GRN in legal row with bankrupt retailer
03 February 2021 | Justice
Government is embroiled in a legal fight over the non-delivery of over N$1 million worth of curtains, scatter cushions and wallpaper for a decorative overhaul of the vice president’s office and residence at the old statehouse with a now bankrupt retailer in Windhoek.
The government of Namibia’s civil case to retrieve the N$1 037 440.45 paid in 2018 for the undelivered goods, was launched in August 2018 – the same month Karseboom, a 60-year family business, collapsed amidst severe financial turmoil.
The civil suit stems from an October 2017 invitation to bid for the supply of soft-furnishings for the Office of the Vice President of Namibia, including private bedrooms, guest rooms, a library, entertainment lounge and dining room.
In affidavits submitted to court since then, the former owner of Karseboom, Yolande Ciolek, and Karseboom former general manager, Brendan Andrew Butcher, a majority member in Cherry Tree Trading CC, hinted that the closing of the business was partly the fault of the tender and the subsequent failure of officials to assist to finalise the work they were contracted for.
The duo argues that despite numerous pleadings for officials to select fittings and fabrics for the project, they never received cooperation and this resulted in their inability to deliver before the company went bust.
“Throughout the duration of the tender, the members of B Karseboom CC and Cherry Tree Trading CC worked hand-in-hand to assist State House in every way possible to complete the tender. This was to the ultimate demise of the two businesses,” Ciolek’s affidavit, submitted in October 2020, reads.
She argues there was no “visible effort” from government officials to “even commence, let alone conclude, the basics of the tender. Without the choice of fabrics, nothing could be done.”
Ciolek also states that during this period, her business lost its school uniform supply contract, presenting the company with a "double negative whammy" that compounded its financial ruin.
“Due to the financial resources being exhausted, caused by the lack of turnover from being on standby for seven months, the business was forced to close.”
Butcher, in an affidavit submitted in August 2019, wrote that the costs involved to prepare for the delivery on the tender and the accompanying delays caused “by the state were a major contributing factor in the bankruptcy and closing of the sub-contractor (Karseboom) and the suspension of business activities by Cherry Tree Trading CC in August 2018”.
Government denies that the choosing of fabrics was to blame for the failure to deliver, arguing that the tender had set out the particular fabrics and no further discussion or decisions were necessary.
“After payment of the invoice, Cherry Tree Trading CC trading as Karseboom only had to deliver.”
Trail of loss
Government lawyers say the money that was paid to Karseboom before the work commenced and the goods were installed, was used by Ciolek to pay off her debts, including a home loan and outstanding taxes.
In her affidavit, Ciolek admits “the funds had slowly been used to cover running costs whilst waiting for someone from State House to make a selection of fabrics”.
Ciolek argues that Karseboom was sub-contracted by Cherry Tree Trading to assist with the tender. She highlights that Karseboom however “did not tender for the job nor had any direct dealing with statehouse in the submission of the tender”.
She says her company did receive the payment, and claims she “advised them (government) of the error of the payment, which should have been made to Cherry Tree CC”.
Nevertheless, she does not deny the money was used to settle outstanding debt.
In email correspondence submitted to the court by the state, Ciolek offered to pay back the money with N$1 000 monthly instalments. The offer was declined. “I have lost everything I worked for in my entire life. My only source of income is a state pension of N$1 300 per month.”
She also details that she lost her pension, savings, and her house, which was sold off below valuation after her business collapsed.
Government lawyers argue that Butcher, a 51% shareholder in Cherry Tree Trading CC, which was at the time of the bid listed as a holding company trading as Karseboom, is side-stepping responsibility for the repayment.
Butcher has argued he was only responsible for the day-to-day running of the business, and had no role in the finances of Karseboom. He argued further that since the loss of his job, he has no authority to represent Karseboom or speak on its behalf.
“Brendan Butcher at all times knew that Cherry Tree Trading CC was not trading as Karseboom CC and / or a holding company of B Karseboom CC, at the time of the tender submission. He made false misrepresentation to the application,” a submission by the government lawyers reads.
Government argues that Butcher and Ciolek “grossly abused” the juristic personality of their company names to win the bid.
Government argues that Ciolek’s financial situation does not “extinguish her liability to repay the money unduly misappropriated”.
As such, government is asking that the court hold both personally liable for the payment of the monies owed, or order them to deliver the curtains, wall paper and scatter cushions as paid for.
The case was before High court judge Marlene Tommasi in late January for a status update. To date no new date for the case has been announced.