Wiseman Khuzwayo
The Supreme Court of Appeal (SCA) has appointed two independent directors to the board of Seena Marena Investments (SMI), of which Fidentia curator Dines Gihwala is a majority shareholder.
The judgment was made on May 10.
However, Gihwala pointed out that the judgment had no bearing whatsoever on his capacity as a curator of Fidentia Asset Management, whose director J Arthur Brown was recently sentenced to 36 months in jail, suspended, and a fine of R150 000 for fraud after billions of rand belonging to widows and orphans disappeared under his management.
The main matter is still continuing at the Western Cape High Court. It started in 2011 when multiple allegations of malfeasance and moral turpitude were made against Gihwala and Lancelot Lenono Manala in their capacities as directors of SMI.
These included alleged breaches of fiduciary obligations, misappropriation and misuse of assets, misrepresentations, fraud, unauthorised use of company funds and denying a shareholder company of SMI its entitlements.
Both Gihwala and Manala were appointed directors of SMI in June 2003 until they resigned in February 2011 and September 2011 respectively.
SMI was incorporated as a special purpose vehicle with the sole purpose of channelling investment in Spearhead Property Holdings to be made by Manala, Gihwala, the Dines Gihwala Family Trust (DGFT), Montague Goldsmith (in liquidation) and Grancy Property.
The proceeds from investments made in Spearhead for the benefit of SMI’s shareholders would be paid as dividends to SMI’s shareholders in proportion to their respective contributions to the acquisition costs once any profit on the investment was realised by SMI.
In its founding affidavit, Grancy alleged unfair and prejudicial conduct against Gihwala and Manala and sought to recover various amounts from the two, including unauthorised and unlawful payment of directors’ remuneration to Manala and Gihwala of R5.5 million for the 2010 financial year, R1.114m to the two purportedly for “providing suretyship(s)” on behalf of SMI, an amount of R2.898m paid to Manala, and R101 529 paid to Hyman Bruk and Bruk Munkes & Co as “auditors’ remuneration”.
Following the resignation of Gihwala and Manala as directors of SMI, the company was left without directors. This prompted Grancy to invite Manala and the DGFT, as shareholders in SMI, to consent to a mechanism in terms of which two independent directors to the board of SMI could be appointed.
This in turn elicited no response from Manala and Gihwala, which precipitated the application to the Western Cape High Court.
Judge Robert Henney dismissed the application with costs but subsequently granted leave to appeal. His findings were that Grancy had not made out a case for the relief it sought and serious doubt was placed upon the case since Manala, Gihwala and the DGFT had satisfactorily refuted the allegations of impropriety against them.
On appeal, Grancy argued that the application was made to arrest the continuation of the oppressive and unfairly prejudicial conduct that disregarded the interests of Grancy as a minority shareholder in SMI perpetrated by Manala and Gihwala.
The SCA ordered that the independent directors should have the sole right, in their absolute discretion and to the exclusion of any other directors nominated by the shareholders of SMI, to determine whether an investigation into the affairs of SMI, in the light of the complaints made by Grancy, is necessary and, if so, conduct such an investigation.