MBABANE - The two former directors of Ecsponent Limited Swaziland, who are purportedly behind the loss of E340 million investments by about 1 500 emaSwati have been ‘locked’ in the country.
This comes after ESW Investment Group approached the High Court on an urgent basis, after learning that the duo of Dave Van Niekerk and Edwin J Soonious were in the country. It is believed that the two were definitely alter-egos of Ecsponent Eswatini (PTY) LTD and GetBucks South Africa. The court further directed the Royal Eswatini Police Service (REPS) and the Ministry of Home Affairs (Immigration Department) to assist in the execution of the order interdicting the two from leaving the Kingdom of Eswatini. Officials from the Immigration Department have been directed to flag and advise police officers upon seeing Van Niekerk and Soonious leaving the Kingdom of Eswatini through any of the entry or exit points.
Finalisation
Van Niekerk and Soonious will have to remain in the country until the finalisation of a legal action to be launched against them for the payment of the funds in excess of the sum of E340 million to be instituted. The interim order was issued by Judge Justice Mavuso yesterday. In the application, the court was informed that the present application was moved to protect the interests of the applicant (ESW Investment Group) and emaSwati investors. The applicant (ESW Investment Group Limited) was incorporated in Eswatini in the year 2013 and was registered under the name Escalator Capital Limited, where Ecsponent Limited, a South African Company listed in the Johannesburg Stock Exchange, owned 85 per cent shares in Escalator Capital Limited.
The applicant’s first issue of the company’s prospectus was issued out in the year 2014, whereby investors were invited to invest their monies with applicant in accordance with the terms as set out in the prospectus. This information was disclosed by Bonginkhosi Max Mkhonza, who is the Chief Executive Officer (CEO) of the applicant, in his founding affidavit. He related to the court that the subscribers in the applicant’s company during this period were Lindiwe Amanda Vilakati, the late Petrus Mtetwa, Gabriel Nkambule, Escalator Investment Holdings (PTY) Limited, Karen Dlamini, Escalator Financial Services (PTY) Limited and Escalator Capital (PTY) LTD.
Mkhonza submitted that in July 2013, the defendant’s company was joined by Anton Hay, who also became director of the company; further directors of the company at the time were Vilakati, the late Petrus L. Mtetwa and Soonious on or about August 2014. He brought it to the attention of the court that on or about the year 2014, the applicant changed its name to Ecsponent Limited Swaziland to align itself with Ecsponent Limited South Africa, its sister company and a 100 per cent shareholder of Ecsponent Holdings Eswatini Limited, which in turn owned 85 per cent shares in Ecsponent Limited Swaziland. He highlighted that in 2017, Ecsponent Swaziland Limited was joined by two more directors, Ndumiso Mamba and the late Esther Magagula, who were non-executive directors and did not partake in the day-to-day operations of the applicant’s company. He alleged in February 2018, the applicant company was later joined by Terence Patrick Gregory and Dirk Petrus Van der Merwe. It was further his submission that pursuant to the above and in the year 2019, Ecsponent Swaziland Limited changed its name to Ecsponent Limited Eswatini.
Changed
Mkhonza stated that the change was motivated by the fact that the Kingdom of Eswatini had now changed the name Swaziland to Eswatini. He highlighted that Ecsponent Eswatini was licensed by the Financial Services Regulatory Authority (FRSA) and was awarded a Certified Income Specialist and Investment Advisory (Type III) licence in January 2014 and in January 2018, respectively and in the year 2017 was further awarded a certificate of licensing as a Collective Investment Scheme Manager. “In its investment product portfolio, Ecsponent Limited Eswatini developed a Linked Loan Unit Product, which was marketed to retail investors in Eswatini from March 31, 2014 through a prospectus which also formed part and contained the essential and decisive terms of the agreement between the parties,” submitted Mkhonza.
He further pointed out that the linked loan unit product was that upon purchasing the linked loan units, the investor would then own preference shares in the applicant company. Mkhonza went on to state that, interest that was to be accrued, dividends and redemptions from the investment depended on the performance of the company. He informed the court that prior to marketing the linked loan units, the prospectus was required to be produced and approved by the registrar of companies’ and FSRA, and thereafter marketed within a prescribed period.
This process, according to Mkhonza, was rightfully completed by the applicant and the prospectus was approved and thereafter, the linked loan units were marketed. “It is important to further highlight that since March 31, 2014, which is the first month of inviting investors up to March 2020, the applicant received investors’ invested funds in excess of E340 000 000,” averred the CEO. Mkhonza went on to submit that in 2019, Mhmk Group Limited Mauritius bought 100 per cent shares in Ecsponent Limited South Africa and fully owned the applicant’s sister company.
Transaction
He stated that through that transaction, Mhmk Group Limited Mauritius automatically owned 100 per cent shares in Ecsponent Holdings Eswatini limited, which then meant that Mhmk Group Limited Mauritius then owned shareholding in Ecsponent Eswatini. Mkhonza related to the court that in the year 2020 Ecsponent Holdings (PTY) LTD was changed into Mhmk Group Eswatini Limited and further acquired the remaining 15 per cent shares and now owned a 100 per cent shareholding in Ecsponent Eswatini Limited. “During the above-mentioned period, some members of the Board of Directors of the applicant company expressed their concern on the way it was being operated. This concern premised mainly on the fact that the local Board of Directors suspected that investors’ funds that were transferred to South Africa, were not invested and were further not returning to the applicant company,” he argued,
This, according to Mkhonza, was informally reported to Mhmk Group Limited Mauritius by a local Board member Ndumiso Mamba to George Manyere, a shareholder and director of Mhmk. He alleged that Manyere was a shareholder and Director of Mhmk Group Limited Mauritius, a company which also suffered a loss from a huge shareholding in the applicant’s company and who (Manyere) was now restoring investors’ invested funds.
