Summary of key transactions that led to significant exposure and losses in Mybucks, its Founders Related Companies & Mybucks Subsidiaries by Afristrat Investment Holdings Limited (formerly Ecsponent Limited).
The board of directors of Afristrat Investment Holdings Limited, formerly Ecsponent Limited (“Afristrat” or “Ecsponent Limited”) wishes to provide an update on matters of the business pertaining specifically to MyBucks S.A.- in Bankruptcy (a company incorporated under the Laws of the Grand Duchy of Luxembourg and hereafter referred to as “MyBucks” or “Mybucks Group” or “the Group”, and in which Afristrat had approximately ZAR1.5 billion invested through debt and equity).
MyBucks was co-founded and run by Mr. Dave van Niekerk, a South African national until March 2019 when the company faced financial difficulties as evidenced by negative equity of EUR41,806,635 (ZAR673,366,927 equivalent) and a net loss of EUR36,107,136 (ZAR581,566,807 equivalent) as set out in the MyBucks 30 June 2019 audited consolidated financial statements. MyBucks was also no longer able to pay its debts as they came due and needed to enter into payment arrangements with its creditors as of Q1/2019.
As MyBucks was showing significant signs of financial difficulties during the 2019 financial year, Ecsponent Limited stepped up as the biggest lender to the MyBucks Group and advocated for management changes, this led to Mr. Dave van Niekerk stepping down effective 26 March 2019. Unfortunately – despite all efforts to rescue the Mybucks Group through a conversion of debt it was unable to pay into equity – MyBucks was placed into bankruptcy by the Luxembourg Authorities on 16 February 2022.
The bankruptcy of Mybucks resulted in regulators in the countries it was operating in deeming the Mybucks Group to be no longer fit and proper to operate regulated financial services businesses. As set in the announcement released on SENS on 12 May 2022 when Afristrat was still listed on the JSE, the Board advised that Afristrat (formerly “Ecsponent Limited”) had lost more than ZAR1.5 billion of equity value in MyBucks and its subsidiaries through debt which was provided under the pretext of growing the MyBucks loan book in South Africa, Botswana, and Zambia.
ZAR428 million of the ZAR1.5 billion loss was from the founding controlling shareholder of the Company, Ecsponent Capital (RF) Limited (“Ecsponent Capital”, now trading as “Basira Capital Limited – in liquidation”) and its subsidiary, Ecsponent Projects Proprietary Limited (“Ecsponent Projects”, now trading as “Purple Orchid Investments Proprietary Limited”). This announcement serves to provide a summary of the various transactions that led to a loss of approximately ZAR1.9 billion in Afristrat investor funds tendered and the subsequent write-off of the MyBucks investment in the Afristrat unaudited 31 March 2024 financial statements that we shared with investors. The Board believes that disclosure of the salient details of such transactions will provide stakeholders with an understanding of the various events that have led to the current financial difficulties in which Afristrat finds itself.
PART A – TRANSACTIONS WITH MYBUCKS OR ITS FOUNDERS WHICH WERE FUNDED BY ECSPONENT LIMITED INVESTORS FUNDS
Transaction1: Amount lost through an investment in MyBucks shares - ZAR262,570,000 -
This transaction was set out in a Circular to shareholders dated 1 March 2017 in terms of which Ecsponent Botswana (now ECS Private Equity Botswana), a wholly owned subsidiary of Ecsponent Limited, acquired 1 100 000 shares, constituting 10.002% of the issued share capital of MyBucks, from Ecsponent Projects, for a purchase consideration of ZAR262,570,000.
----Ecsponent Projects (registration number CO.2015/12033) was a private company with limited liability, duly incorporated in accordance with the laws of Botswana and a wholly owned subsidiary of Ecsponent Capital (registration number 2009/105563/06), the former controlling shareholder of Ecsponent Limited.
