I am still a fan of Rael Levitt and the Auction Alliance business model (with reservations)
I am still a fan of Rael Levitt and the Auction Alliance business model (with reservations)
I have been hesitant to re-post this Article because I am a fan of Rael Levitt and the Auction Alliance business model. Only about a week ago, I was in the company of several prominent role players in the Property Industry, who were (ironically) expressing nothing but admiration for Auction Alliance and Rael Levitt's business model and business acumen.
I mention that the conversation was ironic because of the headlines only a couple of days later. Take the headline of this Moneyweb Article as a prime example. At the end of the Article is an explanation of the circumstances involved in all the accusations against Auction Alliance, which is not reflected in the headline, so I will rather reserve my judgment until all the facts are revealed.
I remain a big fan of Levitt and the Auction Alliance business model but I always have reservations when people have a preferance for "cash transactions". Let's see how this plays out.
- Gareth
Auction Alliance is accused of colluding with banks, liquidators and attorneys.
Auction company Auction Alliance has allegedly been colluding with banks, liquidators and attorneys in a money making racket, according to reports on Saturday.
The Saturday Star reported that a 13-year old paper trail revealed that the company had paid kickbacks to attorneys, liquidators, and bank staff to ensure business went their way.
The report claimed CEO and founder Rael Levitt said in emails the kickbacks would be paid "in cash".
The paper's sources claimed two staff members at Investec were paid large sums of money to insure the company received preferential treatment.
A former Absa bank manager in Gauteng was "ousted" by employers some years back when a kickback trail revealed him as the alleged recipient.
The kickbacks were typically 50 percent of the commission Auction Alliance earned. These rose up to 75 percent during market slumps - to ensure business in bad times.
The company also reportedly trained auctioneers on how to rig an auction and told them what to do if they were caught.
The newspaper reported five insiders wrote affidavits supporting their allegations, which they said were supported by reams of documents.
Billionaire Wendy Appelbaum was disputing the legality of an auction where she bought the wine estate Quoin Rock.
Appelbaum claimed she later found out she was the only genuine bidder and consequently lodged a compliant with the National Consumer Commission, citing irregularities. Levitt responded by suing her for defamation.
Appelbaum's bid was later rejected by the estate's liquidators.
Levitt has denied all the allegations, calling them "defamatory". He said it was not uncommon for law firms to refer auctions to auctioneers and when they did, they could agree to give the attorney concerned a referral commission.
"We leave it to the attorney to make the necessary disclosure to their clients," he said.
He said the practice was long-standing and widely accepted in the industry.
Vendor bidding -- the practice of a seller bidding on their own stock to drive up bid prices -- was "internationally and nationally regarded as an acceptable and lawful auction industry practice", he said.
Levitt also published a rebuttal alongside the newspaper's story.
He attributed the allegations to the competitive nature of the industry and disgruntled former employees.
In an open letter published in a full page of the newspaper, Levitt said he had approached a High Court asking them to interdict the newspaper and prevent them from publishing the story because his side wasn't expressed in his own words.
"We do not resort to unethical and corrupt practices to secure business deals," he said
I have been hesitant to re-post this Article because I am a fan of Rael Levitt and the Auction Alliance business model. Only about a week ago, I was in the company of several prominent role players in the Property Industry, who were (ironically) expressing nothing but admiration for Auction Alliance and Rael Levitt's business model and business acumen.
I mention that the conversation was ironic because of the headlines only a couple of days later. Take the headline of this Moneyweb Article as a prime example. At the end of the Article is an explanation of the circumstances involved in all the accusations against Auction Alliance, which is not reflected in the headline, so I will rather reserve my judgment until all the facts are revealed.
I remain a big fan of Levitt and the Auction Alliance business model but I always have reservations when people have a preferance for "cash transactions". Let's see how this plays out.
- Gareth
Auction Alliance is accused of colluding with banks, liquidators and attorneys.
Auction company Auction Alliance has allegedly been colluding with banks, liquidators and attorneys in a money making racket, according to reports on Saturday.
The Saturday Star reported that a 13-year old paper trail revealed that the company had paid kickbacks to attorneys, liquidators, and bank staff to ensure business went their way.
The report claimed CEO and founder Rael Levitt said in emails the kickbacks would be paid "in cash".
The paper's sources claimed two staff members at Investec were paid large sums of money to insure the company received preferential treatment.
A former Absa bank manager in Gauteng was "ousted" by employers some years back when a kickback trail revealed him as the alleged recipient.
The kickbacks were typically 50 percent of the commission Auction Alliance earned. These rose up to 75 percent during market slumps - to ensure business in bad times.
The company also reportedly trained auctioneers on how to rig an auction and told them what to do if they were caught.
The newspaper reported five insiders wrote affidavits supporting their allegations, which they said were supported by reams of documents.
Billionaire Wendy Appelbaum was disputing the legality of an auction where she bought the wine estate Quoin Rock.
Appelbaum claimed she later found out she was the only genuine bidder and consequently lodged a compliant with the National Consumer Commission, citing irregularities. Levitt responded by suing her for defamation.
Appelbaum's bid was later rejected by the estate's liquidators.
Levitt has denied all the allegations, calling them "defamatory". He said it was not uncommon for law firms to refer auctions to auctioneers and when they did, they could agree to give the attorney concerned a referral commission.
"We leave it to the attorney to make the necessary disclosure to their clients," he said.
He said the practice was long-standing and widely accepted in the industry.
Vendor bidding -- the practice of a seller bidding on their own stock to drive up bid prices -- was "internationally and nationally regarded as an acceptable and lawful auction industry practice", he said.
Levitt also published a rebuttal alongside the newspaper's story.
He attributed the allegations to the competitive nature of the industry and disgruntled former employees.
In an open letter published in a full page of the newspaper, Levitt said he had approached a High Court asking them to interdict the newspaper and prevent them from publishing the story because his side wasn't expressed in his own words.
"We do not resort to unethical and corrupt practices to secure business deals," he said
According to the report, Auction Alliance founder and former CEO Rael Levitt's legal adviser said Levitt was preparing to expose widespread corruption across the auctioneer industry in return for pardon.
ReplyDeleteThe only difference between Levitt and the other auctioneers is that he got bust for giving cash for business which is not a crime in itself. Wendy Appelbaum did not bring him but the relentless and one sided negative media barage did. Newspapers like the Cape Argus and the Star, desperate to stop their declining circulation, went on and on about the company resulting in it closing down and 180 people losing their jobs not to mention the knock on effect to their families, suppliers and the fiscus!
ReplyDeleteLevitt is worth over R250 million so he doesnt care about the negative remarks about him.