Wiese’s mole­hill …

Financial Mail - - MARKET WATCH - @mar­chasen­fuss

Back in late 2016, I at­tended a very un­com­fort­able In­victa Hold­ings AGM. I had just writ­ten a cover story on the in­dus­trial sup­plies con­glom­er­ate that high­lighted the stark dif­fer­ence in per­cep­tions between the In­victa ex­ec­u­tives and some of its mi­nor­ity share­hold­ers around the de­tail is­sued on a re­portable ir­reg­u­lar­ity raised on part of a share re­pur­chase ex­er­cise.

In­victa chair and ma­jor share­holder Christo Wiese dis­missed my ef­fort as mak­ing a moun­tain out of a mole­hill. The is­sue, re­ally, was that In­victa did not of­fer a sur­feit of de­tail on the re­portable ir­reg­u­lar­ity in its fi­nan­cial state­ments … or even at the AGM.

Wiese asked me: “What sort of de­tail do you want … what more do you want to know?”

For those who need re­mind­ing, In­victa po­si­tions held by cer­tain deeplever­aged In­victa ex­ec­u­tives (present and for­mer) were in­vol­un­tar­ily closed out by fi­nan­cial in­sti­tu­tions, and sold into the mar­ket. Sup­pos­edly these shares were in­ad­ver­tently bought back as part of a share re­pur­chase ex­er­cise by In­victa as­so­ciate Hu­lumani.

These trans­ac­tions should have been flagged as a spe­cific share re­pur­chase, which re­quired a spe­cial author­ity from share­hold­ers. Though In­victa cor­rected the trades later, the JSE cen­sured the group. At the time cer­tain mi­nor­ity share­hold­ers re­mained baf­fled by this over­sight. Surely In­victa di­rec­tors knew there was a share buy­back in place?

The mat­ter was seem­ingly laid to rest … un­til last week, when In­victa in­formed share­hold­ers that the JSE had now re­ceived in­for­ma­tion al­leg­ing the com­pany and its di­rec­tors “did not fully and ac­cu­rately dis­close all the rel­e­vant facts to the JSE dur­ing the course of the JSE’S 2016 in­ves­ti­ga­tion, and had failed to rec­tify this de­spite the is­sue hav­ing been raised with mem­bers of the com­pany’s au­dit com­mit­tee”.

The JSE wants re­sponses to these al­le­ga­tions, but In­victa says it’s not aware of the al­leged im­pro­pri­ety.

In­victa share­hold­ers are clearly a lit­tle jit­tery around devel­op­ments.

Read­ers will no doubt re­mem­ber Wiese fa­mously dis­missed, as “drivel”, talk that Stein­hoff In­ter­na­tional’s rep­u­ta­tion was at risk af­ter al­le­ga­tions of ac­count­ing fraud and in­flated prof­its.

In­victa share­hold­ers, just get­ting to grips with a size­able tax set­tle­ment charge around its em­pow­er­ment struc­tures, will be hop­ing Wiese’s “mole­hill” re­mark does not come back to haunt him.

Not a grand de­vel­op­ment

The board of em­pow­er­ment com­pany Grand Pa­rade In­vest­ments (GPI), headed by the com­bat­ive Hassen Adams, be­lieves it is un­der siege from ac­tivist share­hold­ers who don’t have the in­ter­ests of the orig­i­nal com­mu­nity share­hold­ers in mind.

But there’s been some aw­ful tim­ing for Adams in that a court case seek­ing to re­move Adams and oth­ers as trustees from the Hout Bay De­vel­op­ment Trust was con­cluded last week.

In de­liv­er­ing a rul­ing, judge Den­nis Davis noted: “One gets the im­pres­sion Adams was not in­ter­ested in hold­ing trustees’ meet­ings, and that it suited him to ex­er­cise sole con­trol over the trust.” Davis con­cluded that sev­eral breaches of duty war­ranted the re­moval of Adams from the trust.

The damn­ing line was that Davis said: “My find­ings re­gard­ing Adams’ con­duct of the af­fairs of the trust leave me in no doubt that his re­moval from of­fice as a trustee is nec­es­sary in the in­ter­ests of the proper ad­min­is­tra­tion and func­tion­ing of the trust. He has im­per­illed the proper ad­min­is­tra­tion of the trust, and its prop­erty, and has shown he is not a fit and proper per­son to serve as a trustee.”

Of course, these devel­op­ments have lit­tle bear­ing on GPI per se … but there’s no doubt it could strengthen the cause for ad­di­tional over­sight in the board­room as the group looks to im­prove re­turns to share­hold­ers.

The JSE wants re­sponses to these al­le­ga­tions, but In­victa says it’s not aware of the al­leged im­pro­pri­ety

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