INLSA
File Phtot: Sipho Shabalala. Picture: Sandile Ndlovu
The future of Pietermaritzburg’s City Royal Hotel hangs in the balance as its owners – former KwaZulu-Natal Treasury head Sipho Shabalala and his wife Ntombi – fight against a liquidation application sought by the Development Bank of Southern Africa for failing to pay off R12 million borrowed to buy the hotel.
In November 2011, the bank was granted a provisional liquidation order with all interested parties being given until January 16 to give reasons why the final winding up order should not be made final.
The hotel was seized by the Asset Forfeiture Unit in August last year after Shabalala’s arrest in connection with allegedly fraudulent tenders secured from the provincial health department relating to water purification plants and medical oxygen supplies.
Shabalala faces fraud and corruption charges in the matter, which has come to be known as the “Amigos trial”. His co-accused are businessman Gustav Savoi and former provincial health boss Busi Nyembezi
He is accused of “fraudulently” skirting procurement processes by flouting Treasury rules he was responsible for enforcing.
Payments were allegedly made from a lawyer’s trust account to entities Shabalala and his wife had interests in, including Blue Serenity Investments and Skyros Medical Suppliers. Blue Serenity owned a 70 percent stake in the City Royal Hotel.
Eleven people and seven companies are charged with corruption and money laundering in the matter.
The bank now says it wants to auction the hotel. It says it has received reports indicating serious dereliction of operational and business responsibilities at the institution.
An investigation had revealed that essential employees, including the bookkeeper and manager, had resigned because they were not paid their full salaries.
In January 2012, Shabalala’s legal team failed to file opposing papers. When the matter returned to court in February, his lawyers produced an offer by another company to buy the hotel, backed by a guarantee from a financial institution.
However, the bank’s legal team which questioned the bona fides of the loan agreement to buy the hotel, pushed for the finalisation of the liquidation and to have the hotel auctioned.
Shabalala’s spokesman, Vuyo Mkhize, said they did not favour an auction because Shabalala would be liable to pay the shortfall should the auction price not realise the total amount owed to the bank.
The matter was adjourned to a date still to be set to decide on whether to finalise the liquidation or allow the hotel to be bought by the new buyers.
The bank’s spokesman, Jacky Mashapu, declined to comment, saying the matter was sub judice. – The Mercury
