Survé alleged to have perpetrated illegal share scam
His own court action lets slip FSCA probe of trades in AYO stock
● Media owner Iqbal Survé is alleged to have deliberately manipulated the share price of a company he had a significant stake in, apparently to avoid repaying a R4.3bn investment financed by government workers’ pensions.
This is among the allegations contained in an affidavit by a Financial Sector Conduct Authority (FSCA) investigator, which has only just become public.
The FSCA investigated Survé and two of his companies — Sekunjalo and financial services provider 3 Laws Capital — for allegedly contravening the Financial Management Act.
The alleged contravention, which centres on the over-inflation of the value of shares in AYO Technology Solutions — which is linked to Survé and his businesses — carries a penalty of up to 10 years in prison, a maximum fine of R50m or both.
Survé, known for promoting himself through his newspaper titles around the country, has claimed to be former president Nelson Mandela’s personal doctor and the “mind coach” for Bafana Bafana.
FSCA investigator Alfred Shimati’s affidavit, deposed to in October after an 11month investigation, details the alleged share manipulation scam the JSE uncovered.
“The FSCA has reasonable grounds to suspect that certain persons may have contravened the act. The JSE requested the FSCA to consider investigating suspicious prohibited trading practices … in AYO Technology Solutions shares,” the affidavit states.
Shimati alleges that Survé instructed and approved the irregular trades.
"Survé is not a director of AYO. However he is a director of Sekunjalo and has an indirect interest in AYO through [JSE-listed] African Equity Empowerment Investments (AEEI) and Sekunjalo. It would appear Survé is the directing will and mind of Sekunjalo, 3 Laws Capital, AYO, AEEI and AEEI Corporate Finance."
Shimati says when it came to trades by Sekunjalo and 3 Laws Capital, Survé and 3 Laws Capital were the ones "authorised to give instructions".
He states that in "the majority of the trades, the Sekunjalo share trading account and to a much lesser extent a 3 Laws Capital trading account, were the overwhelming majority buyers of AYO shares."
● Media owner Iqbal Survé is alleged to have deliberately manipulated the share price of a company he had a significant stake in, apparently to avoid repaying a R4.3bn investment financed by government workers’ pensions.
This is among the allegations contained in an affidavit by a Financial Sector Conduct Authority (FSCA) investigator, which has only just become public.
Survé and two of his companies — Sekunjalo and financial services provider 3 Laws Capital — are being investigated by the FSCA for allegedly contravening the Financial Management Act (FMA).
The contravention, which centres on the over-inflation of the value of shares in AYO Technology Solutions, which is linked to Survé and his businesses, carries a penalty of up to 10 years in prison, a maximum fine of R50m or both.
Sekunjalo has a 92.5% stake in 3 Laws Capital, with the remaining stake owned by Arthur Johnson. Survé and Johnson are two of the company’s four directors.
Survé, who is known for promoting himself through his newspaper titles around the country, has made a number of claims, including that he was former president Nelson Mandela’s personal doctor and that he was the “mind coach” for Bafana Bafana, with his work playing a role in the team’s victory at the 1996 Africa Cup of Nations.
In 2017 and 2018, he splurged nearly R140m on seven luxury apartments in the V&A’s No 3 Silo, in the same precinct as the Zeitz Museum of Contemporary Art Africa.
The 71-page affidavit of FSCA investigator Alfred Shimati, which was deposed to in October after an 11-month investigation, outlines in detail the alleged share manipulation scam uncovered by the JSE.
Shimati states that the JSE blew the whistle in November 2018 after it became concerned that the FMA was being violated through “prohibited trading practices”.
“The FSCA has reasonable grounds to suspect that certain persons may have contravened the act. The JSE requested the FSCA to consider investigating suspicious prohibited trading practices … in AYO Technology Solutions shares,” the affidavit states.
The only time a trade was done was when the companies themselves traded the shares. Simply put, no-one wanted them
AYO probe insider
Shimati alleges that Survé instructed and approved the irregular trades.
“Survé is not a director of AYO. However, he is a director of Sekunjalo and has an indirect interest in AYO through [JSE-listed African Equity Empowerment Investments, (AEEI)] and Sekunjalo. It would appear Survé is the directing will and mind of Sekunjalo, 3 Laws Capital, AYO, AEEI and AEEI Corporate Finance.”
