Companies in the Iqbal Survé-controlled Sekunjalo Investment Holdings group appear to have been going through a torrid time in recent months. They’re embroiled in battles on so many fronts it’s commendable that they’re able to focus on the challenging work of running a wide range of businesses, from media and fishing to technology and online trading.
The highest-profile issue they’re dealing with is the battle to hold on to their bank accounts. So far, they’ve been remarkably, though not entirely, successful on that front. None of the banks that have threatened to close their accounts has done so, thanks to the group’s dogged determination to drag the controversial de-banking decision through every court in the country.
The latest battle to hit the headlines is the one with an early Sekunjalo backer, the South African Clothing & Textile Workers’ Union (Sactwu).
Sactwu’s investment arm (Sactwu Investment Group) is suing Independent Media Consortium (previously Sekunjalo Independent Media) for R300m. That’s the initial R150m loan it provided back in 2013 when Survé was bidding for control of Independent Media, plus interest.
Despite the name changes Sekunjalo Investment Holdings (SIH) remains the largest shareholder in Independent Media.
According to media reports on the Cape Town court case, SIH says it owes Sactwu nothing because of the terms of a subordinate loan agreement Sactwu signed in 2017, which obliges Independent Media to repay the loan only when its assets exceed its liabilities. Alongside that 2017 agreement, Sactwu was to receive a chunk of shares in Sagarmatha, which was soon to be listed. Essentially Sactwu may have converted the 2013 loan into an investment in Sagarmatha.
Sactwu secretary-general André Kriel, who signed the 2017 agreement, told the court Survé had assured him the Sagarmatha shares would triple or quadruple on listing and the union would then be able to sell its shares at a hefty profit. Of course, as we all know, Sagarmatha was not listed, because it failed to comply with some basic Companies Act requirements.
Sactwu, which has spent the past few years trying to claw back its loan, says Kriel did not have the authority to sign the subordination agreement. SIH says it believed he did have the authority.
Though Kriel always seemed keen on a tie-up with SIH’s media assets, his tougher-minded business colleagues at Hosken Consolidated Investments (HCI) — in which Sactwu has a major stake — were reportedly more wary. This is why the R150m was a loan and not an equity investment.
The court case resumes in late September, when we will find out whether the toughies at HCI were able to protect the union’s funds from Kriel’s self-confessed lack of business acumen.
Sagarmatha was not listed, because it failed to comply with some basic Companies Act requirements
Another recent and unfortunate development involving SIH is the allegation, flagged by Ayo Technology Services, that as much as R25m has been spent irregularly at ICT service provider Sizwe. This is a significant knock for loss-making Ayo, which holds 55% of Sizwe, and represents almost 14% of its market cap.
The news comes just months after Ayo announced it was in negotiations with the Eastern Cape education department to reach a settlement over a controversial R500m 2019 deal for Sizwe to supply 55,000 tablets to matric pupils.
African Equity Empowerment Investments (AEEI), in which SIH holds a major stake, is also deep in talks with an agitated business partner. The discussions with British Telecom (BT), aimed at securing AEEI’s valuable 35% stake in British Telecom South Africa (BTSA), have been going on since 2021, when BT informed AEEI that it was terminating the arrangement.
A further issue that recently resurfaced was the JSE’s censure and fining of Ayo chair Khalid Abdulla. The matter relates to Ayo’s performance management agreements with a little-known asset manager 3 Laws, which is 85% held by SIH and therefore an entity related to Ayo. These valuable (for 3 Laws) fund management agreements — which were put in place between December 2017 and February 2019, when Ayo was flush with cash from the Public Investment Corp’s (PIC’s) R4.3bn investment at the time of its listing — were not disclosed to shareholders as required by the JSE.
Ayo has already been fined for these transgressions, but the JSE believes Abdulla, in his capacity as director of Ayo, facilitated the payments to 3 Laws, contrary to the JSE’s regulations.
And there’s also the matter of Abdulla’s role in adjusting Ayo’s unaudited 2018 interim results, in breach of the listings requirements.
Abdulla told the FM this week that he would be happy to talk about the matter after the Financial Services Tribunal has reviewed his application to reconsider the JSE’s ruling on September 15.
Oh, and did we mention the delay of the Ayo shareholder meeting to vote on the R619m repurchase of shares from the PIC?
That’s a lot of firefighting.
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