What’s behind the shutdown of High Court Masters’ Offices?

Written by Ciaran Ryan. Posted in Journalism

They have been dogged by allegations of corruption for years. From Moneyweb.

The offices administer deceased and insolvent estates, and have been described as ‘breeding grounds for predators looking to pick at the cadavers of deceased estates’. Image: Shutterstock
The offices administer deceased and insolvent estates, and have been described as ‘breeding grounds for predators looking to pick at the cadavers of deceased estates’. Image: Shutterstock

On Monday Justice and Correctional Services Minister Ronald Lamola announced that all 15 Masters’ Offices within the country’s high courts were to be shut down for a day while the Specialised Investigating Unit (SIU) conducted search and seizure operations.

The offices were due to reopen on Wednesday. In a statement, Lamola apologised for any inconvenience, adding: “This investigation was necessitated by several allegations of maladministration and corruption and the Mpumalanga case wherein it is alleged that an official in the master’s amassed R1.7 million through fraudulent activities which further highlighted the need for an investigation of this nature.

“As a result, we will be shutting down all Masters’ Offices across the country to enable the SIU to gather, collate and retrieve information relevant to the investigation without any hindrance.”

One of the primary tasks of the Master’s Office is administration of deceased and insolvent estates.

It also administers the Guardian’s Fund, which manages money on behalf of those deemed legally incapable, as well as minors, unborn heirs, and missing or untraceable people.

Read: Could you be one of 7 000 people owed money by the Guardian’s Fund? 

King Sibiya, head of Lungelo Lethu Human Rights Foundation, which defends the poor against abusive creditor practices, says he has been complaining for years about corruption in and around the Masters’ Offices, which he says are breeding grounds for predators looking to pick at the cadavers of deceased estates.

“We are inundated with cases of widows whose husbands have passed on and who in terms of the law are the rightful executors of the deceased estate. But it is a common practice among banks to have themselves appointed as executors instead, particularly where there is an outstanding mortgage loan owed by the deceased.

“This leads to huge conflicts of interest where banks are deciding how to share the spoils in their favour, with no proper oversight whatsoever from the Master.

“The banks then rush to court to foreclose on a mortgaged property without following the law,” he adds.

“I am obviously extremely pleased that the SIU is now looking into this and that we might finally get some justice for the thousands of people who have been financially ripped off by this kind of predatory behaviour.”

Read: Banks slapped down over home repossessions in Joburg court case

Tony Kay, a KwaZulu-Natal property developer, has campaigned for years for police to investigate the nexus between liquidators and the Masters’ Offices after a Shelly Beach property deal he was involved in went pear-shaped. It was then that the liquidators stepped in.

The property developers in this case, like many others, complained that the auction process was irregular.

The Pretoria Master’s Office last year launched an inquiry into a botched property deal in which Pietermaritzburg liquidator Pierre Berrangé was involved. In recent years, the complaints against liquidators and Masters’ Offices have multiplied – along with the sums involved.

“We want a Master’s Office that will conduct its affairs with integrity in line with Batho Pele [‘People first’] principles and not squander resources meant for the poor and vulnerable in society,” said Lamola on Monday.

Read: Winding up an estate

“We are fully aware that the Master’s Office plays a critical role in our communities, it is an office that works for the most vulnerable in our communities, it works for orphans, minor children, and the widowed. We do however request members of the public to postpone their intention to visit the Master’s Office just for a day.”

The accusations against the Master’s Office, some of them aired in the Zondo commission of inquiry into state capture, range from the opportunistic to the criminal.

The surprise search and seizure raid will have caught corrupt officials in the Masters’ Offices off guard, leaving little time to lose files or shred incriminating evidence.

The SIU investigation will also look into the affairs of the Guardian’s Fund, as well as the supervision of the administration of companies and close corporations in liquidation.

Big money

The 2018 annual report for the Guardian’s Fund showed assets of R13.6 billion, almost 24% more than the R11 billion it had in 2016. In 2018 it received more than R1 billion in investment income.

One of the reasons the fund keeps growing is that so much of this money remains unclaimed, according to Sean Rossouw, founder of Benefits Exchange.

Benefits Exchange offers a free search engine for those trying to track down pension and other benefits that may be owed to them (the first search is free, while a processing fee of R25 applies to subsequent searches).

The Guardian’s Fund is managed by the Public Investment Commissioner.

In terms of the Administration of Estates Act, the Master of the High Court is responsible for paying out from the Guardian’s Fund.

The SIU investigation will also look into “the supervision of the administration of companies and close corporations in liquidation; the safeguarding of all documentary material in respect of estates, insolvencies and liquidations; the processing of enquiries by executors, attorneys, beneficiaries and other interested parties; and the appointment of executors, trustees, curators and liquidators”.

Last year Business Day reported that 45 000 trust files went missing from the Pretoria offices of the Master of the High Court after a storm apparently blew off the roof at a storage facility.

The SIU will have a lot of paperwork to get through over the coming weeks and months.

Read: Trusts: do I have funds due to me as a beneficiary?

Ciaran Ryan

The Writer's Room is a curated by Ciaran Ryan, who has written on South African affairs for Sunday Times, Mail & Guardian, Financial Mail, Finweek, Noseweek, The Daily Telegraph, Forbes, USA Today, Acts Online and Lewrockwell.com, among others. In between he manages a gold mining operation in Ghana, and previously worked in Congo. Most of his time is spent in the lovely city of Joburg.