Shimati says when it came to trades by Sekunjalo and 3 Laws Capital, Survé and 3 Laws Capital were the ones “authorised to give instructions”. He states that in “the majority of the trades, the Sekunjalo share trading account and to a much lesser extent a 3 Laws Capital trading account, were the overwhelming majority buyers of AYO shares.”
The affidavit, which the FSCA used in October to secure a search and seizure warrant to raid Survé’s businesses at their luxury
V&A Waterfront offices in Cape Town, reveals how for months Shimati and his colleagues analysed scores of AYO share trades by Sekunjalo and 3 Laws Capital.
Survé became embroiled in a feud with the FSCA after the raid, in which financial documents and investment contracts were seized and electronic data copied.
Survé claimed the raid was politically motivated and “purposefully designed to cause maximum harm”. He accused public enterprises minister Pravin Gordhan of being involved and said judge Patrick Gamble, who issued the warrant, was friends with Gordhan.
The investigators were seeking evidence in connection with a R4.3bn investment the Public Investment Corporation (PIC) made in AYO with money from the Government Employees Pension Fund (GEPF).
AYO has been courting controversy since the PIC announced in December 2017 that it would invest in it to create SA’s largest blackowned ICT company.
The PIC paid R4.3bn for a 29% stake in AYO at R43 a share, with AEEI holding a 49% stake.
In February the Sunday Times reported how immediately after the R4.3bn loan was paid into AYO’s bank account, Survé attempted to transfer huge sums of money to companies linked to him. Survé successfully had R400m transferred to 3 Laws Capital.
On Tuesday, the PIC announced its application to have Sekunjalo Independent Media liquidated, “because of the company’s failure to honour its loan repayment obligations”. The loan was granted in 2013 to partly fund Survé’s acquisition of Independent Newspapers. Until recently Shimati’s affidavit was kept secret, but it became public after AEEI lawyers attached it to their application to the high court in Cape Town last month to overturn the warrant for the raid.
Shimati says in his affidavit that according to the investment agreement with the PIC, AEEI Corporate Finance would be liable to pay a significant amount of money to the GEFP should the AYO share price fall below a particular price.
“Sekunjalo was indirectly exposed to this risk,” he states.
Shaun Davies, market regulation director in the JSE, confirmed it asked the FSCA to investigate the trading in AYO shares.
“Conducting routine surveillance monitoring, we identified trading activity in AYO shares that we believed required further investigation,” he said. Davies declined to provide information on why the further investigations were needed.
“Share price manipulation is an offence in terms of the FMA. Criminal penalties can be imposed by a court and administrative penalties can be imposed by the FSCA,” he said.
A source with knowledge of the AYO investigation said the manipulation was allegedly done to stop the PIC recalling its R4.3bn investment.
“There were problems from the start with the share value. Just look at the trades. The only time a trade was done was when the companies themselves traded the shares. Other than that there was no movement. Simply put, no-one wanted them.”
Last week Sekunjalo Investment Holdings and 3 Laws Capital launched an application in the high court in Cape Town to overturn the warrant and have the seized items returned.
Survé declined to comment on detailed questions, but in court papers he denied the allegations and claimed the raids were unconstitutional. In an affidavit submitted to court he claims it was he who alerted the FSCA to the alleged share manipulation, which apparently saw his shares undervalued, via a letter to the regulator written in February, but the FSCA did not appear interested.
In his affidavit, Survé says the warrant violated his and his businesses’ rights to privacy.
In AEEI’s application to overturn the warrant, CEO Khalid Abdulla says in an affidavit that the PIC investment agreement “lapsed” because the shareholders failed to approve the new agreement’s conditions in time, with no new agreement signed.
Johnson failed to respond to WhatsApped questions, which he appeared to have read.
AEEI and Survé’s spokesperson, Kaz Henderson, said they would not respond to the Sunday Times’s questions.
Brandon Topham, the FSCA’s investigations and enforcement head, said its application for the search and seizure warrant had been heard in camera, “but because it was attached to AEEI’s application to overturn the warrant, it’s now public”.
“Given the investigation’s sensitivity we would have preferred for it to have remained out of the public.”
Topham dismissed Survé’s and AEEI’s accusations that the raids were unconstitutional.