Business

Nafcoc may be headed for major split – again

2019-07-17 15:02

Top leaders served with court papers demanding payback of allegedly looted monies while president’s foes demand fresh elections to remove him

The National African Federated Chamber of Commerce and Industry (Nafcoc) might be headed for another major split after some of its leaders were served with court papers demanding they pay back millions in allegedly looted monies.

The organisation’s deputy president, Gilbert Mosena, treasurer Teme Letsoela, secretary Stephen Sikhosana and former deputy president Churchill Mrasi were served with summons to get them to, among other demands, pay millions of rands in alleged lost value to shareholders of Silver Vanity, Nafcoc’s investment company.

The same directors were also sent a letter of demand on Friday to recuse themselves from using any Silver Vanity resources, and distancing themselves from its sole asset, Gallagher Estate in Midrand, which is currently on the market.

This means that the seven shareholder trusts are demanding their effective suspension.

The letter, a copy of which City Press has seen, gives the directors 24 hours to undertake in writing to honour the demand or face another court challenge.

The four, with former Nafcoc president Lawrence Mavundla, are directors of Tizapro, one of two companies formed following the dilution of Silver Vanity shares belonging to seven other shareholders.

According to court papers, copies of which City Press has seen, the four Nafcoc officials, Silver Vanity and Tizapro as well as Eriphase, the other company created from the diluted shares, are alleged to have fraudulently siphoned off shares worth millions in 2011.

The action was initiated by seven trusts, which were among the 11 initial shareholders in Silver Vanity. Each had a 7.502% stake which held a value of R17.3 million each.

The trusts are suing the four directors and the three companies – Tizapro, Eriphase and Silver Vanity – for a total of R4 million and 10% annual interest from 2012.

The shareholders of Silver Vanity, which is a Nafcoc investment company, have on discovery of the dilution of their shareholding and allegations of maladministration and embezzlement of funds, resolved to seek legal recourse to protect and preserve their interest in Silver Vanity.

The seven plaintiff trusts are the African Council of Hawkers and Informal Businesses, whose trustee is Mavundla; the Eastern Cape Investment Trust, whose trustee is Harold Ndendela; the Western Cape Investment Trust, whose trustee is Mongezi Memani; the Gauteng Investment Trust, whose trustee is Nkosana Thobela; the Northern Cape Investment Trust, whose trustee is Christopher Mofokeng; the National African Farmers Union of South Africa, whose trustee is Mandla Buthelezi; and the Nafcoc Construction Investment Trust, whose trustee is Welcome Kau.

Mavundla is the only director of Tizapro t included in the summons as a defendant.

The trusts also ask the court to set aside a 2011 shareholder agreement that allegedly formed the basis of the dilution of the Silver Vanity shares.

Letsoela, who is also chair of Tizapro, referred a request for comment to Mosena, the chief executive.

Mosena said he knew about the summons because it was delivered to his office, but had not seen it yet.

Mrasi said he was in the dark about the matter. Attempts to get hold of Sikhosana were unsuccessful.

Nafcoc president Sabelo Macingwane, who has openly said he would be pursuing a clean-up drive that may result in Silver Vanity being sold off, is believed by some to be supporting the move.

The court action by the seven trusts came about after Sikhosana attempted to oust Macingwane from the presidency through a vote of no confidence motion at a special council meeting he (Sikhosana) had called last month. Macingwane had to block the meeting with a court interdict.

“Yes, we are seeking recourse against the directors alleged to have abused their position as directors to the detriment of shareholders. We are going against them in their personal capacity,” Macingwane said.

He also said the organisation would have to find alternative investment opportunities once Silver Vanity was sold. “What I have refused is to engage in backdoor unconstitutional meetings aimed at frustrating our efforts to rid Nafcoc and all its structures of corruption.

“The shareholders of Silver Vanity, which is a Nafcoc investment company, have on discovery of the dilution of their shareholding and allegations of maladministration and embezzlement of funds, resolved to seek legal recourse to protect and preserve their interest in Silver Vanity. To that end, they have raised funds to instruct lawyers to protect their interests.

“Upon conclusion of the sale of Silver Vanity, Nafcoc shall consider, together with its structures, alternative investment opportunities from the proceeds of the sale whilst dispersing a portion of the sale proceeds to the legitimate beneficiaries,” he added.

Over the last decade the organisation has been involved in more than 50 court cases. One of the biggest, at the Supreme Court of Appeal, resulted in Nafcoc splitting into two factions, one led by Mavundla and another by Joe Hlongwane. The court ruled that Hlongwane was not the legitimate president of Nafcoc.

Meanwhile, Macingwane is also facing a possible ousting by a group in the organisation, previously led by Hlongwane, which has vowed to take the organisation to court to nullify Macingwane’s election after he and his predecessor declined to meet with the group a fortnight ago.

“We warned them even before the elections at the conference last year and told them that they can have the conference but they must hold elections,” said Simon Mathysen, the group’s spokesperson and one of its leaders.

Directors were also sent a letter of demand on Friday to recuse themselves from using any Silver Vanity resources, and distancing themselves from its sole asset, Gallagher Estate in Midrand

Mathysen said the meeting a fortnight ago was called after a court suggested that the two factions try to resolve their differences. He wanted to ask Mavundla to call for an election that included his group.

“We will have to write to Mavundla asking him to call for an election. If he doesn’t we will have to go to court, because we want to unite Nafcoc.

“The unity of Nafcoc is very important. I agree with the sentiments from Macingwane that we need to clean up Nafcoc. However, we do not recognise him as president,” Mathysen said.

Macingwane, however, said he was not aware of any meeting of Nafcoc that he was constitutionally obliged to attend.

The breakaway group also plans to support a criminal case recently opened by Thobela over the alleged fraudulent dilution of shares in Silver Vanity.


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August 18 2019