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ECSPONENT COURT CASE: E2.9M SHARES BELONGING TO SA DIRECTORS ATTACHED

23/06/2024 07:58:00 Ntombi Mhlongo

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MBABANE - In a quest to recover E335 million invested by over 1 000 emaSwati in Ecsponent, shares amounting to E2.9 million belonging to two South African businessmen have been attached.

According to a notice of attachment from Deputy Sheriff Thabiso Hlandze, the shares were attached on Friday and they belong to Dave Van Niekerk and Edwin Soonius. The duo is among those who the High Court ordered should repay the lost E335 million. This was through a judgment issued on Thursday whereby they were ordered to repay the money together with other defendants who are Ecsponent Limited South Africa, GetBucks (Pty) Limited South Africa and Anthony Hay.

A copy of the notice of attachment reflects that permanent shares amounting to E2 million belonging to Van Niekerk have been attached. For Soonius, the notice reflects that the amount of shares stands at E904 000.Worth noting is that on December 2023, the High Court granted an interim order for the attachment and freezing of assets belonging to the two South African men as they were implicated in the loss of millions invested by emaSwati in Ecsponent.

The order was granted by Judge Zonke Magagula after the ESW Investment Limited, former Ecsponent Eswatini, moved an ex-parte urgent application for the attachment of the assets pending the finalization of action proceedings instituted against them. The attachment of the shares was made possible through the strength of the default judgment following that the High Court made a ruling. The assets, according to the application, were allegedly owned by the duo in Status Capital Building Society, a building society duly established and incorporated in terms of the Building Society’s Act of 1962.

Status Capital Building Society has been cited as the third respondent in the matter. The other assets, it was stated in the application, were allegedly held in the Swaziland Debt Factoring Firm (PTY) LTD, a company duly registered and incorporated in terms of the company laws of the Kingdom of Eswatini, having its principal place of business at Ezulwini, the Gables complex in the district of Hhohho.

The company was cited as the fourth respondent in the matter. The applicant had sought an order to not only attach the shares but to further interdict any payment of dividends and or interest that was due to the first and second respondents in the two companies. Also included was a sum of E250 000 which was deposited by the first respondent as security for costs under High Court case number 1818/2023.Also, the applicant had sought an order to interdict the payment of the sum of E250 000 and or its residue currently under the custody of the Registrar of the High Court of Eswatini pending the completion of the action proceedings under High Court case number 2975/2023.

The Registrar of the High Court of Eswatini was cited as the fifth respondent in the matter. Furthermore, the applicant had sought an order that would ensure that there was no interference in the financial activities of the third and fourth respondents by the first and second respondents.In his founding affidavit, Bonginkhosi Mkhonza, the then Chief Executive Officer of the applicant submitted that the company, together with the investors who invested sums on excess of E340 million had instituted legal action proceedings against the first and second respondents.

The said action proceedings, according to Mkhonza, have been instituted under High Court case number 2957/2023.VMkhonza said after instituting the said proceedings, the applicant had seen it necessary to move the application to attach property in the form of shares belonging to the first and second respondents and to further seek an order to ensure the attachment and anti-dissipation of assets belonging to them. He submitted that ideally, the application should have included the investors as part of the applicants but that they were over 1 100 in number and given the exigency of time, there was not time to secure confirmatory affidavits. Mkhonza submitted that the order to have the assets attached will not in any way be prejudicial to the first and second respondents as it will seek to ensure that the interests and principles of justice are well preserved.

“This will further ensure that once the action proceedings have been admitted at the High Court, the applicant and investors will be able to recover at least a fraction of what has been lost by them, Mkhonza submitted. He mentioned that the applicant moved the ex-parte urgent application for the attachment of the first and second respondents’ assets in order to establish jurisdiction, as the said respondents were peregrinus to the Kingdom of Eswatini and further more so because there were reasonable grounds a d belief that the respondents could interfere with the financial activities of the third and fourth respondents and to avoid any liability.

Giving a background of the matter, Mkhonza submitted that 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, according to Mkhonza, was issued out in the year 2014 whereby investors were invited to invest their monies in accordance with the terms set out in the prospectus.

He submitted that in terms of relevant prospectus for each period of the investment funds could only be invested in a secured environment through linked preference shares in the share capital of Ecsponent South Africa for investors to obtain higher returns that were normally available while making capital available to businesses that needed the funds for growth. Mkhonza alleged that the first and respondents did not invest the funds as per the relevant prospectus in a secured environment through linked preference shares in the share capital of Ecsponent South Africa for investors to obtain higher returns than were normally available while making capital to businesses that needed the funds for growth use but expatriated the funds to South Africa for their own purposes contrary to the purpose set out in the approved relevant prospectus.

The veracity of the allegations is yet to be tested by the Court.“As a consequence of the above, an amount of E335 240 000 of the investment funds were expatriated to South Africa and became unrecoverable by virtue of the unlawful expatriation and unlawful thereof for purposes other than stipulated in the relevant prospectus,” Mkhonza stated. He said as a further consequence the applicant and investors jointly suffered the loss of the E335 240 000 due to the loss of the investment funds. Mkhonza clarified that the first respondent (Van Niekerk) was not a director of Ecsponent but allegedly held the position in the South African companies believed to have received the funds and definitely has a case to answer.

He had argued that the matter was extremely urgent as there was now action proceedings that had been instituted against the first and second respondents and a freezing of their assets was extremely necessary and urgent as such would ensure that the applicant and investors were able to recover at least a fraction of their invested funds. “I further state that it is necessary to freeze the assets and dividends of the first and second respondents, mainly because fraud criminal proceedings have further been instituted against them”. Another argument by Mkhonza had a clear right to protect as there were a number of investors who suffered huge losses.

The number, he stated, included the elderly, orphans, persons with disabilities and pensionaries. Mkhonza also submitted that the company explained that it moved the urgent ex-parte application in fear that once the two became aware of the action proceedings against them and further criminal case pending against them may either dispose of their shares. Also, the applicant alleged that the first and two respondents resided in South Africa and were likely not to ever come back to the Kingdom of Eswatini. Representing the ESW Investment Limited in the matter was Phesheya Maphalala of S.V Mdladla and Associates. Meanwhile, the judgment issued on Thursday states that the millions lost were invested by a number of individuals and other entities 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 order was granted by Judge Khontaphi Manzini at the Commercial Court Division of the High Court.Our sister publication, the Eswatini News reported yesterday that a representative of the duo of Van Niekerk and Sonius has indicated that they might seek to overturn the judgment granting the payment of the E335 240 000 investments to ESWIG. It was reported that Advocate Louis Hollander, who represents the duo on Friday told the High Court that they intended to apply for a rescission of Judgment Manzini’s decision in terms of which they, together with other parties, have to pay the money.