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Three prominent businesspersons are fighting back and have denied the claims by the Jiraserve chair, have asked court to quash application to declare them delinquents
An ugly court battle over R80 million allegedly looted from Rebosis Property Fund’s subsidiary Jiraserve is compounding the crisis already faced by the once high-flying company.
Four prominent businesspeople have been accused of fraudulently stripping the finances of Jiraserve, a wholly owned subsidiary of Rebosis.
This has seen a plunge of more than 90% in the past year that has wiped billions of rands off the company’s market value due to a R2 billion write down in its UK property assets as well as other factors.
Rebosis is headed by top property entrepreneur Sisa Ngebulana. Rebosis, which owns some of South Africa’s leading malls and had expanded its footprint to the UK, has seen its share price plunge from R8.15 to as low as 51 cents over the past year.
On Friday, Rebosis shares were quoted at 71 cents.
In court papers filed in the Johannesburg High Court, Jiraserve claimed that the three former directors Vusumuzi Mbeje, Siviwe Sowazi and Nkululeko Skweyiya, “looted” the company. Former Jiraserve manger Itumeleng Mosothoane is already facing criminal charges.
The company was initially set up as a “charitable trust” but later evolved into a trading company, according to sources.
In response to questions on Friday, Rebosis said that Jiraserve was a special purpose vehicle and structured by Rebosis as an investment holding company.
It claimed in court papers its assets were stripped by the directors, who are well-known players in the business.
Ayanda Boltina, the Jiraserve chairperson, alleges in the court papers that “the financial demise of [Jiraserve] in that its assets and monies have been stripped from it”. He has asked that an “order declaring the defendants to be delinquent directors”.
Boltina said that Jiraserve raised a second ground of delinquency in the form of misappropriation of R7.5 million between August and September last year.
The money was transferred from Jiraserve’s accounts to a bank account in the name of 28 Degrees.
Boltina said Mbeje, Sowazi and Skweyiya had “gone rogue”.
“They had no intention of complying with their fiduciary duties towards [Jiraserve] and of fulfilling the altruistic, and benevolent, objectives of [Jiraserve] and the trust,” Boltina said.
However, Sowazi in an answering affidavit, denied the looting allegations against all three of the former directors and blamed a former manager against whom they have opened criminal charges.
At the last court date, on June 18, the matter was postponed to September, sources close to the proceedings said.
The second court case, which only has Mbeje, Sowazi and Skweyiya as respondents, was filed in the Johannesburg High Court on June 14.
It has Jiraserve as the plaintiff and Mbeje, Sowazi and Skweyiya as defendants.
DELINQUENT DIRECTORS
Rebosis said the first court case was to preserve Jiraserve assets while the second was to declare the three former directors delinquent.
Boltina explained in court papers that “in and during or about 2015 the board of Rebosis Property Fund conceived of a structure of which Rebosis would create a charitable trust”.
However, according to Sowazi, no trust was registered at Jiraserve and instead it became a trading company pending the registration of the trust. The first account was opened with Afrifocus Securities.
But Rebosis said on Friday that the Abantu Bonke Charitable Trust had been set up. Jiraserve was registered and incorporated in January 2016.
On March 25 2017, Mbeje and Sowazi were appointed as directors of Jiraserve, while Skweyiya became a director on July 19 the same year.
“Between November 1 2017 and October 2 2018, the defendants were the only directors of the plaintiff and were in control of its affairs.”
Boltina claimed in court papers that after Mbeje, Sowazi and Skweyiya were booted off the Jiraserve board last year, R145 million was lent and advanced to Jiraserve, of which R65 million has been repaid.
“In and during 2017 and 2018, a total of R145 million was lent and advanced by Baywest City and the Billion Property Developments, respectively, to Jiraserve [whilst the trust was still being established], which funds were to be used to purchase shares,” he said.
“By applying simple arithmetic, about R80 million should have been invested in shares or held in [Jiraserve’s] FNB accounts,” Boltina said.
Rebosis said on Friday that a forensic audit was being conducted to ascertain the extent of the loss and how the remaining funds would be utilised.
“Court proceedings have been instituted to seek recovery of assets and hold the appropriate people accountable for any loss uncovered,” Rebosis added.
Boltina said: “At the … meeting [Mbeje, Sowazi and Skweyiya] undertook to conduct a forensic audit of the applicant and provide same to the Rebosis Group.
“Despite numerous requests, the forensic audit report never materialised. It is doubtful that it was ever even commissioned.”
Boltina said that the R80 million grew to R103 million, once “the monies lent and advanced by Rebosis to [Jiraserve]” where included.
“Rebosis was owed about R103 million by [Jiraserve] being in respect of monies lent and advanced by Rebosis to [Jiraserve] and despite numerous attempts to [secure] the repatriation of about R45 million which ought to be in the company’s hands, the directors had not cooperated or handed over copies of a forensic report which the directors allegedly initiated four months previously,” Boltina said.