--- Ecsponent Capital is a public company duly registered and incorporated under the laws of South Africa and was once wholly owned by Holdem Legacy Trust, whose beneficiary was Eune Engelbrecht, a former employee of Mr. van Niekerk at Blue Financial Services. This ownership was then changed to Bro Business Trust (IT 3509/2010), a discretionary trust of which the beneficiary was Mr. Lenki Jeffrey Ratsaka, a South African national. Mr. Ratsaka worked for Mr van Niekerk as a driver at both Blue Financial Services and MyBucks.
--- Ecsponent Projects has since been de-registered in Botswana and Ecsponent Capital placed under Business Rescue in November 2021.
----MyBucks was placed under bankruptcy in February 2022 by the Luxembourg tax authority (“MyBucks Bankruptcy”), and this effectively resulted in the Company incurring a loss of ZAR262,570,000 due to the shares it got from this transaction becoming worthless.
2 Transaction2: Amount lost through an investment in MyBucks shares - ZAR260,000,000
--- This transaction was set out in a Circular to shareholders dated 2 August 2018 in terms of which Ecsponent Treasury Services Proprietary Limited (“Ecsponent Treasury Services”), a wholly owned subsidiary of Ecsponent Limited, acquired 1,145,988 shares in MyBucks, constituting 8.839% of the total issued share capital of MyBucks from DTM Capital Proprietary Limited (“DTM Capital”). DTM Capital was a guarantor of Coronado Trading 258 Proprietary Limited (“Coronado”), a borrower to Ecsponent Limited. The sale of the MyBucks shares by DTM Capital was to effectively settle the Coronado loan of ZAR260,000,000.
--- Coronado (registration number 2017/090376/07) (previously Coronado Trading 258 CC) is a private company duly registered and incorporated under the laws of South Africa with its sole director currently being Mr. Donald Gilroy, a South African national. Mr. Donald Gilroy is currently the Director of Cryosave South Africa and previously was the managing director of Fintech Campus, working for Mr. van Niekerk. At the time of granting the loan, the sole member of Coronado Trading 258 CC and its sole director was Ms. Miranda Beumer (currently an employee of Mr. van Niekerk at the Numeral Group and Fintech Campus, previously an employee of Ecsponent Limited and Cryosave South Africa.
--- DTM Capital (registration number CO 2015/7099), is a private company duly registered and incorporated under the laws of Botswana, and wholly owned by Rodger Mcedisi Solomon, a Motswana national.
--- The MyBucks Bankruptcy effectively resulted in the Company incurring a loss of ZAR260,000,000 due to the shares it got from this transaction becoming worthless. Transaction3: Amount lost through an investment in MyBucks shares – BWP65,000,000 - This transaction was set out in a Circular to shareholders dated 2 August 2018 in terms of which Ecsponent Limited (incorporated in Botswana) (“Ecsponent Botswana”), a wholly owned subsidiary of Ecsponent Limited, acquired 352 612 shares in MyBucks, constituting 2.720% of the total issued share capital of MyBucks from Sunblaze Investment Holdings Incorporated (“Sunblaze”). Sunblaze was a guarantor of DTM Capital (“DTM Capital”), a borrower to Ecsponent Botswana. The sale of the MyBucks shares by Sunblaze was to effectively settle the DTM Capital loan of BWP65 000 000. - DTM Capital (registration number CO 2015/7099) is a private company duly registered and incorporated under the laws of Botswana, and wholly owned by Rodger Mcedisi Solomon, a Motswana national.
--- Sunblaze (registration number 2017/090376/07) is a private company duly registered and incorporated under the laws of Samoa, and was wholly owned by Ms Tracy Dillon, a South African national and sister to Mr. van Niekerk.
--- The MyBucks Bankruptcy effectively resulted in the Company incurring a loss of BWP65,000,000 (ZAR86,606,650 equivalent) due to the shares it got from this transaction becoming worthless.
Ecsponent Limited offices in South Africa
Transaction4: Amount lost through an investment in MyBucks shares - ZAR250,060,000
- This transaction was set out in a Circular to shareholders dated 24 December 2018 regarding, inter alia, the acquisition of 1,953,874 shares, constituting of 15.07% of the issued ordinary share capital of MyBucks, from Tailored Investments Limited (“Tailored Investments”) for ZAR250,060,000 through the acquisition by Ecsponent Treasury Services of Pink Orchid Limited (“Pink Orchid”).
