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Durban - John Ellis, a director of the embattled Aids nutrition company Edge to Edge Global Investments, has resigned, saying most of the shareholders’ allegations of fraud and misappropriation were against him and although he denied these, he deemed it “in the best interests of the company”.
However, the shareholders - who claim Ellis and his fellow directors, wife Kathy and Pretoria-based Jan Louw have duped them out of between R70m and R80m - are persisting with their application to liquidate the public company because they want to know what happened to their money, believing the directors have splurged it on a luxury lifestyle.
The shareholders succeeded with their application before Judge Esther Steyn, in terms of the new Companies Act, for permission to wind up the company based on allegations of fraud and the misapplication of assets.
And while the directors have now brought an application for leave to appeal against that decision - which will be argued at the end of this month - the shareholders, led by influential businessman Tony Pinfold, lodged their liquidation application on Friday.
In an opposing affidavit that came before Judge Shyam Gyanda, Louw argued that the Ellis resignation “deals with the complaints of the shareholders” and negates the need to liquidate the company.
In his resignation letter, Ellis says: “The company is on the verge of finalising the most important clinical trials and it is of paramount importance that this process must not be shipwrecked at this stage.”
The clinical trials - or alleged lack of them - are just one of the issues raised by the shareholders seeking answers to what happened to their money.
In their application before Judge Steyn - and repeated in the liquidation applications - are allegations that they were told that their money was to be used to develop a nutrition pack, “a possible cure for Aids”, to be sold across Africa.
However, they claim this was a lie, as was the promise that the company had a patent for a crucial water purifier component of the pack.
The alarm was raised when now-former staff said they had not been paid, the offices were shut and it emerged that no financial statements had been produced in two years, in contravention of the law.
Pinfold says in court papers that the directors had constantly avoided answering questions and their “disingenuous attempt” to frustrate the court applications were “shocking” against the background of their fiduciary duties as directors of a public company.
“It is an indication that they have something to hide, which is yet a further indication of their fraudulent conduct, since otherwise they would co-operate fully and furnish convincing answers to the allegations,” he said.
Louw persists with the line that all is well and that the financials, when produced “in four weeks”, will prove this.
He also claims that “the most important trials in the product” are on the verge of being finalised but more capital is required.
“Should the company be wound up, shareholders will lose millions of rands, notwithstanding the fact that a probable and significant contribution towards combating HIV and Aids would be shipwrecked due to this.
“On the allegations that the public must be protected (from being induced to invest), we can give an undertaking that no further shares will be issued or sold pending the finalisation of the application.
“I stress the company urgently needs extra capital to finalise the last leg of research and clinic trials… but we will endeavour to procure this without selling or issuing more shares,” he said.
Judge Steyn is to hear the application for leave to appeal on October 29 and Judge Gyanda indicated on Friday that he would deal with the liquidation application on the same day.