Times Of Swaziland: ESWIG: EX-FSRA CEO INVOLVED IN TRANSFER OF E335M

ESWIG: EX-FSRA CEO INVOLVED IN TRANSFER OF E335M
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Kwanele Dlamini on 28/12/2023 16:31:00


MBABANE – ESW Investment Group (Pty) Ltd has accused former FSRA CEO Sandile
Dlamini of being involved in a purported fraudulent scheme that resulted in the
transfer of over E335 million outside Eswatini.
ESW Investment Group (ESWIG) was previously known as Ecsponent Swaziland. The
company made the allegation in its combined summons, where it is demanding a sum
of E335 240 000 from the Financial Services Regulatory Authority (FSRA),
Ecsponent Limited South Africa and GetBucks (Pty) Limited South Africa. Other
defendants are Dave Van Niekerk, Edwin Soonius, the former FSRA CEO, Dlamini,
Lindiwe Vilakati and Anthony Hay. According to the combined summons, Dlamini
allegedly knew about measures to control ESWIG in order to ensure the fraudulent
transfer of the amount of E335 240 000 to South Africa.
Returns
The money had been invested by a number of individuals and other entities in
ESWIG to obtain higher returns. However, E335 240 000 of the invested E406 932
005.55 was allegedly transferred to South Africa, and the investors want their
money back. The transfer of the investment funds, according to the combined
summons, was allegedly done under the auspices of Dlamini, who was at the time,
the CEO of FSRA, and its officials under his control, and/or cooperated with
him. The plaintiffs (ESWIG) and Ligagu Investments (Pty) Ltd), informed the
court that the transfer of the investment funds could, and should, have been
prevented by FSRA under the auspices of Dlamini and those under his authority,
in the exercise of their duties and responsibilities.
“The sixth defendant (Dlamini), by virtue of his complicity in the fraudulent
scheme, failed to comply with his duties and responsibilities in terms of
sections 4,5,6 and 8 of the FSRA Act, by failing to foster through the
regulation and prudential supervision the safety and soundness of the
investments; the highest standards of conduct of business in relation to the
investments; the fairness, efficiency and orderliness of the Eswatini
non-banking sector and the protection of stakeholders,” reads part of
ESWIG’s combined summons. The veracity of these allegations is still to be
tested in court. The defendants are yet to file their answering papers. ESWIG is
represented by Sidumo Mdladla of SV Mdladla and Associates.
Dlamini, according to ESWIG, allegedly failed to enforce functions that were
necessary to suppress illegal, dishonourable and improper practices and
financial fraud in order to prevent the transfer of the investment funds to a
secured environment. He is also alleged to have failed to supervise the conduct
of Ecsponent South Africa, Van Niekerk, to take measures for the protection of
investment funds and to prevent the transfer of the investment amounts, contrary
to a secured environment for the investors to obtain higher returns. “The said
failures by Sandile Dlamini were in bad faith as he knew before the investments
were transferred to South Africa, that Escponent SA and Dave van Niekerk,
assisted by the other defendants, put measures in place to control the first and
third plaintiffs (Escponent and Ligagu Investments) and, therefore, the
investments, to ensure the fraudulent transfer,” further reads the papers.
ESWIG submitted that the alleged measures to control it and Ligagu, and,
therefore, the investment funds, implemented by Ecsponent SA and Van Niekerk,
assisted by the other defendants, purportedly included causing Soonius to act as
a representative on behalf of it (ESWIG), as it did not have a qualified CEO
resident in Eswatini.
This, according to ESWIG, is provided for in Regulation 9(4) of the Licensing
Rules of 2013, derived from the Securities Act. The measures, according to
ESWIG, to control it and Ligagu, also included causing it (ESWIG) and Ligagu to
be controlled by Escponent SA, GetBucks SA, Van Niekerk, Soonius and Vilakati.
The control of ESWIG, according to the combined summons, was further through
causing the investment group not to have an appointed compliance officer as the
purported compliance officer was allegedly controlled by Ecsponent SA to ensure
the fraudulent transfer. Other control measure, according to ESWIG, were
allegedly causing ESWIG not to submit copies of reports of internal audits, if
any, conducted on the latter since its inception; causing ESWIG not to submit
audited financial statements dating back to the 2010 financial year; causing
ESWIG not to have a complaint handling policy system, which suppressed
complaints through these channels by investors and causing it not to keep a
complete registry of all emaSwati investors in its offices.
Further, ESWIG alleged that as a control measure, ESWIG was allegedly caused not
to submit valuation reports of all investment products for the funds collected;
not to have the required separate bank account for its business operations, for
receiving investments from investors controlled by the bank, as provided for in
Sections 81 and 84 of the Securities Act. “This effectively denied the bank
any control over the investment amounts.”
Argued
ESWIG argued that the required regulation, monitoring, supervision and
enforcement, as provided for in sections 4, 5, 6 and 8 of the FSRA Act, would
and should have caused the FSRA to intervene and prevent the implementation of
the alleged fraudulent scheme and/or the transfer of the investments to South
Africa. “All the above failures were known to Sandile Dlamini before the
transfer of E335 240 000 invested funds to South Africa and he, in bad faith and
as part of the fraudulent scheme, failed to prevent the failures causing the
expatriation of the investment funds. Sandile Dlamini’s failure to act and
prevent the scheme was in bad faith within the meaning of Section 18 of the FSRA
Act, as he deliberately failed to regulate, monitor and supervise the
investments, as aforesaid, and in particular, failed to enforce any remediation
of the failures, thereby permitting the fraudulent scheme to run its course.”
ESWIG submitted that Dlamini’s purported deliberate failure allegedly was as a
result of his conflicting relationship with Ecsponent SA and Van Niekerk,
causing him to act in concert with Ecsponent and Van Niekerk and not prevent the
said fraudulent scheme. The matter is pending in court.