Abil’s BEE court papers face chal­lenge

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

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”.

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