Annette van der Laan has resigned with immediate effect from the board of CS Holdings (CSH) and the contract with her ex-husband`s consultancy has been terminated due to what the board describes as an "error of judgement".
The "error of judgement" related to the on/off handling of the R18 million transaction of CSH`s electronic documentation delivery system, whereby 80% of the rights and revenue stream were sold to "Faltalia" - a company which seems to have no office or registration.
The CSH board issued a statement on the Stock Exchange News Service (SENS) yesterday evening, saying it had concluded its inquiry into the financial treatment of the transaction that was done in December 2002.
It says: "Management should have communicated the conclusion of the transaction and the accounting treatment thereof to the board prior to finalisation of the 2002 interim results. The board regards such failure as an error of judgment."
First raised by a MoneyWeb ClassicFM programme, the initial allegations contended that CSH artificially boosted its profits by selling an asset for R18 million after acquiring it for R2.5 million and then reversed the sale after its financial results were published.
There were also allegations of a conflict of interest, relating to the involvement in the deal of CSH CEO Annette van der Laan`s ex-husband, Hans van der Laan.
CSH`s major shareholders, electronics group Reunert and Worldwide Africa, appointed a team of senior executives on 15 February to investigate the allegations along with the CSH board.
According to the SENS statement, the transaction was initially perceived to be in the interest of CSH and its subsidiary, and a first tranche payment was received from the purchaser. But tax considerations weighed against the transactions due to the accounting standard AC133 and concerns by the auditors on how the scheme was being treated. The transaction was then cancelled.
The board says that neither CSH nor its shareholders Reunert and Worldwide Africa Investment Holdings suffered any loss from the cancellation.
It also says Annette van der Laan`s ex-husband Hans van der Laan`s company Havadel only received its normal consultancy fee and no commission or payment with regard to the transaction. But the consultancy contract has been terminated.
CSH executive director Dave Vink has replaced Annette van der Laan with immediate effect and Reunert has appointed Pat Gallagher as senior executive to help oversee the management of CSH.
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