The Legal Practice Council (LPC) has suspended six directors of Chueu Incorporated Attorneys for six months due to allegations of misappropriating over R25-million from their clients. This development comes after the Limpopo High Court suspended only the managing director, Chupjana Lekolooana Chueu, before the LPC appealed to the Supreme Court of Appeal (SCA), which ruled that all directors were accountable for the firm’s finances.
The Directors Involved in the Investigation
The six suspended directors are Thabo Milton Chueu, Brian Kingsley Keabetsoe Koopedi, Charles Kgomotso Tsoku, Sekgapinye Tsetsewa, Phaledi Raesibe Gwangwa, and Pascalia Nonhlanhla Mathibela. The directors claimed that they had no involvement in the accounting and financial affairs of the firm. However, the SCA deemed that their lack of involvement constituted a dereliction of their duties as directors and considered their defense insufficient.
The Importance of Integrity and Honesty in the Legal Profession
Judge Caroline Nicholls delivered the judgment and highlighted the significance of integrity and honesty in the legal profession. She noted that a lack of trust in legal practitioners could lead to the erosion of the rule of law. Chueu Incorporated Attorneys was handling approximately 6,000 files valued at R6.2-billion, primarily focusing on personal injury cases, operating from four independent offices, with the directors working from different locations.
Complaints Received by the LPC
In 2020 and 2021, the LPC received complaints from clients who alleged that the firm had represented them in litigation with the Road Accident Fund (RAF) but failed to pay them the money collected. The amounts ranged from R377,000 to R1.2-million, and one client claimed that her R8.1-million RAF claim had lapsed. Furthermore, the LPC learned that the RAF had accidentally made a duplicate payment of R29-million to the firm, which had not been returned.
Unaccounted Trust Funds
By the time the LPC filed charges against the directors in question, they had investigated 26 complaints and discovered that at least R25.8-million in trust funds remained unaccounted for. The directors did not attend the disciplinary hearing to address the charges. In the High Court, they maintained that they were merely “salaried employees” who had been kept in the dark by Chueu and that most of them had already resigned.
The Court’s Decision
Initially, only Chueu was suspended due to the High Court ruling that the LPC’s allegations were too general and did not specifically refer to the directors. Judge Nicholls emphasized that every director has a fiduciary duty towards a company and that pleading ignorance does not absolve them of responsibility. The concept of a “salaried director” is not recognized in the Companies Act nor the Legal Practice Act. Based on the facts, the judge granted the six-month suspension order but ruled that the LPC was not entitled to its costs.
LPC’s Use of Derogatory Language and Disorganized Record
Judge Nicholls criticized the LPC’s use of derogatory language in its notice of appeal and noted that the court had been burdened with a disorganized record of 1,472 pages. She expected more diligent compliance with the rules of the court from the LPC as the profession’s regulator.