Investigation
“The directors of Mhmk Group Limited Mauritius then launched a thorough forensic investigation into what had happened to the invested funds. Following the inception of the forensic investigations, an exodus by some of the applicant’s directors then occurred. “These are namely; Dr Anton Hay, Edwin Soonious, Terence Patrick Gregory and Dirk Petrus Van Der Merwe who are resident in South Africa,” he stated. He said a further highlight was that before the beginning of the forensic investigations, the concerns raised were mainly bordered on the fact that investors invested sums in excess of E340 000000, which were loaned firstly to Ecsponent Holdings Eswatini (PTY) LTD and distributed to Ecsponent Enterprise Development, GetBucks Eswatini and Ecsponent Treasury Services in South Africa. He alleged that these distributions were done under the active and watchful eye of the above-mentioned resigned directors.
“Pursuant to the above, investors’ monies including that of the respondent were transferred to Zechron (PTY ) Limited in South Africa, GetBucks South Africa, and finally to My Bucks in Luxembourg and Vss Financial Services (PTY) Limited in South Africa. It is important to point out that the two companies, MyBucks in Luxembourg and Vss Financial Services (PTY) Limited are under liquidation as the directors in both these companies withdrew in excess of E1.8 billion in investors invested funds, which were invested by South African investors,” submitted Mkhonza. He told the court that Mhmk Group Limited Mauritius then launched an investigation against Vss Financial Services (PTY) LTD and discovered that there were a lot of irregularities, that of the directors’ fiduciary duties, negligent and/or reckless trading, fraud and embezzlement. Mkhonza alleged that, pursuant to the audit, Esw Investment Group Limited had opposed the liquidation of Vss Financial Services (PTY) LTD and had further engaged the services of a former judge to conduct a commission enquiry into the irregularities that occurred with regards to the invested funds.
Investors
“It is further important to point out that not only individual investors but also institutions including the applicant have suffered a deficit in excess of E 340 000 000. It is important to highlight that this supervening event greatly crippled the applicant company’s liquidity and further made it impossible for it to perform timeously to its clients in general and the respondent and as such resorted to Clause 1.5.5 of the agreement between the parties,” alleged the deponent (Mkhonza). The CEO averred that in August 2020 during the period of the acquisition and the forensic investigation, Ecsponent Eswatini Limited was changed to ESW Investment Group Limited.
Evidence
He said the change, including the forensic investigation both in Ecsponent Eswatini Limited and Ecsponent South Africa Limited were evidence of a new directorship that was now in a clean-up campaign of all the irregularities that handicapped the liquidity of the applicant company and the timeous payment of redemption amounts. “Pursuant to receiving the report on investigations conducted on Vss Holdings (PTY) LTD issued an investor update webinar, wherein all investors, including the respondent, were informed of a turnaround plan/strategy to recover from the losses caused by the resigned directors. The strategies included the successful listing of E1.8 billion Medium Term Note, wherein the proceeds from there would be used to liquidate the E 340 000 000 as a whole,” contended Mkhonza. The applicant was represented by Maphalala from S.V Mdladla and Associates.
Dave heavily implicated, has case to answer - CEO
MBABANE - “I submit that Dave Van Niekerk is heavily implicated in the forensic report, as he was the ultimate beneficiary of the funds. He definitely has a case to answer.”
These were some of the submissions made by Bonginkhosi Max Mkhonza, who is the Chief Executive Officer (CEO) of ESW Investment Group Limited. He made the submissions in the application, where the company was seeking an order interdicting Van Niekerk and Edwin J Soonious from leaving the country. Mkhonza told the court that he had been advised that in such applications (ex-parte), the applicant must make full disclosure to court.
“I wish to state that at this stage, due to the urgency of the matter, the applicant (ESW Investment Group Limited) is unable to detail the full information as it has just learnt that the respondents (Van Niekerk and Soonious) are in the country,” submitted Mkhonza. He told the court that the applicant believed that once the duo of Van Niekerk and Soonious left the country, it was not certain if they would return. “The applicant, therefore, undertakes to file a supplementary affidavit in support of this application. The honourable court will also be provided with the forensic audit report,” he argued. He alleged that Soonious had connections to the funds that were paid to GetBucks South Africa, as he was a director and shareholder in it.
Funds
According to Mkhonza, the company received the E117 million loan from GetBucks Eswatini, which funds were from the applicant at the time of Ecsponent. “There is currently an investigation by the Central Bank of Eswatini in respect of the affairs of Esw Eswatini (PTY) LTD and the transfer of the funds,” contended Mkhonza. He submitted that the matter was extremely urgent as the respondents were currently in the country and it was not clear when they would leave. He averred that the application could not have been placed before court any earlier as the information that the duo was in the country only came to the attention of the applicant at about 9:30am yesterday.
