Cape Town — The South African subsidiary of German company MAN Ferrostaal has applied to the Cape High Court to liquidate an education and training trust, which benefited from a R25m loan as part of government’s arms procurement offset agreement, following allegations of fraud.

The application follows claims by Ferrostaal that the Atlantis Economic Development Trust, the chairman of whose board of trustees is prominent Western Cape African National Congress (ANC) MP Danny Olifant, was in breach of its loan agreement. The loan would have to be repaid immediately.

The agreement was that the funds advanced to the trust were to be used to build an education and training institute and that MAN Ferrostaal would earn credits with the trade and industry department as part of the armaments offset deal for the supply of three submarines.

Court papers revealed that three of the five trustees — Olifant, former CEO Quinton Pick and Rebecca Davids — were directors of a company called Quantum Leap, trading as Global Dinamix, which allegedly fraudulently invoiced the trust for nearly R3m.

It is also alleged that the trust withheld tax of about R1,2m from the South African Revenue Service (SARS) and from the Unemployment Insurance Fund, and used the funds for other purposes.

The matter has been opposed by the trust. The case was postponed to August 3 to give the trust and the trustees an opportunity to respond.

MAN Ferrostaal SA’s chairman, Zebulon Nkosi, said problems with the trust were causing “extreme embarrassment” for Ferrostaal. He said the trust, formed for the social upliftment of the Atlantis community, was clearly unable to pay its debts and should be wound up.

The debts owed included R339000 to a construction company, R23000 to a car company and R10000 to a catering company.

The trust has also tried to dispose of its property, which would have the effect of prejudicing other creditors. He said Ferrostaal had been defrauded out of certain sums by the trustees and, because of this, the full amount of the loan was now repayable under the agreement.

Wilfred Williams, acting CEO of the trust, said the trust’s liabilities were R2,5m and this had increased following the nonpayment of salaries to 31 employees.

Williams said he found that Ferrostaal had advanced R2,1m to buy property in Atlantis for the trust, but that the premises had not been bought. The property presently occupied had been donated by 3M SA to the Atlantis community.

Williams said various amounts were paid out of the attorney’s account to the trust and to Global Dinamix. He said Global Dinamix had invoiced the trust for R601200 for the supply of second-hand machinery which in fact had been donated by Atlantis Diesel Engines for training unemployed people.

“The fact that three of the trustees were directors of Global Dinamix means they must have been aware of the false nature of the invoice,” he said.

Olifant handed Williams a letter of resignation from both his positions a day before the court papers were served.

With acknowledgements to Chris van Gass and Business Day.