By 
By Lwazi Dlamini
The battle lines have been drawn. Status Capital Building Society Board headed by Wandile Mtshali, who is also MTN Eswatini’s Chief Executive Officer (CEO), has filed summons in South Africa’s High Court in a bid to recover an E100 million investment in companies linked with former director Dave van Niekerk.
At the same time, Van Niekerk is fighting back, calling on the Board to step down and promising to invest funds to rescue the sinking ship.
Through a presentation which ended up not being delivered by his lawyer Craig Assheton-Smith during the Special Annual General Meeting (AGM) at Sibanesami Hotel on Monday, Van Niekerk accused the Board of mismanaging the organisation, using members funds to cover overheads and also paying salaries for board members and management even though there is insufficient income to support the expenses.
On an eventful week in which Van Niekerk and the Status Capital Board were at each other’s throats, the shareholders of the Status Capital Building Society were also briefed about the precarious financial position of the organisation and how the Board has engaged on a legal route to recover the lost monies in South Africa.
The shareholders were told that legal action has been taken against former directors Dave van Niekerk, Claude Scholtz and Edwin Soonius, who left the company in October 2020 and April last year. The Eswatini Financial Times is in possession of an affidavit filed in the High Court of South Africa (Gauteng Division) on May 18, 2023, by Status Capital Building Society against Status Asset Management (PTY) LTD, who are cited as the first respondents, with Financial Services Regulatory Authority (FSRA) the second respondents and the third respondents being the Financial Sector Conduct Authority.
“From 2019 until May 2021, Ms Viljoen was involved in the disbursement of funds from the applicant’s bank account, and it was common cause that the funds were disbursed to various companies linked to her and Mr. Van Niekerk and Mr. Scholtz. The applicant seeks to recover over E100 million that was disbursed unlawfully by Ms Viljoen to various companies even before the Debenture and Cession Agreements were signed,” reads part of the statement made by Status Capital Building Society Legal and Compliance Officer Sanele Kunene in the affidavit.
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The veracity of these allegations is yet to be tested in court and Van Niekerk is yet to file his answering affidavit. Kunene said the Status Asset Management (SAM) was registered on July 24, 2019, and a couple of months later, on October 12, 2019, the applicant (Status Capital Building Society) concluded a written Debenture Agreement with SAM and a sum of E35 million was advanced in terms of the Debenture Agreement to SAM.
“Because of SAM’s false representation and breaches of the warranties issued in favour of the applicant, as it was entitled, cancelled the Agreement and demanded repayment of its capital and the interest earned thereon from SAM. SAM refuses to honour its own payment or disinvestment undertakings.
The purpose of this application is to place SAM under liquidation and the grounds of liquidation relied upon are SAM is unable to pay its debts as and when they fall due and is commercially insolvent.
Second, the applicant served on SAM a written demand in terms of Section 345 of Companies Act in terms of which the applicant demanded payment of the sum which SAM has admitted owing to the applicant and SAM has not paid the sum due,” part of the affidavit reads. Kunene, in his affidavit, said it would be just and equitable to liquidate SAM because it was established for a fraudulent purpose and operated unlawfully and illegally.
. . . STATUS CAPITAL’S FUTURE LOOKS ‘POSITIVE‘
Despite legal steps taken against him, South African national Dave van Niekerk is adamant about returning as Chairman of the Board of Status Capital Building Society because he foresees a positive future. Niekerk, in a two-page presentation which Eswatini Financial Times (EFT) has seen, says if the board members and any member, wants him to take full accountability and responsibility, he will do so, with a board that has no personal agendas or motives.
“Currently, investments that mature are being squandered for over overheads, staff loans, lavish branches and lifestyles as well as legal and consulting fees,” he said. Van Niekerk said it is disheartening that the current management team and board of directors continue to blame their woes on previous management and the previous board who left two years ago. He said the investments made by the previous management can be early matured and repaid, which is in the process of being negotiated.
“These are actual investments which are redeemable, however, we can’t speak to any investments made of expenses incurred since we left the building society. Dave van Niekerk is willing and has tried to assist the building society’s management and board to early redeem these investments, however there are too many personal agendas preventing a meaningful working relationship as well as constant threats of litigation.
Dave already facilitated several early repayments for the building society; however, his concern is that these funds are being used to pay overheads (expenses, salaries, legal and consulting fees) rather than being used to redeem investors investments.” Van Niekerk added: “There is a positive future for the building society which will see new products, better returns and the growth of a full Eswatini building society, that country and its members can be proud of.”
He further stated that he is prepared to resume his directorship of the society, chair the Board and assist in creating a strategy which will ensure that all the investors receive redemption of their investments. “The first step would be to procure E20 million from subscriptions by permanent members. Procure the appointment of the board at no cost to the members.
Then streamline the management and support team, cutting costs, closing branches, and reducing salaries,” he added. Niekerk said he is prepared to provide the requisite systems, and expertise as well as facilitate the repayment of existing investments made by the building society and streamline its operations. “The alternative is that the Building Society will inevitably not survive, and everyone will lose,” he said in conclusion. He said he has significant money invested in the Building Society and is willing to invest more. “The current management has staff loans, and the Board has no investment or funds at risk, unlike myself and other members,” he said scornfully.
. . . FSRA INSTRUCTED STATUS CAPITAL TO DISINVEST WITH FOUR SA COMPANIES
The Financial Services Regulatory Authority (FSRA) might have closed the barn door long after the horse had bolted when it directed Status Capital Building Society to recall and disinvest all funds invested in terms of the Debenture Agreement with Swaziland Debt Factoring Firm (SDF), Status Asset Management and Claymore Procurement Solutions. The four companies had significant amounts of money outstanding collectively with the Status Capital Building Society which led to delayed member disbursements. The companies are also linked to the former directors of Dave van Niekerk, Claude Scholtz and Edwin Soonius.
FSRA made the directive on June 18, 2021, where the regulator said no further transactions may be conducted through the bank account of the applicant and there should be no further investments made by Status Capital without written approval from them. Status Capital Building Society Legal and Compliance Officer Sanele Kunene, in the affidavit filed with the High Court in South Africa (Gauteng Division) where they are seeking to recoup a sum of over E100 million, said when FSRA issued the directive he was still uncertain about what was going on because the former director Dave van Niekerk had always assured him that everything was in order.
“Mr. Van Niekerk had produced a strategy and vision for the applicant at the meetings which we had held at Fintech Campus in Pretoria. He had introduced the applicant to various key industry stakeholders in South Africa (including SAM) who would, according to Mr. Van Niekerk provide critical services such as cloud hosting, debit card issuing, transaction switching and clearing. The details and strategies shared by Mr. Van Niekerk sounded very impressive and attractive. His strategies were also presented to the Board and members of the applicant at an Annual General Meeting in July 2021,” the affidavit reads in part.
