The managing director of a company awarded a R13 bn state tender has been found unfit to run a body corporate.
|||Cape Town - The managing director of a local solar energy company that was awarded a R13 billion state contract has been found unfit to run a body corporate.
The Western Cape High Court placed the body corporate of the luxury Cape Royale – on the site of the landmark Claridges Hotel on Somerset Road in Green Point – under administration last week owing to fiduciary failure on the part of the trustees. Chairman Pascal Phelan and the only other trustee Bettina Heiberg were found to have failed in their fiduciary duty to the body corporate.
Irish national Phelan is also the managing director of Solar Capital, a local solar energy company which recently won the multi- billion contract from the Department of Energy and Eskom to build one of the world’s largest solar farms in the northern Cape. Solar Capital’s chairman is Danny Jordaan (ex-chief executive of World Cup) while Bobby Godsell (a former chairman of Eskom) is a director. Agang leader Mamphela Ramphele is the former chairwoman of the board.
However, it has emerged that the application to have the Cape Royale body corporate placed under administration was filed in June last year and apparently was not disclosed to the Department of Energy. According to the qualification criteria to bid for a tender from the department, each member of the bidder must disclose “the extent of any material pending or threatened litigation or legal proceedings in which it is involved or has been involved in during the last five years”.
Earlier this year Phelan was also involved in litigation with “Sushi King” Kenny Kunene’s business associate, Gayton McKenzie. He took McKenzie to court to recover outstanding rentals of R450 000 for the nightclub ZAR Lounge, which used to trade from the hotel’s premises. Phelan later withdrew the application.
When asked if he had disclosed the Cape Royale matter to the department, Phelan said: “I am a second respondent. It didn’t appear on my radar, much as a traffic fine wouldn’t.”
When asked if he had disclosed the McKenzie matter, he first said the application had been brought by one of the companies in his group, but then said: “Our legal firms deal with these things. I simply don’t know. I will check whether we were required and whether we did.”
Thandiwe Maimane, the chief director of communications at the Department of Energy, said yesterday it was not aware that Phelan had been involved in litigation and said the matter had been referred for legal advice. “The concerned party will be given the opportunity to respond to the matter, whereupon the department will be in a position to respond,” she said.
Phelan, who made his fortune in the beef industry in Ireland, moved to Cape Town in 2002 and soon made headlines when he bought the famous Claridges Hotel for just over R18 million and announced grand plans to revamp the building at a cost of R120m to turn it into one of South Africa’s most luxurious getaways with a 90-room boutique hotel and adjoining luxury apartments.
The colourful Phelan had already made a splash with his Mars 2112 restaurant in New York which, apart from being the largest eatery in the Big Apple, had patrons agog with its “out of this world decor” which saw diners enjoy an interactive experience, including a simulated trip to the Red Planet.
According to a statement issued by Solar Capital in November last year, the company won a R13bn deal to supply the energy grid with electricity generated from a 75 megawatt photovoltaic solar farm being developed in the Northern Cape. The deal is the largest solar bid allocation in round one of the Department of Energy’s renewable energy independent power producer procurement programme.
The De Aar farm will have one of the world’s largest solar farms with four million panels upon completion and will generate enough electricity to power approximately 14 000 homes every year, Solar Capital’s website says.
Handing down judgment in the Cape Royale matter in the Western Cape High Court last week, Judge Vincent Saldanha said Phelan and fellow trustee Heiberg had failed to carry out their fiduciary responsibilities to the body corporate, and that Phelan had failed in his capacity as chairman to ensure that his interests – in the developer and in a company that provided services to the body corporate – did not compromise or impact on his financial duties to the body corporate. Phelan and Heiberg, who is employed by Phelan, are the only two trustees.
Owners of units in Cape Royale have been involved in a dispute with Phelan since early last year over complaints relating to the management of their properties in the body corporate. This culminated in one of the owners applying to court to have the body corporate placed under administration.
The applicant, represented by Michalowsky, Geldenhuys & Humphries, and supported by 26 other owners, alleged that Phelan and Heiberg were guilty of gross neglect and incompetence, and conflicts of interest.
Weekend Argus