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NHA: Rules Or Guidelines?

A Chronicle Of Failure

Burning book (photo: Wikipedia)

Rules? What rules? (photo: Wikepedia)

Adv Brett Maselle has long been a painful thorn in the side of the South African racing authorities.

In his latest explosive letter to the Sporting Post, he examines the manner in which the NHA has dealt with the Mayfair Speculators fiasco and his interpretation of how the rules should have been applied.

He asserts that the NHA pays lip service to its rules and based on the information he has gathered, the NHA is acting in a wrongful and sinister manner regarding Mayfair Speculators.

Does he have a point?  You decide.

NHA RULES ARE GUIDELINES FOR SOME AND FIXED INSTRUCTIONS FOR OTHERS

AN ACCOUNT OF THE INEPTITUDE AND MISERABLE FAILURE OF THE NHA TO GOVERN AS REQUIRED

This narrative is borne out of frustration. I have experienced failures to reply to correspondence, deliberate silence and a wholesale lack of concern by Mr Lyndon Barends of the National Horse Racing Authority of Southern Africa (“NHA”). The purpose of this piece of writing is not to chronicle and account my unfortunate experiences with Mr Barends. These can be dealt with on another occasion. The purpose of this article is to bring to the attention of horse racing certain facts and events relating to Markus Jooste (“Mr Jooste”) and his company Mayfair Speculators (Pty) Ltd (“Mayfair”) which have occurred in flagrant breach of the rules of the NHA and while under the watchful eye of Mr Barends.

The NHA and in particular Mr Barends needs to take responsibility for their wrongdoings. I believe that the only way to achieve this is for everyone to know the facts. I am tired of obfuscation and brushing issues under the carpet. At least I know that my message will get out there. I am fully prepared to face the consequences of my decision. So, here goes.

Rules or Guidelines?

Lyndon Barends (photo: hamishNIVENPhotography)

Lyndon Barends – inappropriate (photo: hamishNIVENPhotography)

I recently found out that when a NHA employee was speaking to Mr Barends about following the NHA rules, he made it clear to the employee that as far as he was concerned the NHA rules are only “guidelines”. This rendition of what transpired made me realise that horse racing has a serious problem. The rules are required to be followed at all times. They are not guidelines and to have such a view shows a grave lack of understanding and appreciation of the NHA rules and the reasons for having them. This wholly inappropriate statement by Mr Barends displaces any integrity and credibility that the NHA has been trying to obtain.

Ingrid and Markus Jooste

Mayfair has always been known as a company owned by Mr Jooste. He and his wife were partners and Owners of the Year for numerous years. A few years ago, we saw the horses owned by Mr and Mrs Jooste being registered and owned by Mayfair. As the transfer of ownership from Mr and Mrs Jooste to Mayfair is a private affair, we were never told of the reasons for the change in ownership. We can only speculate. The transfer of ownership in the horses appear to have happened at the time Mayfair approached Absa Bank (“Absa”) for a loan of R200 million odd.

Mayfair Speculators

Dominant – Ingrid & Markus Jooste were owners of the year on multiple occasions

There are literally hundreds of horses owned by and registered in the name of Mayfair which is registered with the NHA as a holder of privileges. The colours of Mayfair which were the colours of Mr and Mrs Jooste were likewise transferred to Mayfair. We know that prior to the Steinhoff “accounting irregularities” scandal, Mayfair only had two directors, being Mr Jooste and Mr Stefan Potgieter, who is Mr Jooste’s son-in-law. Shortly after the Steinhoff scandal came to the fore in December 2017, Mr Jooste resigned as a director of Steinhoff International Holdings (“Steinhoff”), Phumelela Gaming and Leisure Ltd (“Phumelela”) and Mayfair. The resignation as a director of Mr Jooste is the important focus point as will appear from what is set out later on.

Mr Jooste also relinquished his personal racing colours and resigned as a member of the NHA. The resignation was accepted by the NHA and it cancelled Mr Jooste’s personal colours and privileges. The NHA did not receive any similar resignation from Mayfair and as a company it continued to remain a colour holder with privileges under the authority of the NHA. The upshot of all the events is that in December 2017 Mr Jooste had completely extricated himself from the authority and jurisdiction of the NHA. This happened in his personal capacity and via Mayfair as a director.

