Business Practices Committee to arrange a meeting as soon as possible". She confirmed that he had returned from overseas.
The secretary called the official at 11h35 and said that Botha would write a letter to the Committee addressing the concerns discussed with Van Wyk. The official told her that he wanted to discuss the matter with Botha personally. She said that she would get back to the official. By 30 August 1998 Botha had not called the official.
| 6.2) | The possibility of a section 8(1)(a) investigation |
On 2 September 1998 Botha was informed that, depending on the developments between then and 9 September 1998, that the Committee would resolve at its meeting on 10 September 1998 whether to undertake a section 8(1)(a) investigation. It was put to Botha that the management of GCI apparently avoided officials of the Committee and/or were unable to answer certain questions. Botha was also informed that Van Wyk was advised by telephone at 09h38 on 2 September 1998 of these developments.
On 9 September 1998 Van Wyk wrote to Burger. Van Wyk informed Burger that the Committee required information and that this information was not forthcoming. Burger was requested, as majority shareholder, to remove these obstacles ("gebreke uit die weg ruim").
On the same day the Committee received a six page letter from an apparently annoyed Botha. He inter alia said that GCI not necessarily conceded that it was involved in a harmful business practice, expressed his dismay and irritation about the Committee's concerns about the 400 million shares, and he expressed his dismay about the Committee's concern about the companies in which GCI invested, and that officials of the Committee contacted Van Wyk. The official was requested not to talk to Van Wyk, but that all communications with GCI should be directed to Botha or de Beer. Botha was asked to put this request in writing.