R&E minority shareholders get court nod to go after Investec

A GROUP of minority shareholders in former Kebble-controlled Randgold & Exploration (R&E) are planning action to claim R1.3bn from Investec Bank after the High Court in Pretoria ruled that they had the “locus standi” or legal standing to do so.

The claim still has a long way to go but the ruling is likely to be followed with interest by other South African shareholders who have lost millions in recent years through corporate collapses such as those of the Kebble companies and African Bank.

Investec had challenged the legal right of certain of the R&E shareholders who plan to sue it for its actions after Brett Kebble left R&E in 2005.

The court ruled that shareholders whose shares were held through nominee companies did not have the legal standing to sue for oppression of minorities, but registered nominees and own-name beneficial shareholders did.

In a statement, R&E’s minority shareholders said since 90% of all shares were held on the JSE through nominee companies, this meant most minority shareholders would have to persuade the nominee company of their bank or stockbroker to proceed on their behalf if they ever wanted to protect their rights, which could be difficult.

All the shares of six of the seven original applicants and 34 of the 40 other shareholders who later applied to join the action can be joined together to sue Investec.

The litigants want Investec to buy their R&E shares for R288.56 each plus whatever R&E’s share price is at the time the purchase is made.

R&E’s shares were at 175c on the JSE yesterday.

The latest published net asset value was 227c per share at the end of June.

The R&E minorities argue that Investec took control of R&E’s board in August 2005, after Mr Kebble left, and prevented the company from pursuing timely claims against Western Areas, Investec Bank UK and Investec itself.

They say one of the claims R&E did not pursue was for R4bn against Investec Bank UK, which borrowed 5.46-million Randgold Resources shares from R&E, and for which R&E was never compensated.

Investec said yesterday it did not want to add to a

statement published on its website two weeks ago. In that statement, it said its R1bn loan to JCI in 2005, which was secured by various assets, had enabled the company to continue operating and was concluded with the full knowledge and consent of its shareholders.

The loan preserved the value of assets in all the three linked Kebble companies: JCI, R&E and Western Areas. Since JCI had run out of cash, the alternative would have been to liquidate it.

Investec said it was never a party to and had no knowledge of any underhand dealings by Mr Kebble. Through its actions Investec had helped uncover inappropriate governance and “untoward dealings”, it said.

It said it had already been sued by R&E in relation to the alleged misappropriation of the Randgold Resources shares, and the matter was settled.

An R&E spokesman said yesterday that apart from the comprehensive legal updates that the company provided from time to time, it would not otherwise comment or speculate on these matters.