JSE probing movement of funds in Survé companies

The Johannesburg Stock Exchange is probing the movement of funds between companies linked to businessman Iqbal Survé to determine if the transactions were in breach of listing requirements, according to evidence heard on Monday by the inquiry into the Public Investment Corporation.

Andre Visser, General Manager for Issuer Regulation at the JSE, said the investigation was "looking at a number of related party agreements" in a bid to safeguard investor interests. 

"The matters that we are looking at specifically...relate to agreements that were entered into between AYO Technologies and [asset manager] 3 Laws Capital," said Visser, adding that the matter had not yet been discussed publicly.

In April, the inquiry sitting in Pretoria heard that millions of rands from the PIC investment into AYO Technology Solutions went to two companies linked to Survé the day after it was listed on the JSE in December 2017.

In his evidence, Visser said it was understood that 3 Laws Capital was a related party to AYO, by virtue of the fact that AYO is ultimately controlled by Sekunjalo Investment Holdings, which has a 85% stake in 3 Laws Capital. Sekunjalo, in turn, is a 61% shareholder in African Equity Empowerment Investments (AEEI) and the company has a 49% interest in AYO.

"The obvious aim is to safeguard investors, in cases where parties with influence over the company can exert undue influence for their own benefit," said Visser.

AYO listed on the JSE in December 2017, with the PIC subscribing to all its shares at issue for R4.3bn.

Common trend

Former AYO Chief Finance Officer, Naahied Gamieldien, last month told the commission that she was instructed telephonically by the CEO of AEEI, Khalid Abdulla, to transfer R35m to 3 Laws Capital and a further R35m to Sekunjalo Capital.

According to Visser, there are stringent regulations governing the transfer of funds between related parties, which includes putting out a SENS announcement to the market to prove full disclosure of the terms of the transaction and that the company needs to get the board to obtain an independent opinion to establish if the transaction is fair to shareholders.

"Our investigation not only focuses on the transaction with 3 Laws Capital; we have also seen a lot of related party agreements being disclosed in the AYO financial statements and we are investigating every single one of those," said Visser.

He said the probe had not yet been concluded.

"The finding would be communicated to the company and we would also communicate that to the market," he said.

Visser further mentioned that the JSE was investigating an overdraft guarantee extended by AYO to African Equity and Empowerment Investment Group, which they picked up in the company’s financial statements. The guarantee is currently at R35.7m.  He said any guarantee involving related parties requires disclosure in the pre-listing statement.

The inquiry is ongoing. 

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