However, don’t be under the wrong impression, although Mr Jooste has officially distanced himself from South African horse racing, he remains circuitously involved through the shareholding in Mayfair which is 100% owned by Mayfair Holdings (Pty) Ltd, a company controlled by Mr Jooste and another person. Plainly, and most importantly, Mr Potgieter remained the only director of Mayfair. Mr Jooste having resigned as a director of Mayfair could not perform any acts on its behalf as a director. It is that elementary.

Transferring Ownership

Has the NHA acted incorrectly?

Remarkably and despite Mr Jooste having resigned as a colour holder and member, the NHA has allowed Mr Jooste, after having resigned, to transfer through the NHA his interest/shareholding in horses in which he was in partnership with others. In my opinion, the NHA should not have allowed this. Mr Jooste was no longer subject to the rules of the NHA. They should have insisted that he re-apply for membership or that the horses be sold by a third-party auctioneer which could transfer ownership for the parties to the new owners. I may seem petty, however, consider this; what if a person who is not a member of the NHA wants to register themselves as an owner of a horse with the NHA, will the NHA allow it? Obviously not. So, why did the NHA allow Mr Jooste and his partners to change ownership when Mr Jooste was no longer registered with the NHA? Mr Jooste should not have resigned without first arranging his affairs relating to horses in his name. The NHA has acted incorrectly and one wonders whether any thought was given to this issue. If it was considered then whoever did so for the NHA needs to explain their conduct. I have digressed, back to the story.

Shortly after the resignations, Absa launched an application in the Cape High Court against Mayfair to place it under an order of liquidation. Absa also brought an application against Mayfair for an order to prevent it from dissipating its assets. The anti-dissipation order was granted by the Court and the liquidation application has been postponed. Subsequent to the granting of the anti-dissipation order, Mayfair and Absa agreed to amend the order to allow Mayfair to trade to a limited extent and monies received by it would go into an escrow account for the benefit of creditors. As things stand, Mayfair’s hands are tied by the anti-dissipation order but at the same time it has not been liquidated. Should it be liquidated, the liquidation will take effect as at the date Absa signed the court documents initiating the winding up of Mayfair. We have not been told the reasons why the application for liquidation was postponed for a second occasion. Rumour has it that the three biggest creditors of Mayfair are involved in negotiations with Mayfair and each other to cause a compromise of creditors to occur and to thus cease the winding up proceedings against Mayfair. This is nothing but speculation.

Serious Allegations

ABSA has a High Court application against Mayfair

Absa has accused Mr Jooste and Mr Potgieter of committing fraud. Mayfair has also suffered similar allegations. The seriousness of the allegations made by Absa against Mayfair, Mr Jooste and Mr Potgieter should not be lost by the horse racing community. Fraud is an extremely grave offence. Steinhoff has also reported Jooste to the Hawks. The NHA referred to Mayfair as “a company dealing with [Mr Jooste’s] horse racing interests” and approached Mayfair for clarity and information. The NHA received a response. For its own reasons it has refused to inform horse racing of the details thereof. I have to ask why the NHA could not have made some disclosure. After all, it was the NHA that informed us that it was seeking clarity and information from Mayfair. As I see it, the NHA made it known that it was looking into the matter because it wanted to ensure horse racing and the public at large that the regulator of horse racing is looking after everything and that no-one should be concerned. Well, we all need to be concerned as the NHA through the leadership of Mr Barends has flouted its rules with gay abandon.

People from all quarters were displeased that the NHA was allowing Mayfair’s horses to run. I might add that the NHA was and is correct in allowing the Mayfair horses to compete as it had and has no right to prevent the horses from competing. Mayfair is a separate entity to Mr Jooste and although we know that he may be in ultimate control of Mayfair, we are required to see them as distinct. Things came to a head when Cosatu started to call for a boycott of the Sun Met if Mayfair horses were allowed to run in the Metropolitan Stakes.

Distance?  What Distance?

Markus Jooste, Mayfair Speculators, silks (photo: hamishNIVENPhotography)

The famous silks were not seen on 2018 Sun Met day (photo: hamishNIVENPhotography)

The Sowetan newspaper confirmed that Mayfair had been selling off some of South Africa’s best thoroughbred horses since Absa had approach the High Court in Cape Town. It reported that according to Mr Barends of the NHA:

(1) the NHA would distance itself from Mr Jooste;

(2) only a few Mayfair horses would be racing on Met day and Mayfair would be allowed to race in order to secure the jobs of jockeys‚ cleaners‚ and other workers and

(3) the horses would not run in the colours of Mayfair, they would run in club colours.

