Attorney Barnabas Xulu has to repay R20m to government department
Prominent attorney Barnabas Xulu is personally liable with his law firm for the repayment of R20.2m he received in fees from the Department of Agriculture, Forestry and Fisheries.
Judge Phillip Zilwa's order on Thursday in the Cape Town high court follows Judge Owen Rogers' ruling in January 2020 that set aside a service level agreement purportedly signed between the department and B Xulu & Partners Inc (BXI) on May 23 2017.
Rogers also instructed Xulu, the sole director of BXI, to show why he and his company should not be ordered to repay the money.
Xulu, who has represented Western Cape judge president John Hlophe on several occasions, filed papers contesting his liability to repay the money.
In his judgment, Rogers said the fact that Xulu was sole director of BXI did not translate into the court piercing the “corporate veil” and holding Xulu to be jointly and severally liable with BXI.
The corporate veil separates the identity of the company from its members and means that if the company incurs debts, members are not liable for those errors and enjoy corporate insulation.
Zilwa said in cases where the shareholders of a company have managed it in a way that fails to separate their personal affairs from those of the legal entity, the company does not — in truth — carry on its own business or affairs, but acts in furtherance of a business or affairs of its shareholders.
Zilwa said it seemed the conduct of Xulu, in his dealings with BXI, fully satisfied the requirements for the lifting of the corporate veil and holding him jointly and severally liable with BXI for the repayment of the money in issue.
“A closer look on the facts clearly shows that under the guise of settling BXI's liabilities, (Xulu) instead appropriated funds from BXI to himself, his family, his family trust, entities under his control and to his office manager, (Nicole) Pick,” Zilwa said.
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