Gold Circle chief executive officer Michel Nairac has resigned, the Racing and Gaming Group announced on Friday.
This comes a week after the horseracing company asked Nairac and Managing Director Dave Furness to take a leave of absence while a special independent audit of Gold Circle's books was being conducted.
The company that runs horseracing in KwaZulu-Natal and the Western Cape has completed the independent assessment of its financial stability.
"It is necessary for the directors to reiterate their previous statement that neither Nairac nor any other Gold Circle senior executive is suspected or accused of any fraudulent activity.
"Gold Circle's board of directors sincerely regrets any negative inferences that may have arisen in relation to Mr Nairac from the instigation of the previously mentioned assessment," a statement from the company reads.
Gold Circle did not respond to the Sunday Tribune's questions on why, if Nairac and Furness were not implicated, they were the only ones being dispatched to pasture at this stage, nor whether any other board members were likely to be suspended soon.
For their part, Furness and Nairac say they are unaware of the motivation behind their being asked to take a leave of absence. "We have not been accused of anything," said Nairac.
Comment
Furness said, "We will no doubt be advised by Gold Circle in due course," but as the matter was sub judice, he had no further comment to make.
Normally, when issues such as a business model revamp or rationalisation are up for discussion, management consultants - who rely heavily on input from senior executives - are called in.
This appears to be of a more serious nature as attorney Bruce Armstrong, who is also a main board director of Gold Circle, has said the absence of Nairac and Furness would enable the audit to be conducted "with total independence".
Armstrong has said the audit was aimed mainly at establishing why Gold Circle's operating figures were missing budgets, although the economic climate was being named as chief suspect.
Armstrong told an online publication (freeracer.co.za) that the newly elected board had asked questions about cash flow for several weeks and were not given satisfactory answers.
He said the only way to get the answers they wanted was to have an internal assessment by auditors.
The attorney told the publication the board had seen about R8-million lost over the past few weeks and as there were no capital investments they wanted to know where the money had gone.
Gold Circle also did not respond to a question about what ball park figure was under investigation.
However, according to financial publication Moneyweb, in its financial year to July 31, 2008, Gold Circle posted a record turnover with total bets struck amounting to R2.17-billion.
In the same year the net income earned by the racing body was R336-million. In 2007, Gold Circle's net income was R303-million.
Despite this, the profit attributable to Gold Circle for 2008 was a mere R3.1-million compared with R9.6-million in 2007.
The audit began last Thursday and is continuing.
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