As we know, the protest was averted and Mr Barends took the accolades for ensuring that the Met went off peacefully.

Many seasoned horse racing people were watching the unfolding of the Sun Met events with much interest. The relevant rule relating to club colours being used is rule 8.3.1 which states that “A horse shall run in the registered colours of its owner and the owner and/or trainer of a horse shall ensure that such colours are available. Where the colours are not available for any reason, a Stipendiary Steward may allow a horse to run in registered club colours.” I do not believe that there has ever been an instance where a trainer has forgotten to take the Mayfair colours to the race course. The point I make is that there could never have been a valid reason for the colours not being available. They are the most used colours in South Africa. Therefore, what gave Mr Barends the right to say that Mayfair horses would run in club colours? The answer is nothing. Clearly, the rules of the NHA meant nothing to him.

Furthermore, to the best of my knowledge, Mr Barends is not a registered stipendiary steward so even if such a decision could be genuinely made, he could never have made it. I keep on asking myself, why should anyone who is a member of the NHA comply with its rules if the NHA does not do so and flagrantly disregards the rules? The NHA should lead by example. Regrettably, there are very few examples that I can count. An illustration of the unfairness is the following: Nearly every week, there is a report in the NHA racing calendar that a trainer has been fined by the NHA for not having the colours of the owner of a horse available on race day. The stipes then allow the horse to run in club colours. If the NHA, represented by Mr Barends, is able to sanction its own breach of this rule, then it is scandalous for it to seek that trainers be found guilty and fined for not complying with the rule.

Changes And Registrations

I now come to what some may call the most contentious part of the story. Since 15 December 2017 to 27 February 2018 the NHA has reported a change in registered ownership of some 53 (fifty-three) horses which were owned by Mayfair or jointly owned by it with others. Given that there are so many horses of Mayfair involved in the transfer of ownership, there are many people who will be affected by what I have to say. Since these new owners have a vested financial interest in the horses they have acquired from Mayfair, I do not expect any of them to agree with my views. If any of them and/or the NHA disagrees with my views, I am willing to debate the issue in an open forum as long as Mr Barends is present and explains his views and reasoning for the actions of the NHA. I am of the view that the NHA has failed to comply with its own rules on at least 53 occasions.

It is evident from numerous newspaper reports and affidavits filed in court that Mr Jooste, whose horseracing interests – according to the NHA – are run through Mayfair, is alleged to have acted fraudulently causing financial harm. Absa has also alleged that Mayfair perpetrated a fraud on it. Fraud is a serious criminal wrong. As I see it, Absa, one of the biggest financial institutions in South Africa, would not make such bold allegations about fraud being committed if it could not prove it.

Ken Truter (photo: supplied)

Many owners, including NHA Chairman Ken Truter, have concluded sale agreements with Mayfair (photo: supplied)

One would think that after hearing about these frauds that any person would run a hundred miles away from doing any business with Mr Jooste and Mayfair. In the face of all of this, many owners including captains of industry, well-known friends and partners of Mr Jooste and Mayfair have concluded sale agreements with Mayfair to acquire its horses and have the ownership registered in their names. When I read that the Chairman of the NHA is one of the owners that was involved in acquiring a horse from Mayfair and was able to have the registration of ownership changed by the NHA during the period when boycotts of the Sun Met was being threatened, I was left amazed.

Who Is In Charge?

I recently contacted the NHA to ascertain the name of the person who, according to its records, is allowed to sign the NHA ownership forms to give effect to a transfer of ownership in respect of the NHA rules and records on behalf of Mayfair. I was horrified to be told that it would be either Mr Derek Brugman or a Ms Heunis. In order to ensure that I was not hearing this incorrectly, I repeated my question and the answer furnished and this was confirmed to me. The person by the name of Ms Heunis was a mystery to me. That recently changed. Ms Heunis is the Personal Assistant to Mr Jooste. I nearly fell off my chair when I learnt this fact.

Essentially, I was told by the NHA that if a transfer of ownership form was provided with the signature of Ms Heunis for Mayfair, the NHA would transfer ownership of the horse to the acquirer thereof. I have no idea whether she is a registered member of the NHA. I doubt it. I doubt that she is a director of Mayfair as this would have been made known. And we all thought that Mr Jooste had completely removed himself from running Mayfair and horse racing! It is unconscionable for the NHA to allow Ms Heunis to transfer ownership of Mayfair horses to others.

