Why WPRFU 'liquidation' may be a ruse

Mon, 05 Dec 2016 23:10
Large thelo wakefield with mic 800

IN THE SPOTLIGHT: Next week Monday is D-Day for Western Province Rugby (Pty) Ltd. Jan de Koning reports on their polemical and spiny application for liquidation.

On Monday, December 12, the Western Cape High Court will decide whether the provisional winding-up order - granted last month - will be made a final order.

However, more 'evidence' has emerged to suggest claims by Constantinos Constantinou - the Chief Executive Officer of Aerios, an advertising partner of WP Rugby - that this is just a ruse, may be closer to the truth than what Western Province Rugby Football Union President Thelo Wakefield would publicly admit.

Constantinou, in court papers and in public statements, accused the WPRFU brains trust of 'widespread misconduct' and using a 'legal loophole' to obtain the liquidation and avoid a damages claim of around ZAR70-million.

The Aerios boss is opposing the application - certainly a major stumbling block for WP Rugby and the WPRFU - and believes he will be able to prove that they are guilty of 'widespread misconduct' and expose their duplicitous behaviour.

There are strong indicators that all is not above board.

WPRFU has already issued 'guarantees' to all players contracted to WP Rugby (Pty) Ltd - the supposed bankrupt commercial arm of the union - that it will continue to pay their salaries and benefits.

rugby365 has seen correspondence sent to the players in this regard.

The BIG questions is: 'If WP Rugby is indeed bankrupt, where are the WPRFU getting the money from?'

Keep in mind that WP Rugby is owned by WPRU (a 75.1 percent shareholder) and Johann Rupert's Remgro (24.9 percent). It is responsible for managing all of the commercial affairs of the union.

Given the correspondence to the players, it appears those commercial affairs have already been passed on to WPRFU.

And it has been suggested that Rupert (or Remgro) has put up the cash for WPRFU to provide the guarantees to the players.

Remgro, according to the Newlands rumour mill, is waiting for the South African Rugby Union to make adjustments to its constitution - which will allow private enterprises to have a bigger share in domestic unions and franchises.

Remgro's share could, overnight, go from 24.9 percent to the proposed 74.9 percent.

Several questions remain unanswered, with Remgro rather circumspect in their responses to enquiries about their involvement.

rugby365 forwarded a number of questions to Remgro:
1. A lot has been written about the application for liquidation and that WPRFU had taken over the players. Was Remgro, as a shareholder, kept in the loop of developments?
2. Does this in any way affect (change) Remgro's involvement in the running of the business - seeing as there is effectively no longer a professional/business arm looking after the players?
3. Are there any meetings planned between Remgro and WPRFU to discuss the relationship going forward?
4. Has Remgro been approached for financial assistance by WPRFU, given the union's dire financial status?
5. Will Remgro be interested in obtaining a bigger share in WPRFU, should such an offer be forthcoming?
 
Remgro CEO Jannie Durand gave very little away in his responses.

"Given the sensitive nature of the provisional liquidation of a company, Remgro is not currently in a position to provide answers to your questions," Durand told rugby365.

"Suffice to say that Remgro, as the minority shareholder of the company-in-liquidation and a long-standing supporter of WP Rugby, remains in contact with the Union on both the liquidation process and the way forward for WP Rugby."

More will emerge in court next week, but it is clear that the WPRFU/WP Rugby will not be able to walk away from this grotesque mess smelling like roses.

Court papers filed last month suggested WP Rugby suffered an operating loss of more than ZAR12-million in the 2015 financial year and that the commercial arm's overdraft facility with its bank is ZAR19-million.

Court papers also suggested WP Rugby will require a cash injection of almost ZAR70-million to pay off its debts to Aerios.

The Aerios boss, Constantinou, has made numerous public statement - apart from his opposing papers in court - to discredit WP Rugby and accused it of faking bankruptcy and having ulterior motives for doing so.

He said it is nothing more than a ploy by WP Rugby (WPRFU) to extricate themselves from what they consider to be a bad bargain with Aerios.

Disputes between Aerios and WP Rugby centre around advertising rights, sponsorship agreements, WiFi services inside the stadium and digital rights to live-stream matches.

Constantinou also claimed that WP Rugby had made several payments to his company this year, including ZAR2-million just days before the provisional liquidation - something, he feels, a bankrupt company would not be able to do.

By Jan de Koning
@king365ed
@rugby365

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