Excerpts from recent SAIA conference

Wrong perceptions have been created that the South African Institute of Auctioneers (SAIA) has, through its Chairman, targeted the insolvency industry and insolvency practitioners as the axis of evil within the auction industry.

These perceptions are thought to have emanated from selective extracts of the opening and welcome speech delivered at SAIA’s 28th Conference and AGM held on 24 March 2012.

Only a small section was quoted out of the nine-page speech covering a wide range of ills ailing the auction industry. These include:

  • Corrupt auctioneers, who operate fraudulently, connive with liquidators and attorneys, conspire with bank officials, hijack auctions (conduct auctions without mandates from sellers) and generally tarnish the goodwill of professional auctioneers who have invested time, effort, education and money to develop themselves and their companies.
  • Corrupt insolvency practitioners who manipulate the requisition system, enjoy too much unfettered power (including the unilateral appointment of auctioneers), blur the lines of their responsibilities by marketing assets themselves, double-dip by demanding kickbacks from auctioneers, and are generally conflicted in their dealings across the insolvency value chain (including cosy dealings between husband and wife teams).
  • The role of sheriffs with regard to sale in execution auctions which; by and large, fail both judgement creditors and judgement debtors by achieving low values, thus forcing judgment creditors to safeguard their interests by buying the assets back in most instances, to the detriment of judgement debtors who remain liable for the unrecovered balance.

In all fairness, the wording of the original text of the speech could give the wrong impression that the entire insolvency industry and all insolvency practitioners are corrupt. Granted, the extent of the corruption within both the insolvency and auction industries has never been quantified, but it is only fair to acknowledge that not all insolvency practitioners and not all auctioneers are corrupt.

Therefore, while SAIA still stands by the views contained in the speech reiterated above, we would like to qualify statements relating to the insolvency industry and insolvency practitioners as follows:
  • Statements made about corruption within the insolvency industry are directed at rogue elements who perpetrate the corrupt and fraudulent activities outlined in the speech.
  • Corruption within the insolvency industry is not a one-sided event, but a collaborative effort between corrupt insolvency practitioners who connive with equally corrupt auctioneers, including attorneys and bank officials most times.

Clearly, the reputational damage caused to both the insolvency and auction industries by rouge insolvency practitioners and auctioneers cannot be left unchallenged. As the saying goes, “For evil to flourish, it is only necessary for good people to do nothing.” Indeed, “The world we live in today is very dangerous, not only because of people doing evil, but because of those who let it happen.”

SAIA is determined to root out corruption within the auction industry and accordingly calls upon upright members of the insolvency industry to join us in the fight to clean up both the auction and insolvency industries.  We cannot continue to countenance fraudulent practices such as kickbacks between auctioneers, liquidators and attorneys which defraud our clients and consumers.  Also, we cannot continue to tolerate corrupt practices which tarnish the images of our industries and erode the goodwill of professional insolvency practitioners and auctioneers who have invested time, effort, education and money to develop themselves and their companies.

The institute’s view is that recent developments have given both the insolvency and auction industries the opportunity for introspection and to revisit the structures of both industries, including admission criteria, standards, qualifications, professional ethics and even funding models.  For instance, if kickbacks are a consequence of paltry remuneration for liquidators through gazetted fees, we should approach the authorities to address the problem.  However, nothing will ever justify greed in whatever form.

SAIA hopes that upright members of the insolvency industry will find this clarification in order and join hands with us to fight the scourge of corruption within both the insolvency and auction industries. Rogue elements within both the insolvency and auction industries should be warned that investigations are ongoing, spearheaded by different government agencies, including the National Consumer Commission, the Estate Agency Affairs Board and National Prosecuting Authority.

*The full speech can be found here

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