Bluthorn directors slapped with P239m claim

 

As the plot thickens for Bluthorn directors and officers, the liquidator has slapped them with a P239 880 724.32 claim for recklessness with investors’ money, among others.

Kopanang Thekiso was appointed Final Liquidator of consolidated estates of Bluthorn Fund Managers (Pty) Ltd (In Liquidation), Prime Employee Benefits (Pty) Ltd (In Liquidation), Bluthorn Procurement Solutions (Pty) Ltd (In Liquidation), Bluthorn Holdings (Pty) Ltd (In Liquidation) and B Thorn (Pty) Ltd (In Liquidation).

The directors and officers who are defendants in the claim are Eune Engelbrecht, Joseph Mosimane, Tiyedzi Kamodi, Motlamedi Matome and Jeffry Sibisibi.

The Plaintiffs say they are qualified to bring the matter to court (locus standi in judicio) for reasons that the entire cause of this action arose within the jurisdiction of Court; and the Plaintiff is the duly appointed liquidator of the companies in the Group.

It is argued that the Court has jurisdiction over the Defendants for reasons, namely: the entire cause of this action arose within the jurisdiction of the Court; the Defendants were at all material times, directors and/or officers of one or more companies in the Group; and the Defendants are domiciled in Botswana.

According to the particulars of the claim during 2016, BFM issued a prospectus in respect of an investment company with the aim of encouraging investors to purchase shares in BFM in order for it to invest the funds in accordance with the provisions of the Collective Investments Undertakings Act ('the CIU Act”).

On the 2nd of April 2020, Peter Collins ('the Statutory Manager') was appointed by the Non-Bank Financial Institutions Regulatory Authority ('NBFIRA') as the Statutory Manager of BFM in terms of Section 46 (4) of the Securities Act on the basis that it appeared to NBFIRA that BFM was not complying with a financial services law, was or was likely to be in an unsound financial position or may be involved in a financial crime.

The appointment of the Statutory Manager was later confirmed by Justice Gabriel Komboni on the 20th April 2020. Subsequently, the companies in the Group were then liquidated and consolidated under the estate of BFM.

Thekiso has indicated in court papers that after an inquiry was held and several witnesses testified thereafter, having considered the evidence provided at the inquiry, it became apparent that the Defendants, jointly and

severally, as officers of the companies in the Group: acted recklessly; breached their fiduciary duties; contravened provisions of the Companies Act ('the Act”) and the CIU Act; and were the controlling mind behind the formation and the running of the business of the companies in the Group.

“The Plaintiff seeks to recover various amounts (which were initially invested by the creditors in BFM), due to the conduct of the Defendants (as directors, officers or in any capacity related to the companies in the Group), and are therefore liable to the Plaintiff in the total amount of P239 880 724.32.

“The Plaintiff seeks an order declaring that the Defendants are personally responsible jointly and severally, the one paying the other to be absolved, for all of the debts of the companies in the Group in the total P239 880 724.32,” the court papers say. According to Thekiso, during the course of winding up the companies in the Group it has become apparent that the Defendants carried on the businesses of the companies in the Group in a reckless manner, alternatively with the intent to defraud the creditors of the companies in the Group, alternatively with the fraudulent purpose of unlawfully misappropriating the invested funds paid by the creditors and, alternatively, unlawfully enriching themselves and other third-party beneficiaries.

He said inter alia: the companies in the Group were set up as separate legal entities for legal and regulatory purposes only. However, in reality they were managed and controlled as a single entity, without any segregation between them, he revealed.

The liquidator pointed out that the setup of the companies in the Group was such that the various companies could be regarded as divisions or departments within the same company being BFM, with BFM taking deposits, and PEB and BPS being the retail end of the business.

“Several agreements were signed between the companies within the Group, legitimise certain transactions as the same officers in BFM (one or more of the Defendants) were also signing on behalf of the various companies in the Group, even though they were technically employed by BFM; BFM was registered as an Investment Company with Variable Capital under the CIU Act but was operating as a deposit taking and micro lending entity.

“This activity was not represented in the BFM prospectus as it was akin to the business of a bank; none of the investors in BFM ever received statements demonstrating how their investments were performing.”