By …writes to the Chief Justice of the Supreme Court of Appeal in Bloemfontein
By Bahle Gama
Ecsponent not only gives sleepless nights to Eswatini investors but even in neighbouring South Africa where investors refuse to throw in the towel and are fighting to find out what happened to their investments.
One of these is Jienie-Michelle Dreyer who wants to know what happened to the E2.3 billion invested in preference shares in the company.
Dreyer wrote a letter of dispute on a petition to appeal to the Chief Justice of the Supreme Court of Appeal in Bloemfontein to give notice that she intends to apply to the court to review the case on grounds of grave failures of justice.
Also, she is against Judge Gregory Ally’s judgement and orders in that on February 20, 2024, Judge Ally dismissed her application to provisionally liquidate Afrisat, and on May 26, 2024, dismissed another application for leave to appeal the judge’s judgment.
As well as the Supreme Court of Appeal ruling on November 11, 2024, not to entertain her petition for leave to appeal the judgment. According to reports, in South Africa, Ecsponent was renamed to Afristrat Investment Holdings and had its listing on the main board of the JSE removed on July 1, 2024, following the suspension of trading in the company’s shares on August 5, 2022, because it failed to publish its audited financial statements.
Despite opposing Dreyer’s application, Afristrat’s board decided on March 1, 2024, to voluntarily liquidate the company because it is commercially insolvent. Afristrat was unable to proceed with its liquidation application because Dreyer’s application to provisionally liquidate the company took precedence.
In the letter, Dreyer claims that an injustice has been committed and stresses that her application was for the urgent liquidation of Afristrat and not how the investments were lost.
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She claimed Judge Ally erred in finding that the test in her application for leave to appeal has changed in every instance to one where she is required to convince the court that another court “would” come to another conclusion as well as omitting the possibility altogether that there exists some other compelling reason why an appeal should be heard.
Dreyer believes the whole matter should have been reconsidered by a fresh pair of eyes and criticizes the fact that reasons were not provided for dismissing her attempts to appeal the judgment.
She stated that the fact that Judge Ally cannot document any legal reason for his decision, nor can the judges that denied the petition give valid legal reasons is not only in bad taste, “it also leaves more conjecture as to the respect afforded to the normal citizens of South Africa.”
Dreyer’s various court applications follow her acquisition of E6.5 million preference shares in Afristrat through an independent financial broker/advisor on 13 September 2015 and 1 June 2016.
In September 2019, Afristrat reportedly invested more than E2 billion of investors’ money in the MyBucks Group, which was listed on the Luxembourg Stock Exchange and a microlender in several southern African countries.
MyBucks
Speaking to Moneyweb, Afristrat’s CEO said that almost 90 per cent of Ecsponent or Afristrat’s investment funds were invested in MyBucks, either as equity or as loans, and all that money was lost when MyBucks collapsed. The MyBucks Group has been liquidated and is being wound up.
In the letter, Dreyer said that Afristrat represented itself to be solvent through the publication of its financial statements and, therefore, launched her application in terms of Section 81 (1) (e) (i) and (ii) of the Companies Act because the company’s assets are being misapplied or wasted.
She said the court, which heard her liquidation application correctly, found that Section 81(1) did apply because Afristrat had publicly represented itself to be solvent.
Therefore, the crisp issue upon which her appeal will turn is where Judge Ally erred in accepting Afristrat’s submissions that the point at which an investment is assessed “is at its inception and that such investment cannot be assessed during its currency or its result when determining wasteful or misapplied assets”.
She stressed that she had no voting powers, no say within the company, and could not withdraw her capital. Hence the request for a fair legal response on what grounds was the petition to appeal denied.
The investor continued that Afristrat accepted that continuing investment losses were incurred, which, according to the audited financial statements of MyBucks, were an E11.9 million loss in 2016, E221.2 million loss in 2017, E163.4 million loss in 2018 and E79.5 million loss in June 2019.
However, Dreyer said Afristrat continued to invest in MyBucks after the publication on October 19, 2019, of a PricewaterhouseCoopers (PWC) report that stated that MyBucks, as a going concern, breached covenants of certain debt facilities, which cast significant doubt on the group’s ability to continue as a going concern. Afristrat subsequently applied sums of E450 million and E1.671 billion in goodwill to this investment.
“It is common cause such funds were all lost,” she said.
Further, Dreyer questioned how the court determined that Afristrat had not misapplied assets when, in the same month of the company’s default in honouring their agreement to their investors, it was able to provide ECS Financial Holdings, a shelf company that had been incorporated for less than 20 days, had no assets or staff, with an unsecured loan of more than E626 million, plus a further loan of more than E400 million over one year, all of which was lost.
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She said a further instance of wasted or misapplied assets by Afristrat was the investment of E100 million in VSS Financial Services (Pty) Ltd, which, before such investment, had a reported audited net loss of E17 million. Funds that were all lost.
Dreyer added that several wholly owned or majority-owned subsidiaries, which had significant value to Afristrat, had remarkably been sold to the CEO, one of the current directors, for R1.
She said subsidiaries disposed of in this manner were Ecsponent Business Credit, which in the year to end in March 2020 had an income of E46 million and liabilities of E10.5 million.
As well as Eswatini-domiciled companies, which in the year to March 2020 had an income of E347.5 million and liabilities of E325.5 million; and Ecsponent Swaziland (Ecsponent Limited), formerly Escalator Capital Limited, which in the year to end-March 2020 reflected a profit of E842 843.
Dreyer said that in the judgment to her application for the provisional liquidation of Afristrat, Judge Ally did not deal with any of these submissions at all and simply stated he was not convinced another court would come to a different conclusion.
“As such, the applicant (Dreyer) is hard-pressed to set out further submissions concerning the judgment as there are no reasons the Learned Judge advanced save for his conclusion. It is respectfully submitted that the Learned Judge ought to have provided such reasons, not the least of which is it is in the interests of fairness to do so,” she said.
She further submitted that it is in the interests of justice that an appeal hearing is allowed as contemplated in Section 17(1)(a)(i) and (ii) of the Superior Courts Act 10 of 2013.
