The decision by major banks to close Bosasa accounts for fear of reputational damage has now forced the company into compulsory liquidation
The company announced on Monday that its bank accounts will be closed by the end of February.
The company’s board made the decision to go into voluntary liquidation in line with the obligations of the Companies Act which states that if a company will not be able to pay its creditors within the next six months they either have to apply for business rescue or voluntary liquidation.
“The decisions made by the financial institutions are not based on the African Global Group’s liquidity status, financial stability, operational performance or growth forecasts.
On the contrary, the group is both factually and commercially solvent. Tragically, the Group will be unable to trade without a bank account,” said Bosasa in a statement.
Bosasa has been the subject of the commission of inquiry into state capture where former employees have been giving testimony about how it has been able to secure a monopoly on government tenders and contracts. Through intensive testimony before the inquiry, which spanned over two weeks, Bosasa’s former chief operations officer, Angelo Agrizzi disclosed how the company had used bribes to political officials and uncompetitive tender processes to secure their grip on business from the state.
The most popularly known ‘cash cow’ for Bosasa was the correctional services department, but this influence on contracts also expanded to home affairs and other departments.
At the beginning of February, the Mail and Guardian reported how Bosasa, headed by Gavin Watson, had managed tosecure at least R12-billion in state contracts from about 40 national and provincial government departments over the past decade.
The liquidation will affect 4 500 direct employees at Bosasa which the company estimates will indirectly impact on 25 000 people.
Bosasa said the liquidation will not affect its current operations and “staff remain employed and we go about with our work till informed otherwise”.
Bosasa also has 108 young people on learnerships, an excess of 3 100 suppliers and contractors, many of which are small businesses, will also be affected.
The company emphasised that it had contributed to improved service delivery in the country by “serving our clients with the best standards and futuristic solution”.
“We confirm that nowhere and no one has reported that we have failed to deliver quality service to our clients. We always met/exceeded our client’s expectations,” Bosasa said.
Bosasa has also been running the country’s migrant repatriation centre, Lindela, where immigrants have long reported to be subjected to human right violations.
Four-year-old Sinoxolo Hlabanzana diedafter he developed a fever and diarrhoea while he was illegally detained at Lindela with his aunt.
Bosasa has reached out to various local and international financial institutions to open a trading account that will allow it to operate beyond March 1.
The company says it will not be making any further statements on the matter beyond the latest statement.