Durban — The Pietermaritzburg High Court ordered that a trustee from a public benefit organisation be removed because she used the entity’s finances for her personal benefit, including pocketing exorbitant and unjustified salary increases and gratuity payments.
Funds donated to the organisation were for the empowerment and development of individuals from previously disadvantaged communities, who were attempting to get a footing in the construction industry.
The order was handed down at the court against Patricia Chalwa, the CEO and a trustee of the National Construction Incubator (NCI) Trust, earlier this month.
Acting Judge Garth Davis said Chalwa had conducted herself “in a manner that was completely unbecoming as a trustee”.
“Her continuance in office would be detrimental and prejudicial to the welfare of the trust,” said Davis.
Included in Davis’s ruling was that the Master of the High Court endorse the removal of Chalwa from their records, which it has since done.
The Master’s office were also respondents in the matter but did not oppose the application brought by the NCI’s three standing trustees against Chalwa, that raised various allegations of financial impropriety and misconduct against her.
Davis heard the matter in October.
The Small Enterprise Development Agency (SEDA) successfully applied in September to be included as an applicant in the matter. As part of its contribution to “develop and mentor” emerging southern African construction companies, SEDA formed the NCI in 2018 and remains its main funder.
While Davis granted their application to intervene, he dismissed their request to have all the trustees removed to be replaced with an administrator who would investigate the allegations against Chalwa.
“On scrutiny of the court papers there is no evidence that the applicants (the three trustees) were undermining the NCI Trust, but merely exercising their fiduciary duty in accordance with the trust deed and the trust’s objectives.”
The NCI was represented by advocate Dees Ramdhani SC and instructed by Mcgregor Erasmus Attorneys.
Davis ruled that only the Master’s office had the power to appoint an administrator.
The dispute between Chalwa and the other trustees emerged on March 6 when two of the trustees arranged an informal meeting with the CEO to obtain explanations on serious allegations of misconduct from her. Chalwa left before any meaningful engagement could happen.
On March 30 she “locked out the applicants” from the NCI’s premises and blocked their IT infrastructure access.
This resulted in the Chalwa receiving a notice of suspension.
In terms of the trust deed the trustees are mandated to provide oversight over the functioning of the entity, but SEDA removed the suspension shortly thereafter.
Chalwa brought a High Court application in early April to prevent the other trustees from entering the NCI’s premises but it was opposed successfully.
On April 13, she procured the removal of the trustees and replaced them with two new trustees. Further court battles between Chalwa and the three trustees ensued thereafter.
Chalwa ignored court rulings that went against her. On one occasion she approached the Nelson Mandela Bay Municipality unsuccessfully about depositing donor funds into a bank account in the name of NCI that she was not permitted to open.
The Master’s office withdrew the appointment of the two new trustees and restored the original status quo in May.
In spite of court ruling, which prevented Chalwa from transacting without the consent of the others, she signed off on a payment schedule.
In handing down his judgment, Davis said Chalwa made “unilateral” decisions, bypassing the other trustees, which affected the optimal running of the NCI. He also said she embarked on a journey to enrich herself.
“Once it became apparent that the investigation into her misconduct had exposed serious cases of maladministration and malfeasance, she embarked on a mission to protect herself by rendering the trustees ineffective.
“The most disturbing aspect is the manner in which the CEO was remunerated.”
Davis said the management board of the NCI had no right to approve Chalwa’s remuneration or any bonus commission paid to her. He was referring to the salary increase of 25% and the 10% funders fee she received.
Chalwa scored a R125 000 payment for SEDA’s donation to the NCI. Davis reasoned that as SEDA was the founder and was legally obligated to fund the trust, he found the payment “incomprehensible”, as it was for doing “absolutely nothing”.
Regarding her salary he said she was earning R1 630 804 a year, while a 25% increase would see her pocketing R2 049 755.
He said SEDA’s unwillingness to deal with the facts regarding the going ons in the trust was disappointing.
Lucky Nhlabathi, the attorney representing Chalwa, said they were studying the judgment before deciding their next move.
Sunday Tribune