Illovo, shareholders face off in court
Trial in the case involving Illovo Sugar (Malawi) Limited and its minority shareholders began yesterday at the High Court’s Commercial Division in Blantyre with the applicant, Prudential Holdings Limited (PHL), giving evidence.
The sugar company was taken to court alongside its 11 directors by PHL, a holding company representing some minority shareholders, over claims of fraudulent financial transactions.
When hearing started yesterday, PHL chairperson Ramesh Savjani, who is the key witness in the matter, was the first to testify against the Malawi Stock Exchange (MSE)-listed sugar company and its directors before being cross-examined by the defence lawyers.
Savjani gave a summary of PHL’s case, saying it was to do with the disclosures in the financial statements relating to transactions between Illovo Sugar (Malawi) and other related companies.
He said PHL was unhappy with several categories of the financial transactions, including payment of management costs to Illovo Sugar South Africa by Illovo Sugar (Malawi) under the management agreement.
On the issue, he argued that the two companies signed a five-year management fee agreement in 2011 where Illovo Malawi was to be paying Illovo South Africa $30 000 per month, translating to $ 360 000 per annum.
Testified Savjani: “However, around 2013 this management fee agreement was revised and the amount went up to around $4.5 million per year… And there was no evidence that proper consultations with the board were followed.”
He also argued how the issue of sugar sales between Illovo Sugar (Malawi) and other related foreign companies, commissions and procurement costs have been transacted.
Today, the lead counsel for the defence, Shabir Latif, Senior Counsel, is scheduled to continue cross-examining the key witness.
Latif said the defence will parade 13 witnesses while lawyer representing PHL, Davis Njobvu, said they only have three witnesses. The applicant’s witnesses include Savjani, Alexandr Consulting and audit and business advisory firm KPMG, he said.
This is the actual hearing of the matter that first came before the court on April 12 this year but since then proceedings failed to take off due to fresh applications filed along the way.