“The directors’ actions in paying themselves salaries was not authorised and there was no rationale for such salary payments, bearing in mind that [Jiraserve] was not actively conducting business,” Boltina said.
“Something had to be done, and the directors [Mbeje, Sowazi and Skweyiya] could not be left in control of a company [Jiraserve] which ought to have held at least about R45 million in cash and equities, and which was indebted to Rebosis in the significant amount of R103 million,” he said.
“Therefore, on September 14 2018, at my instruction, the then directors were given notice in terms of Section 57 of the Companies Act 71 of 2008, that a meeting was convened by myself, as sole shareholder of [Jiraserve], for the purposes of, inter alia, considering the removal of the directors, as the then director of [Jiraserve],” Boltina said.
“No response to the notices convening a shareholder’s meeting were received from [Mbeje, Sowazi and Skweyiya], prior to the meeting,” Boltina said.
He said that Mbeje, Sowazi and Skweyiya failed to appear at the meeting and all three were removed as directors on October 2 2018.
In his answering affidavit, Sowazi said that in January and February 2017, Ngebulana, former Rebosis CEO Andile Mazwai, Rebosis CFO Marilise Delange and Rebosis COO Mande Ndema agreed to formulate a black economic empowerment trust vehicle for the purpose of generating revenue by investing money on the JSE.
This would allow them to make social impact investments in regions where the Rebosis Property Fund had its properties.
Rebosis entities Baywest Mall and Forest Hill Mall lent Jiraserve R150 million.
Sowazi said a meeting was held on March 21 2017 where he and Mbeje decided to take a 50% stake each in the entity.
“This would be the shareholding arrangement until the formation of the trust, after which all the shares would be transferred to the trust,” Sowazi said.
However, the trust was never established and no charitable beneficiaries were selected.
Sowazi said that Boltina was not authorised and therefore did not have the right and/or authority to bring this application.
“In the circumstances, this application stands to be dismissed and for Boltina to pay the costs in his personal capacity on an attorney and client scale,” he said. Sowazi denied that the unlawfulness of the transfer of the shares.
Sowazi said the basis for transferring the shares and cash to 28 Degrees South was to conduct a forensic probe on the questionable transaction of former Jiraserve manger Mosothoane. He said during a meeting with Ngebulana he had informed him about “Mosothoane’s suspicious transactions on the Jiraserve bank account, his suspension and the imminent disciplinary hearing”.
The former directors subsequently opened a criminal case against Mosothoane.
“At this stage, it is clear that Mr Mosothoane has committed serious irregularities and same is currently a matter of criminal investigations ... I submit that the bank was requested to commission a report indicating the inflow and outflow activities on the Jiraserve bank account by Mr Mosothoane ... What we have discussed has been furnished to the police for further investigations,” he said.
Sowazi denied that he, Mbeje and Skweyiya had “gone rogue”.
“We object to our fraudulent removal as Jiraserve directors,” he said.
He said that 28 Degrees South, a company set up by Mbeje, Sowazi and Skweyiya, had invested in securities, asset management and battery regeneration in order to realise Rebosis’s objective.
“It remains the intention of the respondents to conduct a forensic investigation on the conduct of Mr Mosothoane,” Sowazi said. “I submit that I have since been informed by the investigation officer dealing with the criminal investigations that same is complete and further steps will be taken in due course,” he said.
MISPLACED APPLICATION
“It is the respondent’s respectful submission that the applicants’ application is misplaced and without merit and stands to be dismissed by the honourable court on the basis of one or all of the preliminary points raised and/or lack of merit on the grounds set out above. The application by the applicant is clearly a non-starter.”
Sowazi said to date “an amount of R80 million has already been paid back to Jiraserve’s creditors”.
“We were able to uncover serious irregularities, which have since resulted in the laying of criminal charges against Mr Mosothoane, at the Douglasdale police station. The matter is currently pending. Consequently, salaries were warranted,” Sowazi said.
Lasweek City Press sent questions to Douglasdale police station spokesperson Captain Mpho Tshetlhane regarding the criminal charges against Mosothoane.
Tshetlhane referred City Press’ queries to SA Police Service’s Gauteng provincial spokesperson Mvela Masondo, who in a reply said: “A suspect aged 49 was arrested on June 14 2019 and charged with theft. He appeared in court on June 15 2019. He was released on bail. The investigating was continuing.”
Masondo was not able to identify the suspect and referred City Press to the National Prosecuting Authority in that regard.
When called on his cell phone, Mosothoane confirmed that a criminal matter had been opened against him at the police station by the former Jiraserve directors and that he had appeared in court.
He said he was consulting his lawyers.
On Friday he had not replied the emailed questions.
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