The Trustees of Blue Catalyst Matching
Fund Trust (“BCMFT”), announced this
week that Genesis Fitness, an
investment undertaken by the BCMFT
has been served with an urgent
application to liquidate it by one of its
creditors.  BCMFT is an investment
vehicle of Blue Catalyst Investments
(Pty) Ltd, a subsidiary of Blue IQ, which
in turn is an agency of the Gauteng
Provincial Government. 

Confirming that liquidation
proceedings have been instituted
against Genesis Fitness, the trustees
were not surprised, further stating that
it had been their intention as the
shareholder of Genesis Fitness to
initiate such liquidation.

The investment into Genesis Fitness
had been made by former officers of
Blue Catalyst, all of whom have since
left the organisation.  It appears that
this investment had been made in
contravention of the investment
objectives set out in the trust deed.

Having commissioned a comprehensive due diligence investigation to be
conducted by independent law firm Mkhabela Huntley Adeyeke Inc, it became
apparent to the trustees that the company was not being managed in the
best interests of government or the public.  A further forensic investigation
was commissioned which was carried out by leading forensic auditing firm,
Gobodo Forensic Investigative Accounting (“GFIA”).

During the course of this investigation it became clear that a swift takeover
of the management control of Genesis was necessary.  This was carried out 8
weeks ago by a team put together by the trust and the forensic auditors.  The
extent of the financial mismanagement became quickly apparent to the trust
and the decision to take the necessary action to bring operations to a close
was taken.  However, unanticipated delays at the office of the Master of the
High Court resulted in the shareholder not being able to act as swiftly on the
liquidation as was hoped.

The forensic audit was provisionally finalised in early October and a final report
received at the beginning of this week. Based on the outcomes of this forensic
audit report, coupled with a strong appreciation for the need to maintain
effective governance and sound financial management in all public entities, the
trustees anticipate that a number of criminal and civil actions will be launched
against those guilty of complicity or active decision making that has resulted in
this unfortunate turn of events for Genesis Fitness and wastage of public funds.
The Trustees have also stated that they will co-operate in all respects with the
liquidation process.

Issued on behalf  of the board of Trustees
Blue Catalysts Match Fund

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