Eswatini court has ordered former Get Bucks Botswana (My Bucks) CEO – David Van Niekerk, Edwin Soonius and others to reimburse dozens of Eswatini investors more than E335 million (approximately P300 million) after they were found guilty of siphoning investment funds under the pretext of investing it offshore.
The matter involves over 1,000 emaSwati victims who had invested in Ecsponent, now known as ESW Investment Group (ESWIG) in Eswatini, formerly Swaziland.
Anthony Hay, Ecsponent Limited South Africa and GetBucks (Pty) Limited South Africa have also been ordered by the Manzini Commercial Court Division of the High Court to pay.
The money was invested by several individuals and other entities in ESWIG to obtain higher returns.
However, E335 240 000 of the invested E406 932 005.55 was allegedly transferred to South Africa, and the investors want their money back. The order was issued by Judge Khontaphi Manzini at the Commercial Court Division of the High Court.
This week, ESW Investment Group (Pty) Ltd obtained a default judgment in its favour after demanding the amount from the Financial Services Regulatory Authority (FSRA), Ecsponent Limited South Africa and GetBucks (Pty) Limited South Africa.
A default judgment is a judgment granted against a defendant who failed to defend a claim against him/her. The other defendants in the matter, which are Financial Sector Regulatory Authority (FSRA), former FSRA CEO Sandile Dlamini and Lindiwe Vilakati, are opposing the matter, hence no order against them was issued.
The default judgment comes after, ESWIG filed combined summons, where it was demanding a sum of E335 240 000 from FSRA, Ecsponent Limited South Africa and GetBucks (Pty) Limited South Africa, Van Niekerk, Soonius and Anthony Hay.
According to the combined summons, Dlamini (Sandile) allegedly knew about measures to control ESWIG to ensure the fraudulent transfer of the amount of E335 240 000 to South Africa.
The transfer of the investment funds, according to the combined summons, was allegedly done under the auspices of Dlamini, who was at the time the CEO of FSRA, and its officials under his control, and/or cooperated with him.
The plaintiffs (ESWIG and Ligagu Investments (Pty) Ltd) informed the court that the transfer of the investment funds could, and should, have been prevented by FSRA under the auspices of Dlamini and those under his authority in exercise of their duties and responsibilities.
“The sixth defendant (Dlamini), by virtue of his complicity in the fraudulent scheme, failed to comply with his duties and responsibilities in terms of Sections 4,5,6 and 8 of the FSRA Act by failing to foster through the regulation and prudential supervision the safety and soundness of the investments; the highest standards of conduct of business in relation to the investments; the fairness, efficiency and orderliness of the Eswatini non-banking sector and the protection of stakeholders,” reads part of ESWIG’s combined summons.
Dlamini, according to ESWIG, allegedly failed to enforce functions that were necessary to suppress illegal, dishonourable and improper practices and financial fraud to prevent the transfer of the investment funds to a secure environment.
He is also alleged to have failed to supervise the conduct of Ecsponent South Africa, Van Niekerk, to take measures for the protection of investment funds and to prevent the transfer of the investment amounts contrary to a secured environment for the investors to obtain higher returns.
“The said failures by Sandile Dlamini were in bad faith as he knew before the investments were transferred to South Africa, that Escponent SA and Dave van Niekerk, assisted by the other defendants, put measures in place to control the first and third plaintiffs (Escponent and Ligagu Investments) and, therefore, the investments, to ensure the fraudulent transfer,” further reads the papers.
ESWIG submitted that the alleged measures to control it and Ligagu, and, therefore, the investment funds, implemented by Ecsponent SA and Van Niekerk, assisted by the other defendants, purportedly included causing Soonius to act as a representative on behalf of it (ESWIG) as it did not have a qualified CEO resident in Eswatini.
This, according to ESWIG, is provided for in Regulation 9(4) of the Licensing Rules of 2013, derived from the Securities Act. The measures, according to ESW, to control it and Ligagu, also included causing it (ESWIG) and Ligagu to be controlled by Escponent SA, GetBucks SA, Van Niekerk, Soonius and Vilakati. The control of ESWIG, according to the combined summons, was further through causing the investment group not to have an appointed compliance officer as the purported compliance officer was allegedly controlled by Ecsponent SA to ensure the fraudulent transfer.
Other control measures, according to ESWIG, were allegedly causing ESWIG not to submit copies of reports of internal audits, if any, conducted on the latter since its inception; causing ESWIG not to submit audited financial statements dating back to the 2010 financial year; causing ESWIG not to have a complaint handling policy system, which suppressed complaints through these channels by investors and causing it not to keep a complete register of all emaSwati investors in its offices.
Further, ESWIG alleged that as a control measure, ESWIG was allegedly caused not to submit valuation reports of all investment products for the funds collected; not to have the required separate bank account for its business operations for receiving investments from investors controlled by the bank as provided for in Sections 81 and 84 of the Securities Act.
It is not the first time that Van Niekerk and associates have implemented a scheme of this nature. Van Niekerk is the former founder and boss of Blue Financial, a microlender that operated in Several Southern African countries. Investors lost millions after it was found to have been operated unlawfully by South African regulators. The company was also operating in Botswana.
He was also involved in establishing My Bucks in South Africa, a micro-lender that also operated in several Southern African countries including Botswana. Millions were also lost under the same scheme.
The model of operation by David Van Niekerk and his associates, and the companies linked to them is basically to set up enterprises in African countries, to use the local enterprises to solicit funds from members of the public and then to get the local enterprises to re-invest again in enterprises they control. Using the re-investment enterprises, funds invested by innocent members of the public are channeled out of the local country and hidden away through a series of further transactions.
