ECSPONENT INVESTORS CRAM HIGH COURT

MBABANE – Former FSRA CEO Sandile ‘Chief’ Dlamini and Lindiwe Vilakati want the report on the forensic investigation into circumstances that resulted in the loss of ESWIG investors’ over E340 million.

Yesterday, their attorney, Mxolisi Dlamini, of Dynasty Inc Attorneys, told Judge Khontaphi Manzini that there had been developments in the form of the forensic report. The Ecsponent Eswatini Forensic Investigation Report was prepared by Cliffe Dekker Hofmeyr Inc. for the Central Bank of Eswatini (CBE).

Yesterday, hundreds of investors or their representatives, since some are sickly and others have died, were summoned to the High Court after the Financial Services Regulatory Authority (FSRA) called to question the authority of SV Mdladla and Associates to represent the investors.
To establish S.V. Mdladla and Associates’ mandate to appear on behalf of the over 1 500 investors, Judge Manzini ordered that the investors present themselves physically to court.

They were divided into two – one group went to court yesterday and the other will go today. The investors were called one at a time to come forward and confirm authorising S.V. Mdladla and Associates to represent them and present their national identification (ID) cards. The exercise is expected to continue today. However, before this exercise, the attorney representing the former FSRA CEO, Sandile, and Vilakati, submitted that there had been developments in the matter.

He said the issues arose specifically due to an alleged conflict of interest on the part of the investors’ representatives’ law firm. Mxolisi said his clients, Sandile and Vilakati, were being sued on their personal capacities. Sandile is out on bail after being arrested following accusations that he received E117 000 kickback. He was arrested by the Anti-Corruption Commission (ACC) officers.

Conflict

According to Mxolisi, from snippets of the forensic report, it appeared that there was a conflict of interest as it allegedly seemed like the law firm was the secretary of some of the companies being sued. He also alleged that the law firm was involved in the establishment of Escponent Eswatini (Pty) Ltd, now known as Eswatini Investment Group (ESWIG). “My clients need to have the report to make their own assessment on the issue of the conflict. We currently do not have the report,” said Mxolisi.

He also told the court that Likhwane Beneficiaries Services filed a separate claim against FSRA. He said Likhwane was among the beneficiaries who are represented by SV Mdladla and Associates in this matter. Mxolisi said the problem was that ESWIG denied the conflict. He said yesterday’s business, which was the verification of the mandate granted to the law firm by the investors, should not continue until they received the report.

Meanwhile, S.V. Mdladla and Associates was not implicated in the forensic report, but rather, a question on whether there was no conflict of interest in its involvement in Ecsponent was raised, based on the fact that it allegedly doubled as the company’s secretary. The forensic report was tabled by the Minister of Finance, Neal Rijkenberg, in the House of Assembly and is yet to be debated by Members of Parliament (MPs).

It came about after over 1 500 emaSwati lost over E340 million after investing in Ecsponent. According to the forensic report, a finding was made that S.V. Mdladla and Associates was involved in the business operations of Ecsponent Eswatini and its related entities from inception.
Additionally, the report states, it was discovered that even though Sidumo Mdladla, a senior partner of the law firm, refuted being contracted by the company and signing a service level agreement, S.V Mdladla and Associates was listed as the company secretary of the company purported to provide secretariat duties. It should be noted that since the report has not yet been adopted by Parliament, the contents remain allegations.

On another note, Lawyer Phesheya Maphalala objected to Mxolisi’s submissions. He said the last time the parties were in court, it was agreed that when they returned upon the set date, it would be for the investors to prove that they instructed S.V. Mdladla and Associates to represent them in the matter in which they demand their investment from FSRA.

Arguments

Maphalala argued that the parties were not in court to present arguments. He mentioned that the report wanted by Sandile and Vilakati was yet to be debated in Parliament. He said it was commissioned by the investors. Mxolisi pointed out that they could not proceed to the business of the day, until his clients had the report. He said he wished that the judge could have sight of the report.

Judge Manzini said ‘we do not know what is in the report’. She said she does not read newspaper articles on matters she is dealing with because she does not want it to interfere with the manner she is dealing with a matter. Judge Manzini wondered how, if Mxolisi’s clients did not have a copy of the report, they instructed him on the issue that the court should not continue with the verification of S.V. Mdladla and Associates’ instruction by the investors.

However, Judge Manzini assured the investors that they would do what they set out to do yesterday until the proceedings were exhausted. The judge said they would continue with yesterday’s exercise and they would ask for the report later. FSRA was yesterday represented by Simphiwe Mkhumane of Magagula and Hlophe Attorneys.

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