Deadline looms for disgruntled African Bank investors
Thousands of African Bank’s investors have just over two weeks to lodge their amended R2.1bn claim against the company and its auditors, accusing them of undervaluing shares and negligent auditing, notes a Sunday Tribune report. The 13 000 investors, through their representatives, Hlumisa Investment Holdings and Eyomhlaba Investment Holdings, say they suffered loss and damages as a result of the bank being placed under curatorship by the SA Reserve Bank.
They are demanding more than R721m from African Bank Investment Limited (Abil), African Bank and its directors at the time the lawsuit was filed in 2015.
The investors are demanding another R1.34bn from Deloitte, the auditor of Abil and African Bank, which they accuse of alleged negligent auditing of the bank’s financial statements.
Hlumisa and Eyomhlaba accuse Abil and African Bank of authorising the publication of financial statements that were false and misleading between 2012 and 2014. Among other things, according to Hlumisa and Eyomhlaba, the directors failed to stop loans provided by African Bank to Ellerines Holdings or its subsidiaries, in contravention of the Companies Act and in circumstances that they would be unable to repay the loans.
On 31 August, Gauteng High Court (Pretoria) Judge Letty Molopasethosa upheld Abil’s directors’ and Deloitte’s exceptions to the claims and gave the investors 30 days to amend its particulars of claim. African Bank collapsed in 2014 and a report commissioned by the Reserve Bank found that although there was no evidence that the business was conducted with the intent to defraud depositors or other creditors, the boards of Abil and the bank were party to conduct that included the breach of their fiduciary and other duties and running the bank negligently and recklessly.
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