The South African Reserve Bank (Sarb) is bringing the application, after an inspection by EY confirmed that Carmol was illegally conducting the business of a bank and a subsequent report from KPMG has found it is unable to cover its liabilities, which could be as high as R1 billion.
The “business of a bank” is simply described as soliciting deposits from the general public. Diesel ‘smokescreen’ While Carmol claimed to be involved in selling and distributing petrol and/or diesel products, “a regular feature of the Carmol business was, in fact, the carrying on of an unlawful deposit-taking scheme”, notes Registrar of Banks, Renè van Wyk in court papers.
Carmol’s directors include Yunus Moolla and his wife, Fathima Carawan. In February, the Sarb ordered Carmol to repay money collected from the public and appointed KPMG as the repayment administrators. Carmol has failed to do so and it appears that Moolla and Carawan have fled to Dubai. KPMG estimates that roughly R192.6 million can be recovered from Carmol, in the form of cash and other assets.
But Carmol’s liabilities exceed its assets by at least R385.3 million, court papers show, and the number could be much greater. The lower amount owed to investors is around R538 million, with the higher amount closer to R1.4 billion. KPMG has found that Carmol does not carry on business and is unable to generate profit to cover its asset shortfall, declaring it “technically and commercially insolvent”.
Van Wyk has also applied for the sequestration of Carawan and Moolla. Meanwhile, Dave Randles, an attorney at Durban-based TMJ Attorneys, has agreed to help investors pursue claims against Carmol.
“The dividend to creditors will depend on how many creditors can prove claims, and how much a liquidator can recover,” Randles says.