The powerful Attorneys Fidelity Fund will have an unusual item on the agenda when it meets later this month. It has to decide whether to report the former CEO of the Law Society of SA to the police for investigation into whether he was involved in a corrupt transaction.
Former CEO Raj Daya featured recently in an extraordinary case with the fidelity fund going after the seller from whom the fund and the law society bought property to house both their headquarters.
At the last minute the fund and the law society discovered that the outfit appointed to act as their agent in locating suitable property had a covert deal with Erf 49-1 Menlyn and Head Brothers Steel Fabricating & Engineering — collectively the seller — to take a grossly inflated commission to the amount of R5.5m.
The agent, Intibane Mediates’ Romeo Tshepo Ramothibe , died before the two organisations could act against him, and his business was deregistered. Since they could not sue Ramothibe over the commission, the two bodies decided to establish whether they had an action against the seller for not informing them of the deal struck with Ramothibe, and in that way could retrieve the R5.5m held in a trust account pending the outcome of the case.
Judge Sulet Potterill found in favour of the fidelity fund and ordered that the commission be repaid to the fund and the law society. She said that as agent for the law society and the fidelity fund Ramothibe should have served these two bodies in good faith. Instead he made a covert deal with the seller to the detriment of his principals.
The judge said the seller had a legal duty to inform the fund of the secret commission and that his real "bottom line" was much lower than the price the agent "negotiated" for the sale.
The seller should have told the fund that it (the fund) was being pressured to pay more to accommodate the secret commission deal between the seller and the fund’s own consultant.
As for the alleged role of Daya, the judge quoted argument by the fund in which it said he was implicated in the scheme between the seller and Ramothibe.
And in her decision the judge held that the seller, as an astute businessman, "knew that Daya was playing a part in the whole transaction that was untoward".
Daya had a five-year contract as CEO of the law society during the period the deal was negotiated, but his contract had expired by the time the case was brought to the high court.
He now works for the justice department as deputy chief state law adviser—chief director and secretary to the rules board.
Co-chair of the Law Society, Jan van Rensburg, was on the council of the fidelity board at the crucial time. He said it was decided not to take any action until the civil case had played itself out in the court. Now that judgment in the civil matter has been delivered, the fund’s council will have to decide what steps to take next.
Not having been cited as a party to the case, Daya has not had the opportunity to respond to these allegations and the judgment cannot stand as in indictment against him. But it does disclose the fund’s beliefs regarding his role.
Anticorruption legislation would oblige the council to report anyone they suspect of corrupt activities to the prosecuting authorities, and if the council decides that they have sufficient grounds to "suspect" Daya, they will be obliged to report their concerns
It’s not often that lawyers are the victims of sharp practice and this case is all the more exceptional because the intended victims were two of the most powerful legal organisations in SA.
You can read the judgment in Attorneys Fidelity Fund vs Intibane Mediates for yourself: it left me speechless.