Property law experts say auction kickbacks by banks, liquidators and executors have been going on for years and it's a sickness in South Africa. The Saturday Star revealed the 13-year-old paper trail with chief executive officer of Auction Alliance, Rael Levitt, having said in emails kickbacks would be paid in cash.

The Saturday Star revealed the 13-year-old paper trail with chief executive officer of Auction Alliance, Rael Levitt, having said in emails kickbacks would be paid in cash.

Heinrich Koorts, chief executive officer of Benguela Group and property law expert was reacting to allegations of colluding with banks, liquidators and money rackets by Auction Alliance as reported in the weekend media publications.

According to the Saturday Star, Auction Alliance paid kickbacks to attorneys, liquidators and bank staff to ensure business went their way.

The paper revealed the 13-year-old paper trail with chief executive officer of Auction Alliance, Rael Levitt having said in emails kickbacks would be paid in cash.

The kickbacks were typically 50 percent of the commission Auction Alliance earned and these rose up to 75 percent during market slumps to ensure business in bad times.

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Billionaire Wendy Appelbaum was disputing the legality of an auction where she bought the wine estate Quoin Rock after she later found out she was the only genuine bidder

Appelbaum lodged a complaint with the National Consumer Commission, citing irregularities and Levitt responded by suing her for defamation.

The Quoin Rock Winery and Manor Estate in the Western Cape owned by businessman Dave King was sold at an auction for R60.5 million in December 2011.

Auction Alliance said at the time this was one of the highest value liquidations to have ever been held in the Western Cape and the highlight of the auction calendar for 2011.

Levitt said this was a fair price considering the economic climate and offered excellent value for the buyer.

Read the article here.

Koorts says the bottom line is while liquidators and executors or bank employees are not permitted to take any form of kickback, the fact is that this is a common practice that has been going on for years.

“It is unfortunately a sickness in South Africa and there is a lot of underhandedness in all kinds of business in both the public and the private sector.”

He says it is an unfair advantage that some people choose to use and is entirely unacceptable.

Koorts explains that planted bidders are also common practice in certain circles in the auctioning field and are meant solely to drive the price up, which is also not an acceptable practice. 

Koorts explains that planted bidders are also common practice in certain circles in the auctioning field and are meant solely to drive the price up, which is also not an acceptable practice.

If an auctioneer sells his own property or is buying at auction, they should be disclosing that to the seller or buyer.

This sometimes falls by the wayside when financial gains stand to be made, he says.

“The situation is that smaller auction houses that do not believe in paying bribes, kickbacks or commissions that are not disclosed, do not receive the work.”

The liquidator or certain people in the banks are now playing ‘God’ over the auction work and giving it to the person who polishes their hand the best, he says.

“This breaking story has now put a huge spotlight on the auctioning business and people will now be wondering whether their auction sales were done correctly and in accordance with the law.”

It is now high time that people should be asking their auctioneer to present them with the full conditions that the Consumer Protection Act (CPA) has laid down in terms of auctions.

In the past there weren’t many laws governing auctioning, but the CPA has now come in and governs this industry and the public must become more aware of it he warns.

“They must also be aware that not everyone in auctioning must be classified under the same black cloud – there are many of us out there that do not carry out these practices.”

It also does not mean that auctioning is not a good way to sell,  it certainly is because when you need certain results at a specific time, auctions can do this for you. 

“Now is the time for liquidators, trustees of deceased estates and banks to revisit their policies around how they push out the work to auction houses.”

He adds that the public who are impacted on by these policies and practices must make sure that they know what is going on.