Rules – They Are For Everyone

All parties are bound to comply with the NHA Constitution and the Rules

The rules of the NHA are required to be followed by all. The NHA has a contract with all privilege holders and operators that all parties are bound to comply with the NHA constitution and the rules. Put another way, the NHA cannot on the one hand rely on the rules to regulate horse racing and on the other hand flout the rules or say that it is not required to follow its rules.

It appears that although the assets of Mayfair have been prevented from being dissipated by it, there is little preventing Mayfair from selling to any party its horses and/or any interest in them. I am not saying that the sale by Mayfair to these parties is legally invalid. The important aspect is that in order for these horses to be able to be nominated by the new owners to run and for the horses to be able to run in their names, the NHA rules need to be complied with regarding transfer of ownership. The new owners cannot be registered by the NHA as owners unless the rules of the NHA are complied with.

I say that neither Mr Brugman nor Ms Heunis have or had any right in terms of the NHA rules to sign registration of ownership forms for Mayfair and they had and have no right in terms of the NHA rules to have the ownership of the horses transferred in the records. To explain: Should my brother in law sign a NHA transfer of ownership form for me instead of me, the NHA would outright reject the transfer and registration of the horse as my signature is required. It should be no different for anyone else.

What The Rules Say

Mayfair is a company and the NHA rules deal with the exact identity of the person who can act on behalf of the company. I will try make it easy. NHA rule 8.6 deals with juristic persons such as Mayfair and sets out the rights and obligations of the company. My interpretation and understanding of the rules which apply is set out below. In terms of, inter alia: –

• rule 8.6.2 – Mayfair shall appoint, in writing, one of its directors as a nominee and, subject to the provisions of rule 8.6.5, only that director shall exercise the powers of Mayfair.

• rule 8.6.3 – the nominated director shall be responsible and may be held liable for the actions of the Mayfair or for any offence in relation to any horse owned by Mayfair and shall be deemed to have assumed the responsibilities of Mayfair.

• rule 8.6.4- Notwithstanding the provisions of rule 8.6.3, all directors in Mayfair shall be bound by the Constitution and rules of the NHA and shall be responsible and may be held liable for the actions of Mayfair or for any offence in relation to any horse owned or leased by Mayfair. All directors in Mayfair shall be jointly and severally responsible for any liability incurred by Mayfair to the NHA.

• rule 8.6.6 – A horse owned by Mayfair shall be raced in the colours of Mayfair and in the name of Mayfair represented by the nominee.

• rule 8.6.7 – Should the director appointed as nominee or any director in his individual capacity be warned off, disqualified, suspended, or his name be placed on the defaulters list the colours of Mayfair shall automatically be suspended for a period of 30 days or until the date of reconstitution of Mayfair, whichever is the earlier. During this period the remaining directors may appoint a new director as nominee and/or apply for the reconstitution of Mayfair and/or the registration of the new nominee. If the reconstitution is not applied for or a new nominee is not appointed, or approved and registered by the licensing board the colours of Mayfair shall automatically lapse.

• rule19 8.6.8 – Should the nominee director of Mayfair die or retire, or be removed as nominee by the remaining directors, the remaining directors shall forthwith apply for the appointment of a person eligible in terms of the rules to be the nominee of Mayfair. The horses registered in the name of Mayfair shall not be entered for or be permitted to run in any race until the change is registered by the licensing board, save for those engagements made prior to the removal, death or retirement of the nominee.

• rule 8.6.9 – Any change in the directors in Mayfair shall be subject to the approval of the licensing board on such conditions as may be determined by it, provided that if in the opinion of the licensing board such changes result in Mayfair not complying with the provisions of the rules the licensing board may require that the proposed changes not be implemented and/or the colours of Mayfair be cancelled and/or the colours in the name of a new juristic person be registered.

• rule 8.6.10 – The nominee director of Mayfair shall advise Mr Barends in writing on the prescribed form of the names of any proposed new directors and/or any other proposed changes in the directors of Mayfair. No horse may be entered to run in a racer in the colours of Mayfair until such change has been approved by the licensing board.

