Report 68 Business Practices Committee8. GCl's Response to the Meeting of 21 September 1998 |
GCI addressed a letter to the Committee dated 25 September 1998. The letter was signed by Dr Fred de Beer, the "Assistant Financial Manager". This person apparently was the father of de Beer. It was inter alia stated in the letter that the directors' shares were to be consolidated into 4 000 shares and that all future correspondence should be addressed to Botha or de Beer.
The letter also contained a rather lame excuse about the telemarketers. It was stated that Botha came to know about the telemarketers during the meeting with the official on 21 September 1998 and he immediately put a stop to it. The writer of the letter stated that a marketing company was contracted to market the products of two subsidiaries of GCI, namely VAC 2001 and Cell-Clip. The marketers "...knew about the registered prospectus" of GCI and they thought that "... they could help the broker". The incidence was due to a "misunderstanding".
Also attached to the letter was a list of "subsidiary companies" of GCI. The subsidiaries are listed below and the percentage shareholding of GCI in the subsidiary is indicated in brackets.
Beamress (Pty) Ltd (100%). Botha was the designated managing director of this non-operational company.
Bigfoot Holdings (Pty) Ltd (90%). Burger was the managing director of this company. BOTHA SAID THAT GCI PAID ±R300 000 FOR ITS SHARES IN THIS COMPANY. BOTHA AND BURGER SAID THAT SHEEP WERE BOUGHT BY GCI FOR BIGFOOT HOLDINGS. THESE SHEEP, ACCORDING TO BURGER, WERE LATER SOLD AT A LOSS. BURGER PROMISED TO HAND OVER THE ACCOUNTING BOOKS OF THIS COMPANY TO OFFICIALS OF THE COMMITTEE BY 11 NOVEMBER 1998. HE FAILED TO DO SO.
Bottom Line Holdings (Pty) Ltd (51%). Other shareholders in this company were Erasmus (10%), Burger (20%) and Bosch (9%). BOTHA SAID THAT GCI PAID ±R20 000 TOWARDS THE ESTABLISHMENT COSTS OF THIS COMPANY AND IN TURN RECEIVED 51 PERCENT OF THE SHARES.
Cell-Clip (Pty) Ltd (51%). ACCORDING TO BOTHA GCI OBTAINED 51 PERCENT OF THIS COMPANY BY PAYING THE ESTABLISHMENT COSTS. GCI ALSO ADVANCED A LOAN OF R150 000 TO THE COMPANY. GCI's INVOLVEMENT WITH THE COMPANY WAS INITIATED BY BRUYNS.
Colour Me In Copy Shop (100%). THIS COMPANY DID NOT TRADE AT ALL.
Corpro (Pty) Ltd (51%). This company acts as project consultants. Bruyns holds 9 percent of the shares in Corpro. On 8 October 1998 Corpro wrote to the directors of GCI claiming substantial amounts from GCI. It was alleged in the letter that Corpro was appointed by GCI to manage the projects involving Cell-Clip, VAC 2001 and Meritas. It was alleged that GCI was guilty of malpractice ("wanprestasie"). Also on 8 October 1 998 Bruyns wrote a letter in his personal capacity to the board of directors of GCI. In this letter he stated inter alia:
| 1) | "I was totally dismayed upon reading the report submitted by (auditor of GCI) about the material irregularities that have taken place in the Company and which is likely to cast financial loss to the Company or it's Shareholders as well as Creditors. |
| 2) | The fact that information was withheld from most of the ex directors, even when they were sitting on the Board of Directors, is a major concern of myself and the reason for this is now very clear to me. |
Therefore I have no alternative but to serve this written notice on the Company calling on the Company to institute such proceedings within 1 (one) month from the date of service of this notice, to recover damages, loss or benefit that was suffered by the Company and I wish to initiate this proceedings on behalf of the Company against the current Board of Directors as well as Mr. P Sadie, previous executive chairman and Director of the Company and Mr. J F de Beer, Company Secretary and Financial Manager.
Failing to do so an application to the Court, according to paragraph B of Section 266 of the Companies Act, No 61 of 1973, will be made".
GCI Beef Ltd (90%). This company never traded.
GCI Information Technologies (Pty) Ltd (51%). Other shareholders were Corpro (49%). Sadie was apparently involved with this company and Botha said that ± R160 000 worth of electronic equipment was given to Sadie.
Grootfontein Game Estate (51%). BOTHA SAID THAT NOTHING CAME OF THIS VENTURE.
Market Place Holdings (Pty) Ltd (78%). The other shareholder was Mr. X, a friend of Burger. BOTHA SAID THAT THIS COMPANY NEVER GOT OFF THE GROUND.
Market Place Investments (Pty) Ltd (76%). Other shareholders were Mahlangu (6%), Van Oudtshoorn (6%), Erasmus (6%) and Bosch (6%). BOTHA SAID THAT GCI SPENT ± R140 000 ON THIS COMPANY WHICH NEVER CAME OF THE GROUND. Botha was the managing director of this company.
Meritas (51%). This company also never traded.
Shimmy Shine (R) TM Auto Care (51%). This company also never traded.
Tellnelle Investments (Pty) Ltd (100%). Botha was the designated managing director of this non-operational company.
Vac 2001 Manufacturing (Pty) Ltd (51%). BOTHA SAID THAT IN TURN FOR THE 51 PERCENT SHARES IN THIS COMPANY, GCI PAID ± R500 000 TOWARDS THE ESTABLISHMENT COSTS OF THE COMPANY. GCI ALSO ADVANCED A LOAN OF R50 000 TO VAC 2001. THIS INVESTMENT WAS INITIATED BY BRUYNS.