NOTES FROM PETER MOSS
1.Introduction
1.1During 1995 Moss negotiated the acquisition of a German registered company, Werner and Pfleiderer Industrielle Backtechnik Gmbh (“WPIB”) and a South African company Werner and Pfleiderer (SA)(Pty) Ltd (“WPSA”), which the Krupp group of companies wished to dispose of. WPSA changed its name to Combake ("CBH").
1.2Moss engaged the services of attorney Benji Liebmann (“Liebmann”) to structure the transactions.
1.3Moss officially emigrated to Germany.
1.4Moss asked Liebmann to assist him in finding a financial manager. After extensive persuasion by Liebmann, Moss engaged the services of Jeff Liebesman (“Liebesman”) as the financial manager. Liebesman persuaded Moss to form a 60/40 partnership with him in a new holding company to be formed. Liebesman told Moss that if he did not double the size of the company in two years, Moss could have the shares back for R1-00.
1.5Liebesman persuaded Moss to take the R32 million in cash which was sitting in WPIB and put it into the new holding company, Combined Bakery Holdings (“CBH”), and BVI registered holding company set up by Liebesman. Liebesman’s intention was to use the cash for acquisitions in the bakery industry.
1.6Liebmann set Moss up in BVI trust as he did for Liebesman and himself. Liebesman was to give Liebmann part of his shareholding. The shares in WPIB were held by three separate trusts. Moss’ shares were held in a Swiss registered trust named International Bakery Investment Trust (“IBIT”). The trustee of IBIT is a resident of Switzerland, Mr Peter Biberstein. Liebmann controlled his own trust, and Liebesman was the beneficiary of a trust known as Wellbake Investment Trust (“Wellbake”). A written agreement was entered into between IBIT, Liebesman and Liebmann. In terms of this agreement, IBIT transferred its shares in WPIB to Wellbake and CBH, which at the time was the sole shareholder in Combake. The South African company, WPSA, owned by CBH was sold to WPIB for R10.7 million at the same time as CBH took its loan from WPIB of R32 million.
1.7Liebmann became the sole custodian of the documents.
1.8The initial shareholding was Moss 60 / Liebesman 40.
2.Change in shareholding
2.1Liebmann and Liebesman then advised Moss that they had found a cash-shell in South Africa. They wanted to use it as a vehicle to establish an investment house in South Africa, listed on the JSE. Logic was that by holding undisclosed offshore shareholding, they could trade the shares without detection. This new strategy was a departure from applying the cash to investments in the bakery field.
2.2At that stage, Liebmann and Liebesman demanded a restructure of the shareholding of CBH. 60/40 was no longer good enough for them because Moss would be getting the shell at cash value and they would be injecting assets into it.
2.3Moss agreed to a change from 60/40 to 50/50. Liebesman reduced his shareholding from 40% to 37.5% in order to accommodate a 12.5% shareholding for Liebmann.
2.4Liebmann saw the gap in Southgo and insisted on a 12,5% shareholding. This would reduce Liebesman's share to 37,5%.
2.5Liebmann handled all the documentation and undertook to draw up the revised agreements. When these draft agreements were given to Moss, they showed a reduction in Moss’ share from 50% to 43.75%, an increase in Liebesman’s share from 37.5% to 43.75%, and the balance of 12.5% to Liebmann. This departure in shareholding was never discussed or agreed and remained unresolved into the future.
3.R32 million cash reserves in WPSA
3.1The R32 million was allocated into two portions:
3.1.1CBH bought 100% of the cash shell, Southgo, from the controlling shareholder Norman Lowenthal (at a cash price of approximately R3–4 million). Ellerine Brothers held 10% of the shareholding in the cash-shell (since Ellerine Brothers held these shares and became a substantial shareholder when the cash-shell changed its name, it would be reasonable to assume that this shareholding was maintained either on-shore of off-shore);
3.1.2A rights issue of R28 million took place and Southgo changed its name to Corpgro. A consortium was put together. Moss represented himself and the BVI trusts of Liebmann and Liebesman. Moss held his shares in the name of his trust (IBIT). Liebmann structured the BVI trusts. The initial shareholding of Moss, Liebesman and Liebmann was 25%.
3.2Liebmann and Liebesman also told Moss that the target was to acquire Macadam, a company in the bakery field in South Africa.
3.3The initial intention was to use the R32 million in CBH to acquire companies in the bakery field. Now, all of the money had been used firstly to acquire the cash-shell and then to follow rights in Corpgro.
4.New shareholding imposed
4.1Liebesman and Liebmann had unilaterally imposed a new shareholding dispensation on Moss.
4.2Whereas originally Liebmann's 12,5% shareholding was to be being allocated from Liebesman's shareholding, it was now allocated from both Liebesman and Moss, predominantly from Moss’ allocation.
4.3Moss’ shareholding had therefore reduced from an initial 100% of WPIB to 60%, then 50%, and now 43.75%.
4.4This dispute was never resolved.
5.Repayment of cash to German company
5.1The initial loan from WPIB in Germany to CBH became due for repayment in 1997. Moss, as the geshftsfuhurer was obliged to repay the amount in full. An amount was required by the German company to cover warranties that had to be paid out on plant and equipment in the amount of approximately R5 million over and above the R32 million.
5.2When WPIB was refunded, Liebesman and Liebmann refused to pay Moss. Moss paid the R5 million from South Africa.
5.3Moss repaid the R32 million loan via the sale of his shares in Southgo / Corpgro. Liebesman and Liebmann refused to meet their portion of this liability. Liebesman stated that he had pledged the shares in order to settle his liabilities to Trencor. (It would be reasonable to assume that the pledge by Liebesman was to Grolman).