ABIL’S BEE PARTNERS GET THEIR DAY IN COURT
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.