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S. African authorities question
Malta-based company’s role
by Ivan Brincat
Prominent figures in a company which traded internationally
through a Malta-based company should be prosecuted, documents
submitted by liquidators in South Africa suggest.
The documents which investigated LeisureNet’s affairs hints
at various irregularities.
The liquidation of LeisureNet, which traded internationally
through a company registered in Malta, Healthland International,
has been described as the largest corporate collapse in the
history of South Africa.
Healthland operated health clubs in seven countries, and LeisureNet
had a 57.8 interest in the group.
Meanwhile the Malta-based company which has an issued share
capital of £53,387,901 passed an extraordinary resolution,
last month, on 28 May 2001 for its dissolution and consequential
voluntary winding up.
On 6 June, Ronald Attard of Ernst and Young Ltd and Dr Arthur
Galea Salomone were appointed as liquidators of the company.
A report from Cape Town states that one question being asked
is whether LeisureNet’s business was viable from the start
and what role Healthland International played in it.
LeisureNet’s financial involvement in the expansion of
Healthland International, the company based in Malta was worth
more than £82m.
Healthland International Ltd was registered at the Malta Financial
Services Centre. The directors of the company were South African,
British and American with no Maltese involvement while the shareholders
were companies registered in the British Virgin Islands, Bermuda,
South Africa and
Australia.
The commission launched a
public inquiry in Cape Town last week.
Several issues are being investigated including the rapid growth
of the group, the swift international expansion of the Malta-based
company Healthland International and the dramatic increase in
interest-bearing debt among others.
In November last year, the Cape High Court had requested a commission
of inquiry into LeisureNet’s affairs in terms of Section
147 of the Companies Act. LeisureNet was listed in the hotels
and leisure sector of the JSE Securities Exchange.
In the opening statement by the liquidators’ legal representatives,
it was said that the company started doing business in 1990
as the Health and Racquet Club Group and that the original gyms
oper-ated by the company were financed by a debenture holder
scheme.
The debentures were not issued by LeisureNet itself. But the
claims for repayment were held against subsidiaries of Health
and Racquet Club Holding and later Sports Centre Holdings.
In November last year, the company owned 85 Health and Racquet
Club gyms with more than 900,000 members throughout South Africa.
It had more than 5,000 permanent and part-time employees.
The liquidators’ legal representatives of LeisureNet said
an investigation should be done into LeisureNet’s corporate
management. Two directors, for example, obtained a five per
cent interest in Healthland International at a nominal cost
which could have meant potentially large benefits.
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