--- Prior to the acquisition, Pink Orchid, a company duly registered and incorporated under the laws of Mauritius, was a wholly owned subsidiary of Purple Orchid Limited, a private company duly registered and incorporated under the laws of Mauritius, which was a subsidiary of Ecsponent Capital (the former controlling shareholder of Ecsponent Limited).
--- Tailored Investments (registration number C36357/C2/GBL) is a company duly registered and incorporated under the laws of Mauritius, and wholly owned by Serge Perriard. Mr. Johannes Jonck issued a disclosure on the Frankfurt Stock Exchange as being a person closely associated with Tailored Investments Limited on 9 February 2018. Mr. Jonck was previously the employer of Mr. van Niekerk at Unity Financial Services, he sold a business to Mr. van Niekerk at Blue Financial Services and he was the co-founder along with Mr. van Niekerk at MyBucks S.A.
--- The MyBucks Bankruptcy effectively resulted in the Company incurring a loss of ZAR250,060,000 due to the shares it got from this transaction becoming worthless.
Transaction5: Amount lost through an investment in MyBucks shares – US$5,000,000.
--- This transaction involved the investment of US$5,000,000 into MyBucks shares (444,000 shares) by Ecsponent Limited through an exercise of rights under a Rights Offer at a price of EUR8.00 per share in February 2018. The investment was funded by a loan facility from Norsad Finance (Botswana) Limited.
--- The MyBucks Bankruptcy effectively resulted in the Company incurring a loss of US$5,000,000 (ZAR81,871,000 equivalent) due to the shares it got from this transaction as repayment of the loan becoming worthless.
Transaction 6: Amount lost through an investment in MyBucks subsidiaries namely, VSS Financial Services, GetBucks South Africa and GetBucks Eswatini – ZAR450,000,000
--- This transaction was set out in a Circular to shareholders dated 22 October 2019 in which it was disclosed that an amount of ZAR450,000,000 was owing by MyBucks subsidiaries, namely GetBucks South Africa Proprietary Limited (“GetBucks South Africa”) (registration number 2011/10861/07), GetBucks Eswatini Proprietary Limited (“GetBucks Eswatini”) (registration number R7/29333) and VSS Financial Services Proprietary Limited (“VSS Financial Services”) (registration number: 2012/073113/07) a private company duly registered and incorporated under the laws of South Africa, and a wholly owned subsidiary of MyBucks.
--- As a result of the MyBucks’ subsidiaries above failure to repay the loans in cash, the ZAR450,000,000 was settled through the issuance of 27,829,313 new shares in MyBucks, which turned out to be worthless as a result of Mybucks Bankruptcy.
--- VSS Financial Services, Getbucks South Africa and Getbucks Eswatini are wholly owned subsidiaries of Mybucks Group and VSS Financial Services was placed into voluntary liquidation in 2019.
--- Afristrat demanded the reversal of VSS of the Voluntary Liquidation to the Liquidators to allow an investigation into the activities of VSS and its inability to repay its amounts which were due to Afristrat. A petition was made to the High Court in South Africa to remove the VSS from liquidation and order a Commission of Inquiry into the activities of VSS Financial Services. The request was granted, and the Commission of Inquiry has been ongoing for the past few years and we are not aware of what stage it is now at as the process requires funding to see it to its conclusion.
--- The Company incurred a loss of ZAR450,000,000 as a result of Mybucks default on its loans outstanding as at 30 June 2019 and all efforts to recover through alternative route of conversion into equity was not successful as the shares were also worthless due to Mybucks being bankrupt.