• rule 8.6.11 – The assignment by a director in Mayfair of any part of his share or interest in Mayfair shall be deemed to be a change in the directors and the provisions of rule 8.6.9 and 8.6.10 shall, in that event, be complied with.

• rule 8.6.13 – The National Board of the NHA may, after a hearing, cancel the colours Mayfair if Mayfair or its nominee director fails within a reasonable time to furnish Mr Barends and/or the licensing Board with such information as Mr Barends and/or the licensing Board may require from time to time. We know that Mr Brugman and Ms Heunis are not directors of Mayfair. Inasmuch as they are not directors they cannot exercise the powers of Mayfair as that power is only given to the director who has been nominated in writing. The NHA should never have allowed the transfer of any horses of Mayfair to any party if Mr Brugman or Ms Heunis’s acted for Mayfair and their signatures were appended to the ownership transfer form.

Racing Manager

Derek Brugman – overstepping the mark?

Of course, Mr Brugman is the racing manager of Mayfair but that does not assist him, Mayfair, the NHA and the entities and persons who obtained transfer. Mr Brugman could (and can) represent Mayfair, provided he abides by the rules and constitution. In particular, his appointment as racing manager did not affect any of the rights, duties and obligations of Mayfair in terms of the rules and constitution. Articulated differently, Mr Brugman could not perform the powers specifically given to directors of Mayfair. If he did, then the NHA should not have allowed it. The involvement of Ms Heunis is contrary to the rules of the NHA and is extremely worrisome. Mr Jooste has not left the building. We should be worried and angry.

Questions

Is horse racing really being protected by the NHA? The answer is obvious to me. When Mr Brugman was appointed as nominee for Mayfair, the rules of the NHA precluded it. Obviously, an ordinary person would not have insight into the documents or decisions of Mayfair and it was fair to assume that the NHA had ensured compliance with its rules. With hindsight, it appears that the NHA failed miserably in ensuring compliance with its rules. At that stage Mr and Mrs Jooste were the biggest owners in horse racing and Mr Jooste was a director of Phumelela. Who would have dared questioning Mayfair? All of this shows that the NHA has had serious problems for some time and they continue despite a change in control.

What This Means

You may ask about the consequences of this clearly unjust and wrongful conduct of the NHA under the watchful eye of Mr Barends. The transfers of ownership in the records of the NHA of the Mayfair horses to the new owners should not have occurred. These horses should not have been allowed to be nominated and to run. Stated differently, until Mayfair and the new owners had ensured compliance with the NHA rules, the status of the horses with the NHA should have remained in limbo. The new owners of the Mayfair horses have unduly benefitted. Stakes earned for wins or places should not have been paid to the new owners of the Mayfair horses. Horses that came second to any of these horses or just missed out in placing in races that were listed or graded races would have suffered in all respects.

The NHA has ended up selling its soul and integrity to the operators, the sponsors, Mayfair, creditors of Mayfair and those who have done deals with Mayfair in respect of its horses since December 2017. The mess should be undone. Mr Barends should resign. The rules which are not guidelines should be followed at all times. If they are wrong, then amend them. Until they are amended everyone including the NHA must abide by them. There is no exception. What has occurred is unforgivable and has shown that the NHA needs to clean up its act immediately.

Closed Shop

A quick reading of the other provisions of rule 8.6 shows that there are many questions that the NHA needs to answer. The difficulty is that the facts are within its knowledge and from personal experience, I know that the NHA does not provide information which may cause difficulties for it. A few questions that spring to mind are: Since Mr Jooste has resigned in December 2017 as a director of Mayfair and assuming that he was the nominated director to act on behalf of Mayfair in terms of rule 8.6.2: (1) why did the NHA allow and why is it continuing to allow Mayfair horses to run? and (2) in light of the rule, why has Mayfair’s continued to hold privileges and colour?

When the NHA has its most important representative making light of the NHA rules, there is a serious problem. Given all the facts, it appears to me that the NHA has put the interests of an alleged fraudster before its rules and obligations to horse racing. I feel sorry for the hard-working employees of the NHA that have done nothing wrong but followed instructions from the top and who inevitably become the scapegoat.

Trust me, there is plenty more wrong in the NHA.

Brett Maselle

7 March 2018

*Note*  We have disabled direct comments on this article at the specific request of Adv Maselle.  Anyone who wishes to comment or respond is invited to do so via our Mailbag (https://www.sportingpost.co.za/contact/?subject=opinion) or email [email protected]

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