swaziland times

Mbabane – Shares worth €2.9 million held by two South African businessmen have been seized in an effort to recover €335 million invested in Ecsponent by more than 1,000 emaSwati.

The shares were seized on Friday, according to a seizure notice from Deputy Sheriff Thabiso Hlandze, and belong to Dave Van Niekerk and Edwin Soonius, who are among those ordered by the High Court to repay €335 million in losses. They were ordered to repay the money along with other defendants, Ecsponent Limited South Africa, GetBucks (Pty) Limited South Africa and Anthony Hay, according to a judgment issued on Thursday.

A copy of the seizure notice shows that Van Niekerk’s €2 million perpetual shares have been seized. For Soonius, the notice shows that the shares amount to €904,000. It is worth noting that in December 2023, the High Court issued an interim order to seize and freeze the assets of the two South African men because they were suspected of causing millions of euros in losses to emaSwati’s investment in Ecsponent.

Justice Zonke Magagula granted the order following an ex parte urgent application filed by ESW Investment Limited (formerly Swaziland Arbitrators) to seize assets pending the conclusion of proceedings against them. The seizure of shares was made possible by the effect of a default judgment following a ruling by the High Court. According to the application, the assets were allegedly owned by two persons of Status Capital Building Society, a building society duly established and registered under the Building Societies Act 1962.

Status Capital Building Society is named as the third defendant in the case. The application states that the other assets are allegedly held by Swazi Debt Factoring Company (PTY) LTD, a company duly incorporated under the company laws of the Kingdom of Swaziland with its principal place of business at Gables Complex, Hhoho District, Ezulwini.

The company is named as the fourth defendant in the case. The order sought by the applicant not only seizes the shares, but also prohibits the payment of dividends and/or interest due to the first and second defendants of the two companies. This also includes the 250,000 Egyptian pounds deposited by the first defendant as security for litigation costs under the High Court Case No. 1818/2023. In addition, the applicant also seeks an order prohibiting the payment of the 250,000 Egyptian pounds currently in the custody of the Registrar of the High Court of Swaziland and the remaining amount until the proceedings in the High Court Case No. 2975/2023 are completed.

The Registrar of the High Court of Swaziland is named as the fifth defendant in the case. In addition, the applicant is seeking an order to ensure that the first and second defendants do not interfere with the financial activities of the third and fourth defendants. The then CEO of the applicant, Bonginkhosi Mkhonza, stated in his founding affidavit that the company, together with investors who invested more than €340 million, initiated legal proceedings against the first and second defendants.

Mkhonza said the said proceedings were filed under High Court case number 2957/2023. VMkhonza said that following the filing of the said proceedings, the applicant found it necessary to file an application to attach the property in the form of shares of the first and second defendants and further sought an order to ensure the attachment and prevent the loss of their assets. He said that ideally, the application should have listed the investors as part of the applicants, but the number of investors exceeded 1,100 and the time was tight, leaving no time to obtain confirmatory affidavits. Mkhonza said that an order to attach assets would not in any way prejudice the interests of the first and second defendants as it would ensure that the interests and principles of justice were properly upheld.

“This will further ensure that the applicants and investors will be able to recover at least a small portion of their losses once the High Court takes up the proceedings,” Mkhonza said. He mentioned that the applicants filed an ex parte urgent application to seize the assets of the first and second defendants to establish jurisdiction because the said defendants are foreign nationals in the Kingdom of Swaziland and more importantly, there are reasonable grounds to believe that the defendants can interfere with the financial activities of the third and fourth defendants and escape any liability.

Giving the background to the matter, Mukhunza said the applicant (ESW Investment Group Limited) was established in Swaziland in 2013 under the registered name of Escalator Capital Limited, of which Ecsponent Limited, a South African company listed on the Johannesburg Stock Exchange, owns 85% of the shares of Escalator Capital Limited. Mukhunza said the applicant first issued a company prospectus in 2014, inviting investors to invest in accordance with the terms set out in the prospectus.

He said that according to the relevant prospectus, the funds for each investment period could only be invested in a secured environment through preference shares linked to the share capital of Ecsponent South Africa in order to obtain above normal returns for investors and to provide capital to businesses that needed capital for growth. Mkhonza alleged that instead of investing in a secured environment through preference shares linked to the share capital of Ecsponent South Africa in accordance with the relevant prospectus, in order to obtain above normal returns for investors and to provide capital to businesses that needed capital for growth, the plaintiff and defendant repatriated the funds to South Africa for personal purposes, contrary to the purposes set out in the approved relevant prospectus.

The court has yet to test the veracity of these allegations.Mkhonza said: “As a result of the above, €335,240,000 of investment funds were transferred to South Africa and due to illegal transfer and illegal use for purposes not specified in the relevant prospectus, these funds cannot be recovered.”He said that as a result of the loss of investment funds, the applicants and investors jointly lost €335,240,000.Mkhonza clarified that the first defendant (Van Niekerk) was not a director of Ecsponent but allegedly held that position in the South African company that was believed to have received the funds and certainly had a case to answer.

He argued that the matter was of the utmost urgency because now that proceedings had been initiated against the first and second defendants, freezing their assets was extremely necessary and urgent because it would ensure that the applicants and investors would be able to recover at least a portion of their investment funds. “I further submit that it was necessary to freeze the assets and dividends of the first and second defendants primarily because criminal proceedings for fraud had been initiated against them. “Another argument of Mkhonza was that they had a clear right to protection because there were many investors who had suffered huge losses.

He said these include the elderly, orphans, people with disabilities and retirees. Mkhonza also said the company filed the urgent ex parte application out of fear that the two men might sell their shares once they become aware of the proceedings and further criminal cases against them. In addition, the applicants claimed that the first and second defendants reside in South Africa and may never return to the Kingdom of Swaziland. Representing ESW Investments Ltd in the case is Phesheya Maphalala of SV Mdladla and Associates. Meanwhile, the judgment issued on Thursday noted that the millions of dollars lost were invested by some individuals and other entities to get higher returns.

However, it is alleged that €335,240,000 of the investment, or €406,932,005.55, was transferred to South Africa and the investors want their money back. The order was granted by Judge Khontaphi Manzini of the High Court’s Commercial Division. Our sister publication Eswatini News reported yesterday that representatives of the duo, Van Niekerk and Sonius, have indicated that they may seek to overturn the judgment approving the payment of the €335,240,000 investment to ESWIG. Lawyer Louis Hollander, who is representing the duo, reportedly told the High Court on Friday that they intend to apply to set aside the Manzini judgment, under which they and other parties must pay the money.