--Transaction 7: Amount lost through an unpaid loan by Bluthorn Holdings, a company whose founder Mr. Eune Engelbrecht, is a former CEO of Ecsponent Limited and used to work for Mybucks Founder, Mr Dave van Niekerk at Blue Financial Services - ZAR232,500,000
-- This transaction was set out in a Circular to shareholders dated 24 December 2018 in which it was disclosed that Bluthorn Holdings Proprietary Limited (“Bluthorn Holdings”) (registration number CO.2014/3692) a company registered in Botswana, owed ZAR232,500,000 to Ecsponent Limited.
--- Bluthorn Holdings – in Liquidation is a private company duly registered and incorporated under the laws of Botswana and whose founder is Eune Engelbrecht, a South African national and former CEO of Ecsponent Limited. Mr Engelbrecht was an executive director at Blue Financial Services, a company which was founded by Mr Dave van Niekerk, founder and former CEO of Mybucks, as well.
--- The Company incurred a loss of ZAR232,500,000 due to the non- repayment of the amount due from Bluthorn, which is now in liquidation.
Transaction 8: Amount lost through an unpaid loan by Basira Capital (formerly Ecsponent Capital), a company whose founder Mr. Eune Engelbrecht, is a former CEO of Ecsponent Limited and also used to work for Mybucks Founder, Mr Dave van Niekerk at Blue Financial Services - ZAR195,934,860
--- This transaction was set out in a Circular to shareholders dated 24 December 2018 in which it was disclosed that Ecsponent Capital, the previous controlling shareholder of Ecsponent Limited, owed Ecsponent Limited ZAR195,934,860.
--- The Company incurred a loss of ZAR195,934,860 due to the non- repayment of the amount due from Basira Capital (formerly Ecsponent Capital). Basira Capital has since been placed in business rescue in 2021.
--- Ecsponent Capital is a public company duly registered and incorporated under the laws of South Africa and was once wholly owned by Holdem Legacy Trust, whose beneficiary was the Eune Engelbrecht family, a former employee of Mr. van Niekerk at Blue Financial Services. This ownership was then changed to Bro Business Trust (IT 3509/2010), a discretionary trust of which the beneficiary was Mr. Lenki Jeffrey Ratsaka, a South African national. Mr. Ratsaka worked for Mr van Niekerk as a driver at both Blue Financial Services and MyBucks.
Transaction 9: Improper utilisation of proceeds from listed bond issued by Getbucks Limited Botswana, a subsidiary of Mybucks – BWP97,901,507
- As set out in the announcement released on SENS on 26 August 2022 (and using the terms defined therein unless otherwise stated herein) between February 2017 and January 2018, Getbucks Limited Botswana, a subsidiary of MyBucks (now FirstCred Limited), raised BWP116,000,000 through its Botswana Bond Programme. BWP97,901,507 of the bond proceeds raised (“Bond Proceeds”) was grossly and inappropriately misused by former management, and this included an amount of BWP50,000,000 which was inappropriately invested by Ecsponent Botswana, a wholly owned subsidiary of Ecsponent Limited.
--- FirstCred Limited was placed under Judicial Management on 19 August 2022 because of the misuse of the Bond Proceeds. - The Company has incurred a loss of BWP50,000,000 (ZAR66,620,500 equivalent) as the Judicial Managers have rejected the Company’s investment on the basis that it was not properly done to justify its existence.
Zimbabwean born businessman George Manyere.
PART B – MATERIAL TRANSACTIONS WITH MYBUCKS OR ITS FOUNDERS WHICH WERE FUNDED BY OTHER INVESTORS FUNDS
Below are other material transactions that were executed within Mybucks and funded by other investors. These investors have also lost their funds since Mybucks failed to pay back these amounts.
Transaction 10: Improper utilisation of cash proceeds from AS Mintos Marketplace by GetBucks Limited Botswana, a subsidiary of Mybucks – BWP32,200,000
--- Between 2017 and 2018, GetBucks Limited Botswana (now FirstCred Limited) raised BWP60,700,000 through bilateral loans from AS Mintos Marketplace (a joint stock company existing under the laws of the Republic of Latvia with unified registration number 40103903643), of which BWP32,200,000 (ZAR42,903,602 equivalent) raised was grossly and inappropriately misused.
