Consumer Protection Commission turns its attention to the property industry

For the first time the Consumer Protection Commission has “shown its teeth” in a property related matter.  The Commission has begun a public hearing into a complaint against Auction Alliance  at its Pretoria offices

The Consumer Commission is empowered by law to levy huge penalties against transgressors of the Consumer Protection Act. Fines of up to R1-million or 10 per cent of  the transgressor’s annual turnover can be levied.  Estate agents and other players in the real estate industry are watching the Auction Alliance case with interest to see whether this is the start of a real focus on protecting the consumer rights of property buyers.  Up to now the Commission appears to have devoted a lot of its energies to abuses in the cell phone industry.

Deon Leygonie, the other bidder at the disputed December Auction Alliance wine farm auction gave evidence to the Commission on Friday 16 March. According to The Sunday Times, Leygonie, 63, who described himself as a proxy bidder for Rael Levitt, the Auction Alliance former CEO, bid against billionaire Wendy Appelbaum for the 194ha Quoin Rock wine estate.  He told the National Consumer Commission that Levitt asked him to bid for the estate just 10 minutes before the start of the auction, which had already been delayed 30 minutes.  He said that he was a contract employee at Auction Alliance and acted on instructions from Levitt.

The commission is investigating a complaint by Appelbaum into how the “flawed” auction was conducted amid claims of a “ghost bidder”.  Leygonie said he had, over the past seven years, undertaken “contract” work as a proxy bidder for Auction Alliance for a fee of R1500. “The ladies from the Auction Alliance office would call me when they wanted me to bid on behalf of the buyer [as a proxy bidder] or seller [as a vendor bidder]. Rael only got involved when there were big farms for sale and VIP stuff,” he told the commission.

Talking about the day of the auction – which attracted some of the country’s richest business people – Leygonie said: “Rael came to me and said I must bid on behalf of an offshore bidder up to R50-million.”  Leygonie said he was the only proxy bidder for the auction house.  However, Consumer Commissioner Mamodupi Mohlala pointed out to the tribunal that, according to a statement from Levitt,  he (Levitt) had assumed Leygonie was there as a “vendor bidder”.  Mohlala said: “Levitt says he assumed you were there as a vendor bidder, but you are telling this panel he wanted you to be there as a proxy bidder. That’s a contradiction.”  (Levitt provided the commission with his statement after he was summonsed by the body.)

The Sunday Times reported in January that Leygonie – according to documents produced by Auction Alliance after the auction – had bid on behalf of Israeli businessman Ariel Gerbi. However, Leygonie told the Commission that he did not know Gerbi and said the first time he heard of the Israeli was when he was contacted by The Sunday Times.

The bidding started with an offer of R30-million, and the price jumped to R60-million. Appelbaum declined to offer R65-million, and Levitt then announced the R60-million bid was “a mistake”. The estate was knocked down to Appelbaum for R55-million.  But, a week later and after Appelbaum demanded details of the other bidders, the liquidators declined to confirm the sale. Levitt told the Sunday Times previously that Leygonie had erred when he bid R60-million and retracted it.

Leygonie told the commission that Appelbaum “ran all the way with me until R50-million. When he [Levitt] came with R60-million, I froze. It was not in my mandate to go past R50-million.”  Mohlala quoted Levitt as saying in his statement that he and Gerbi had agreed that the latter would be registered as a bidder after the fact.  Referring to Levitt’s statement, Mohlala said: “Then they would cap off R50-million and create the impression that you [Leygonie] were there to bid as a proxy for Gerbi.”

The commission will now deliberate on whether to call more witnesses and will then make a decision whether to refer the case for criminal prosecution.  According to a report in The Star, Auction Alliance founder and former CEO Rael Levitt’s legal adviser has said that Levitt was preparing to expose widespread corruption across the auctioneering industry in return for pardon.

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