Abil’s BEE court papers face challenge
The former directors of African Bank Investments Limited (Abil) and auditor Deloitte have raised exceptions to the court papers filed by Abil’s former empowerment partners and the matter could be heard in May or June.
The dates that were being looked at are June 5 to June 8 and again June 13 to June 14, according to an exchange of letters between the parties which City Press has seen. The empowerment partners, Hlumisa Investment Holdings and Eyomhlaba Investment Holdings, who represent 13 000 black shareholders, are seeking to sue the directors and Deloitte for R2.1 billion.
Hlumisa Investment Holdings chairperson Desmond Lockey said that the case was based on a section of the Auditors Act and section 218 of the Companies Act.
Lockey said this week that it was possible that the matter could be heard in the week starting May 29.
Deloitte has raised two exceptions in a court filing to the court papers filed by the two former Abil empowerment partners.
In the first exception, Deloitte said the alleged wrong was committed against African Bank and not against the plaintiffs.
“Abil’s shareholders have no claim over any assets of Abil and/or African Bank and merely have a personal right to participate in Abil on the terms of its memorandum of incorporation,” Deloitte asserted.
“The shareholders of Abil have no claim in law against a third party which caused any loss which African Bank may have suffered. The diminution of the value of the shares held by Abil in African Bank and by the plaintiffs in Abil is merely a reflection of the loss suffered by African Bank,” Deloitte said.
In the second exception, Deloitte said it owed no legal duty to the plaintiffs as individual Abil shareholders.
“The plaintiffs’ claim against Deloitte is a delictual claim for pure economic loss,” the auditor added.
“The plaintiffs’ claim is based upon negligent misstatements allegedly made by Deloitte in expressing audit opinions in respect of the financial statements of African Bank,” Deloitte said.
“A statutory auditor of a company owes its legal duties to the company itself and to the shareholders in general meeting; it owes no legal duty to individual shareholders in their capacity as such,” the auditor said.
Deloitte is asking for either of the two exceptions to be upheld with costs.
The 10 former Abil directors have raised three exceptions to the court papers filed by the two former Abil empowerment partners.
The former directors of Abil and African Bank who are being sued are former African Bank CEO Leon Kirkinis, Nithiananthan Nalliah, Mojankunyane Gumbi, Mutle Mogase, Nomaliso LangaRoyds, Nicholas Adams, Samuel Sithole, Antonia Fourie and Robert Symmonds.
Morris Mthombeni, a director of African Phoenix Investments Limited, which is the new name for Abil, is also being sued.
In the first exception, the former directors say that the plaintiffs have not set out factors, or alleged any basis, entitling them to recover the losses suffered by them in consequence of the drop in the Abil share price.
In the second exception, the former directors say the claim does not contain allegations entitling the plaintiffs to reply on section 218(2) of the Companies Act.
In the third exception, the result of the plaintiffs’ particulars of claim do not contain sufficient averments to sustain a cause of action based on representations allegedly made by the defendants.
The former directors are seeking for certain key paragraphs of the claim to be struck.
Abil’s ex-empowerment partners say in court papers that the blame for R41 billion lost by the failed bank’s former shareholders should be on the bank’s former directors and Deloitte.
The court papers allege that the Abil and African Bank directors authorised the publication of financial statements in respect of Abil and African Bank that were false or misleading in “material respects”.