15 witnesses in Illovo, shareholders case
As the case between Illovo Sugar (Malawi) Limited and its minority shareholders resume at the Commercial Division of the High Court in Blantyre today, about 15 witnesses are expected to give evidence.
This is the actual hearing of the matter that first came before the court on April 12 this year, but since then, actual hearing has failed to take place due to other fresh applications that were filed along the way.
The 1997 Malawi Stock Exchange (MSE)-listed sugar company and its 11 directors were taken to court by Prudential Holdings Limited (PHL), a holding company representing some minority shareholders, over claims of fraudulent financial transactions.
Lawyer Davis Njobvu of Savjan & Co, who are representing PHL, confirmed yesterday that the matter was coming before Justice John Katsala for the start of actual hearing with 15 witnesses lined up to give evidence.
“The matter has been set for the whole week from Monday [today] up to Friday with a total of about 15 witnesses expected to give evidence. [We] will start with Prudential side then the respondent [Illovo],” explained Njobvu.
The matter was last adjourned in June this year following fresh applications by Illovo South Africa to be struck off as a party on grounds that it was improperly made a defendant in the case.
However, the applicants opposed the application on the basis that Illovo South Africa was the effective majority shareholder and in control of Illovo Malawi and the entire Illovo Group.
The court then threw out Illovo South Africa’s application and further refused an application for injunction by PHL which was meant to arrest the matters being complained of in the action.
PHL has three witnesses, including chairperson R. H Savjani, Alexandr Consulting and KPMG then there are about 10 of the directors who will be in court and the Malawi Stock Exchange (MSE).
According to Civil Case Number 33 of 2016 filed on February 9 2016, the minority shareowners through PHL, claim the sugar company was falsifying its financial statements and holding information from them.
Further, it claims that Illovo Sugar was making payments to “undisclosed related parties” and unexplained payments to Illovo Sugar in South Africa and its parent company, Associated British Foods, in the United Kingdom.
The minority shareholders also accuse the company of failure to disclose excessive borrowing which increased by 40 percent, the financial costs that increased by 135 percent and a bank draft of K1.2 billion, which they claim the borrowing had no rationale and were without any adequate or proper consideration by the board.
In affidavits sworn by messrs Savjani, G. Tembo and A. A. Kalanda, the plaintiff are demanding that Illovo Malawi or its directors should disclose commission payments of $500 900 (about K335 million) and $900 000 (K603 million), the details of the transactions and procurements that attracted a K300 million interest with Illovo South Africa. n
