A whites-only, Afrikaans-speaking enclave in the Northern Cape faces ruin after the company formed to run it was provisionally wound up because it was founded and run illegally, says a News24 report.

Western Cape High Court Judge Patrick Gamble ruled Eureka Beperk, registered in 2016, made an unlawful initial public offering then diluted its shareholding through an unlawful secondary offering.

The company also has a verhandelkamer (trading room), which was an unlicensed securities exchange, meaning the share trades it conducts are illegal, Gamble said.

In his judgment, Gamble said Eureka was the dream of people who wanted to ‘live in splendid isolation, rooted in the past while speaking the language of their choice, to the exclusion of all others’.

Before resigning as a director, said Gamble, Eureka founder Adriaan Nieuwoudt (77) devised a scheme with accounting officer Andries le Roux that gave him a shareholding of at least 60% in Eureka Beperk – and the unilateral right to increase this percentage in future – in return for his intellectual property in matters such as building sewerage systems, houses, roads, and desalinating groundwater.

‘Nieuwoudt was further authorised to dispose of those shares to whoever he chose and he was not obliged to offer them to any of the other shareholders,’ said Gamble.

However, Eureka resident and shareholder Carolina Lombard (59), who brought the winding-up application, said Eureka’s real purpose was to enrich Nieuwoudt.

The News24 report says Lombard’s High Court application claimed she was entitled to a damages payout of R6.5m – something Gamble described as a ‘bald allegation’.

But the judge said Lombard had established a case for her conclusion that Eureka was used by Nieuwoudt to conduct a self-enrichment scheme, and that the illegality of its business model justifies its winding-up so liquidators can investigate where its money has gone.

Gamble said there might also have been an argument that the aims and philosophy of Eureka ‘stand in stark contrast to the spirit and purport of our Constitution’.

However, ‘as a subscriber to the principles of white supremacy and the racist agenda promoted by Nieuwoudt, her fellow shareholders and the company in general, Lombard can hardly have been expected to raise such a point in her papers’, he said.

‘She has chosen to make common cause with the other occupants … and she is tarred by the same brush. In the circumstances it would be incorrect for this court to adjudicate the case on this basis.’ 

The report notes Eureka is due back in court on 17 May to argue against a final winding-up order, and in the meantime the company will be run by the Master of the High Court.

Full News24 report