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Litha Nyhonyha, CEO of Regiments Capital, in Johannesburg, South Africa.
- The regiments found themselves in the crosshairs for identification following allegations of fraud, corruption and money laundering that arose when Regiments was Transnet’s adviser.
- The ID believed that the Regiment’s frozen assets were proceeds of crime and that it had illegally obtained contacts from the state-owned company.
- Judge Maletsatsi Mahalelo ruled against identification. His ruling depended on the identification not revealing material information about the regiments.
The Investigations Directorate has lost its court offer to have its R1.6 billion asset freeze at the Regiments Capital fund managers final after failing to disclose material information about the company.
In 2019, the ID obtained a court order granting him a provisional restraining order to freeze the Regiment’s assets and R600 million in cash, following his suspicion that the company had conspired with other taxpayers to “loot” the railway, the state port and pipeline. Transnet company.
Identification is part of the National Prosecutor’s Office and deals with high-level fraud and corruption.
The regiments found themselves in the ID’s crosshairs following allegations of fraud, corruption and money laundering that arose when Regiments was an advisor to Transnet and provided investment services to the Transnet Second Defined Benefit Fund (TSDBF) in the acquisition of 1,094 locomotives between 2010 and 2019.
The ID believed that the frozen assets of the Regiments were proceeds of crime and that it had illegally obtained contacts from Transnet.
The urgent provisional request in the Johannesburg High Court to freeze the assets was made ‘ex parte’, meaning that the Regiments had not been informed of the intentions of the identification, on the basis that the fund administrator would have removed their assets within the scope of identification. .
One day after their provisional application was granted identification, the regiments had paid TSDBF a settlement of around R639 million, after the fund sued the company for R848 million on criminal charges against it. This means that a separate initial asset freeze related to the company’s issue with TSDBF was gone, and the ID had been brought to court two days before it happened to ensure that the Regiments’ assets remained frozen.
The identification then went to the South Gauteng Superior Court to make the interim order final, but on Monday, Judge Maletsatsi Mahalelo ruled against the identification. His failure depended on the identification not revealing certain information about the regiments.
The regiments had argued that the identification did not reveal information related to the settlement agreement between the regiments and Transnet, how the agreement was implemented, and the cooperation of company executives, including Litha Nyhonyha, owner; the executive president of Regiments, Niven Pillay; and Trillian CEO Eric Wood, who was once a director of the company.
The fund manager also argued that the ID had not informed the court in its request for an interim order in November 2019, and that the Regiments had an initial asset freeze granted in September. Had the identification revealed that, it would have been clear that Regiments was part of “multiple proceedings” and would use its liquid assets in the form of stocks and cash to pay its creditors.
However, by not disclosing that information, the court granted the restraining order, which went against the September order, making it impossible for the company to pay its creditors as required.
The other nondisclosure concerned the identification not informing the court, in its request for provisional restriction, that the Regiments had reached a settlement agreement with TSDBF, which would have influenced the court’s decision.
Mahalelo concluded that the nondisclosure was “substantial,” and said the facts that are not disclosed in an ex parte application lead to court orders being mistakenly granted.
Next, it downloaded the provisional order and the request to make it final with the costs.
Sindisiwe Twala, a spokesperson for ID, said: “We are still studying the trial and will consider our options.”
