South Africa

Up in smoke: UK businessman cries foul after SA firm offloads his product to dagga growers

Up in smoke: UK businessman cries foul after SA firm offloads his product to dagga growers

A British businessman is suing a South African company for allegedly cheating him out of R1.3m worth of agricultural product and then selling it off to dagga growers.

Matthew Ralph thought he had struck a good deal in 2018 when Strand business Progrow Products purchased coir from his London-based firm Gover Horowitz & Blunt.

Coir, derived from plant fibre, is widely used in gardening and agriculture for its water retention capabilities.

Ralph is crying foul two years later and trying to recoup money allegedly owed for his product by Progrow. The high court in Cape Town has granted him a provisional liquidation order. Progrow, however, insists his product was defective.

Ralph's lawyer Barry Varkel said Progrow had since closed shop and his client found the cupboards bare when examining the company’s finances.

“What they have essentially done is taken my client’s stock and put it into their other business, called Just Cannabis, and they are selling it,” said Varkel.

“They cleaned out the liquidated company’s bank accounts. This matter will in all likelihood end up as an insolvency inquiry with personal claims against the directors and a fraud docket being opened.”

Varkel said Ralph’s company had lost about R1.3m worth of stock in the ill-fated  transaction.

“There were also weird bank transactions in Progrow's Investec bank account where around R488,542 was transferred into the account and then the account was flattened. The current bank balance, as per the liquidator, is nominal,” said Varkel.

“Effectively they sold my client’s stock, and took the cash for themselves and then transferred stock to Just Cannabis to make sure the liquidator cannot get his hands on it. These are voidable transactions in terms of insolvency law which the liquidator will have to go to court to reclaim.

“To me, they are criminal counts of fraud. My clients will do everything within their power to get their stock and cash back.”

'A bullying tactic to crush another entrepreneurial enterprise'

Progrow hit back, however, saying the product supplied was substandard. 

“The baseless attack on our business is a transparent attempt by Gover Horowitz & Blunt to justify delivering a defective product and then unreasonably demanding payment for this substandard product from an enterprise that was simply attempting to stimulate the local economy with no consideration for its own blameworthiness, or the current state of the national and global economy," said Progrow director Toni-Lee van Niekerk.

“Rather, it was simply a bullying tactic to employ high-powered attorneys to crush yet another entrepreneurial enterprise to avoid its own contractual obligations.

“The difficulties experienced by Progrow Products emanated directly from the deficient product received from Gover Horowitz & Blunt in that it did not expand to the promised, invoiced and contractually agreed upon amount.”

“All transactions on Progrow Products’ bank accounts were made in the normal course of business, and any suggestion of untoward conduct, whether as alleged or at all, is categorically denied, and our rights in this regard are strictly reserved.”