By Lwazi Dlamini
A mighty legal showdown has ensued between the Financial Services Regulatory Authority (FSRA) and ESW Investment Group over the Ecsponent scandal where 1 138 of emaSwati lost a sum of E340 million.
FSRA, through their legal representatives, Magagula & Hlophe Attorneys, have filed an affidavit with the High Court questioning the authority of ESW Investment Group’s legal representation of the 1 138 of emaSwati investors through Ligagu Investments (Pty) Limited.
ESW Investment Group is represented by S.V. Mdladla & Associates who have also filed answering affidavits on the matter set to be heard on Friday, March 22, 2024.
FSRA argues that through extensive consultations between the first defendant (ESW Investment Group) and its legal representatives (S.V. Mdladla & Associates), there are good reasons to suspect that the 2nd Plaintiff (Investors) and the legal representatives might not have the requisite authority to institute the main proceedings nor the necessary authority to act on behalf of each investor.
“The investors consist of individuals, companies, co-operatives, funds, associations, clubs, trusts, statutory bodies and other entities. It is necessary to ascertain whether each of the investors authorized the proceedings which purport to be brought in their name.”
“There is a real risk that some of the litigants have not authorized the institution of the proceedings and/or mandated the attorneys to act on their behalf,” part of the affidavit reads.
It continues: “There are real prospects that the objection is a well-grounded one. The 1st defendant (FSRA) would suffer real prejudice if the proceedings were to continue and it turns out at a later stage that the investors did not authorize the institution of the proceedings and that the Attorney does not have a mandate to act for the investors.”
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The Investors Relations Committee represented by Chairman Norman Dlamini through their legal representatives, S.V. Mdladla, have indicated that after a meeting held on 17 and 18 June 2022 at Esibayeni Lodge, took a resolution that an ESWIG Investors Relations Committee be set up and mandated to drive the process of recouping the investor funds and S.V. Mdladla & Associates was duly granted the power of attorney to act on behalf of the individual investors.
Dlamini in his affidavit said the 1st Defendant (FSRA) is seemingly non-desirous of having this matter dealt with on its merits and in line with the orderly manner prescribed by the rules, which is to file its Plea on the merits as opposed to saddle the matter with unnecessary technicalities and interlocutory motions.
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“This application is unnecessary and tantamount to abuse of court process and should be viewed as a veiled attempt by the 1st Defendant to buy time and delay the filing of a substantive Plea on the merits of the main matter,” part of Dlamini’s affidavit reads.
The bone of contention which has degenerated into a legal battle began when ESW Investment Group filed an affidavit claiming a sum of E335 240 000 from FSRA for enabling the loss of the E340 million belonging to emaSwati in the Ecsponent scandal through the active involvement of the then Chief Executive Officer (CEO) Sandile ‘Chief’ Dlamini and also the regulator acts and omission which “makes it clear that there was bad faith”.
The letter filed by S.V. Mdladla & Associates also states that FSRA, through its employees had an obligation to protect emaSwati and to safeguard the interests through active monitoring and control of the industry.
“Given the glaring inefficiencies, lack of application, the gross negligence to the extent of being deliberate and the manner in which the irregularities committed by the company were either ignored and/or allowed by the Authority, actually points out to the collusion to defraud the company and the investors by using the company as a vehicle. Regrettably, the Authority has a responsibility and an obligation to account for its actions,” the letter reads in part.
The matter will be heard on Friday (today) at the High Court.
