It’s the picket-plotters who got WP in a pickle, says Saru

The South African Rugby Union (Saru) has come out swinging ahead of the planned picket at the United Rugby Championship clash between the Stormers and the Sharks at Cape Town Stadium on Saturday.

In a strongly worded open letter, Saru said: “Claims now being made by individuals — some of whom were part of the executive that traded the entity to the brink of bankruptcy and now wish to reclaim control — are erroneous, misleading and needlessly distracting.”

It felt it necessary to write an open letter “to remind the public of the calamitous sequence of actions and inactions by the former executive that led to the WPRFU being reluctantly taken into administration”.

Saru in 2021 suspended the WP executive council and put the union under administration.

Much of the discontent among the potential picketers relates to the proposed sale of Newlands Rugby Stadium, the proceeds of which will be used to service debt WP Rugby had undertaken before Saru intervened.

Saru stressed, however, that the sale of property could only be done with the approval of the general council of WP.

“Most important to note is any property or equity deal that the executive council [exco] of Saru believes has sufficient merit to be presented to the general council of the WPRFU cannot be completed without the approval of that general council,” it stated.

It also provided a timeline of what motivated their decision to take WP into administration.

Saru’s timeline:

• 2019: WPRFU signed heads of agreement with the Investec’s Property division for the redevelopment of the Newlands Stadium. Investec advanced a R50m loan to the WPRFU.

• 2020: WPRFU declined to sign the final documents to conclude the sale of Newlands development rights to Investec.

• 2020: WPRFU received R112m Flyt Property (secured on 11 properties owned by the union), who were appointed as developers of the Newlands.

  • Notwithstanding the value of the loan to repay the previous loans, it was secured by bonding the properties to the value of R250m, encumbering all the properties (worth almost R450m) without performing a due diligence and exercising its duty of care;

  • WPRFU’s auditors highlighted serious concerns regarding the arrangement.

  • The WP executive failed to de-risk the organisation and did not act with the duty of care by not conducting a formal due diligence exercise.

• 2020: Flyt, via its parent company, Dream World, paid R52.97m to Investec Bank and R57.76m to Remgro to clear WPRFU’s debts.

• 2020: six WPR board directors resigned or were removed from the board in October.

• 2020: in December Flyt declared a dispute with the WPRFU over the valuation of Newlands.

• 2021: Dream World (Flyt) filed a suit against the WPRFU in the Western Cape high court, claiming R388m in damages and the repayment of its R112m loan plus interest.

• 2021: a term sheet was signed with Staytus by a member of the Exco, without performing a formal due diligence exercise and once again failed in its duty of care, furthermore breaching clause 13 of the WP constitution and failing to get a mandate from the general council.

• 2021: in June Saru, deeply concerned about the WPRFU’s operations — established a joint steering committee with WPRFU — comprising representatives of both organisations to help manage the mounting legal and financial challenges.

• 2021: in September Saru exited the steering committee because of a lack of transparency among WPRFU’s officials, making it impossible for Saru’s representatives to perform any useful function.

• 2021: five members of the WPRFU executive committee — including the vice-president — filed an urgent application at the Western Cape High Court to have the president removed.

• 2021: in October, the executive council of Saru determined that the WPRFU failed to meet the requirements of clause 29 of its constitution. Western Province Professional Rugby was in a terrible financial position, the Union’s auditors, BDO Inc., had noted several reportable financial irregularities, and Western Province Rugby was facing several legal battles, was unable to pay Sars or salaries and was in imminent danger of being liquidated. Saru was left with little choice but to take the WPRFU into administration.

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