ABIL’S BEE PART­NERS GET THEIR DAY IN COURT

CityPress - - Business - JUSTIN BROWN justin.brown@city­press.co.za

The bat­tle be­tween the for­mer em­pow­er­ment part­ners of African Bank In­vest­ments Lim­ited (Abil) and the failed bank’s for­mer di­rec­tors and au­di­tor Deloitte & Touche is set to go to court next year.

Abil’s ex-em­pow­er­ment part­ners have re­filed court pa­pers, in which they squarely blame the R41 bil­lion that they say the failed bank’s for­mer share­hold­ers lost, on the bank’s di­rec­tors and Deloitte.

Hlu­misa In­vest­ment Hold­ings’ chair­per­son Des­mond Lockey said this week that the R2.1 bil­lion case against the di­rec­tors and Deloitte would go to court next year.

Lockey said that African Bank’s for­mer em­pow­er­ment part­ners, Hlu­misa and Ey­omh­laba, had filed new court pa­pers at the North Gaut­eng High Court due to the com­ple­tion of the probe and the re­port into the col­lapse of African Bank by Ad­vo­cate John My­burgh.

The de­fen­dants had asked for an ex­ten­sion in or­der to re­spond to the new pleas, he added.

“They are com­ing with de­lay­ing tac­tics. We are con­fi­dent that we have a clear-cut case and that our claim will be suc­cess­ful. The for­mer di­rec­tors and au­di­tor of African Bank screwed us,” Lockey said.

The plain­tiffs say in the new court doc­u­ments that from De­cem­ber 2012 to De­cem­ber 2014 Deloitte was the au­di­tor of Abil and African Bank.

“The au­di­tors had a duty to carry out th­ese func­tions com­pe­tently, with­out neg­li­gence,” the plain­tiffs said.

“As a re­sult of the au­di­tor’s fail­ure ... Abil share­hold­ers suf­fered losses in the to­tal amount of R40.6 bil­lion,” they al­leged.

Deloitte Africa’s chief ex­ec­u­tive, Lwazi Bam, said: “Deloitte takes its re­spon­si­bil­i­ties as a guardian of pub­lic trust very se­ri­ously ... We be­lieve we have fully com­plied with our obli­ga­tions as au­di­tors and deny any neg­li­gence in our de­liv­ery. As this is a le­gal mat­ter, we are un­able to pro­vide fur­ther com­ment.”

The for­mer di­rec­tors of Abil and African Bank who are be­ing sued are: Leon Kirki­nis, for­mer African Bank CEO; Nithi­anan­than Nal­liah; Mo­jankun­yane Gumbi; Mutle Mo­gase; No­ma­l­iso Langa-Royds; Nicholas Adams; Sa­muel Sithole; An­to­nia Fourie; and Robert Sym­monds.

Mor­ris Mthombeni is still an Abil di­rec­tor and is also be­ing sued.

The court pa­pers al­lege that the Abil and African di­rec­tors au­tho­rised the pub­li­ca­tions of fi­nan­cial state­ments in re­spect of Abil and African Bank that were false or mis­lead­ing in “ma­te­rial re­spects”.

“In Au­gust 2013, [they] au­tho­rised the pub­li­ca­tion of a prospec­tus con­tain­ing de­tails of a pro­posed rights is­sue of R5.5 bil­lion for Abil which con­tained fi­nan­cial state­ments and other fi­nan­cial in­for­ma­tion that were false or mis­lead­ing in ma­te­rial re­spects,” the pa­pers al­lege.

The di­rec­tors of Abil and African Bank failed to ex­er­cise their pow­ers and per­form their func­tions with a de­gree of care, skill and dili­gence, the pa­pers added.

The plain­tiffs al­lege that the ap­point­ment of Tham­sanqa Sokutu as an ex­ec­u­tive di­rec­tor of Abil and African Bank hap­pened when he had no tech­ni­cal bank­ing skills and “[when] he was not suf­fi­ciently qual­i­fied to carry out his du­ties as di­rec­tor of African Bank or as man­ag­ing di­rec­tor of re­tail lend­ing for African Bank”.

The di­rec­tors also failed to make ad­e­quate pro­vi­sion for losses sus­tained by African Bank.

The plain­tiffs said African Bank had used “a flawed credit-pro­vi­sion­ing model”, which re­sulted in an un­der­pro­vi­sion­ing for de­fault­ing loans.

African Bank “[pur­sued] ac­count­ing prac­tices which were, when com­pared with com­mon bank­ing prac­tices and with the pru­dent prac­tices ex­pected of a reg­is­tered bank, ag­gres­sive to the point of reck­less­ness,” the pa­pers al­lege.

Lawyer Danie Le Roux, for the Abil di­rec­tors, didn’t re­spond to calls seek­ing com­ment.

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