Former
partners of Saha International Partnership, an insolvent management and
financial consulting group which operated in New Zealand, Australia, Namibia
and South Africa are in court arguing over who bears the partnership losses.
A number of partners allege Dr Govind Saha, the
founding partner and chief executive of Saha International: acted negligently;
misled them over material aspects of the partnership’s ongoing business and
incorrectly allocated partnership income.
The full extent of partnership losses has yet
to be settled. Justice Collins said a
full court hearing is required to sort out a multitude of disputed facts. Any trial is expected to take six weeks. The effect of trading as a partnership is
that individual partners of Saha Partnership are required to meet partnership
debts out of their own pocket.
Saha International was set up in 2001. There was a mass departure of all partners,
bar two, from the partnership in late 2010.
A number of these partners allege the partnership annual accounts for
the 2007, 2008 and 2009 years contained material errors. In particular, there are complaints that
partnership profits were overstated because losses in the South African
division were not properly recorded.
Compounding problems for partners is the fact
that profit projections, on which partner distributions were calculated, ran
well ahead of partnership profitability.
The High Court was told a forecast profit for the 2008 year of $6.09
million later proved to be only $1.41 million.
Subsequent years were even worse: a projected profit of $6.2 million for
2009 became an actual loss ($0.56 million); 2009’s projected profit of $6.1
million a loss ($2.4 million); and 2010’s projected profit of $3.6 million also
a loss ($2.4 million). During the period
2006-2010 the number of partners in Saha International increased from four to
ten while partnership annual operating costs increased from $5.5 million to
$18.1 million.
Evidence was given that partners took part in a
November 2010 mediation attempting to resolve outstanding issues over the
partnership winding up. A set of 14
“settlement principles” were agreed by six of the partners.
The High Court is being asked to rule on both
the Saha International partnership agreement and the November 2010 “settlement
principles”.
re Saha
International Partnership – High Court (1.04.15)
15.028
15.028