The 13000 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 R721 million from African Bank Investment Limited (Abil), African Bank (AB) 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.
According to Hlumisa and Eyomhlaba, the directors failed to stop loans provided by African Bank to Ellerines Holdings or its subsidiaries, including Ellerines Furnishers, in contravention of the Companies Act and in circumstances that they would be unable to repay the loans.
The directors are also accused of failing to exercise their powers, perform their functions in good faith for a proper purpose in the best interests of Abil or African Bank and with a degree of care, skill and expected diligence.
On August 31, North Gauteng High Court Judge Letty Molopa-Sethosa upheld Abil’s directors’ and Deloitte’s exceptions to Hlumisa and Eyomhlaba’s claims and gave the investors 30 days to amend its particulars of claim.
Judge Molopa-Sethosa found that Hlumisa and Eyomhlaba’s claims did not disclose a cause of action against Abil’s directors and Deloitte.
“From the facts before this court it cannot be said that the plaintiffs (Hlumisa and Eyomhlaba), as shareholders suffered ‘a loss separate and distinct from that suffered’ by African Bank and/or Abil,” she ruled.
Hlumisa and Eyomhlaba owned 1.73% and 3.24% Abil shares respectively.
This represented 74 million shares with about 43 million belonging to Eyomhlaba and Hlumisa having 32 million, according to the business rescue practitioner of both companies, Connie Myburgh.
In court, Eyomhlaba and Hlumisa said Abil shareholders lost R40.6bn as a result of Deloitte falsely stating that African Bank’s finances presented fairly its financial position in September 2012 and the following year.
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.
The directors cited in Eyomhlaba and Hlumisa’s court action include Abil’s former chief executive Leon Kirkinis, ex-president Thabo Mbeki’s former legal adviser Mojanku Gumbi, Nithiananthan Nalliah, Robert Symmonds, Mutle Mogase, Nomalizo Langa-Royds, Antonio Fourie, Nicholas Adams, Samuel Sithole and Morris Mthombeni.
Myburgh did not respond to requests for comment on Saturday.