--- FirstCred Limited was placed under Judicial Management on 19 August 2022 as a result of the aforementioned misuse of funds. - The failure by Firstcred to repay the BWP32,200,000 due Mintos, resulted in Mintos placing FirstCred into Judicial Management.
Transaction11: Improper utilisation of funding from SATF to Ecsponent Mauritius – US$7,500,000
--- In December 2017, Ecsponent Mauritius (now ECS Private Equity Mauritius), a wholly owned subsidiary of Ecsponent Limited, raised US$10,000,000 from SATF (a United Kingdom registered lender), intended to be used for funding SMEs in Botswana and Zambia, of which US$7,500,000 (ZAR122,806,500 equivalent) was grossly and inappropriately misused for the benefit of Mybucks and Ecsponent Projects.
--- The gross misuse and misapplication of the US$7,500,000 due to SATF, has resulted in in the funds being unrecoverable to date.
Transaction 12: Utilisation of cash proceeds raised from institutional investors by GetBucks Zambia, a subsidiary of Mybucks – EUR11,125,459
--- Between 2017 and 2019, GetBucks Zambia, a subsidiary of Mybucks, raised funding from AS Mintos Marketplace (a joint stock company existing under the laws of the Republic of Latvia with unified registration number 40103903643) to support growth of its loan book for an amount of approximately EUR15,000,000 of which EUR11,125,459 (ZAR179,194,43 equivalent) was grossly and inappropriately used.
--- The gross misuse and misapplication of the EUR11,125,459 due to foreign lenders, has resulted in in the funds being unrecoverable to date.
My Bucks founder Dave Van Niekerk
PART C - LEGAL ACTION AND FORENSIC INVESTIGATIONS
In order to ensure that any wrong doings in respect of the aforementioned transactions are dealt with and the perpetrators held accountable, the following key actions have been initiated by Afristrat and are being pursued despite the financial burden:
1. A claim for EUR27,829,333 (ZAR448,238,717.83 equivalent) before interest against MyBucks (in Bankruptcy)(“MyBucks claim”).
2. A claim for ZAR195,934,860 against Ecsponent Capital (in Business Rescue)(“Basira claim”).
3. Lawyers in Botswana are trying, with much difficulty, to serve legal papers relating to the Company’s claim on Bluthorn Holdings for the outstanding ZAR232,500,000 loan (“Bluthorn claim”).
4. A Commission of Inquiry into VSS Financial Services (in Liquidation) in respect of losses for Afristrat of approximately ZAR579,443,430 has been completed (“VSS inquiry”). The report in respect thereof has been finalised (“VSS investigation”). Subject to availability of funding where needed to meet legal and other experts’ costs, appropriate regulatory, legal and criminal considerations are underway and the Section 417 inquiry is still ongoing.
5. A forensic investigation into the gross misuse of BWP130,101,507 (ZAR173,348,548 equivalent) in FirstCred Limited has been completed and the report in respect thereof has been finalised (“FirstCred bond and Mintos proceeds investigation”). Subject to availability of funding where needed to meet legal and other experts’ costs, appropriate regulatory, legal and criminal considerations are underway.
6. A forensic investigation into the gross misuse of EUR11,125,459 (ZAR179,194,430 equivalent) in GetBucks Zambia has been completed and the report in respect thereof has been finalised (“Zambia investigation”). Subject to availability of funding where needed to meet legal and other experts’ costs, appropriate regulatory, legal and criminal considerations are underway.
7. A forensic investigation into the gross misuse of US$7,500,000 (ZAR122,806,500 equivalent) in Botswana has been completed and the forensic report in respect thereof has been finalised (“SATF investigation”). Subject to availability of funding where needed to meet legal and other experts’ costs, appropriate regulatory, legal and criminal considerations are underway.
8. A forensic investigation into the gross misuse of E366,000,000 of investors funds in Ecsponent Eswatini Limited (now ESW Investment Group Limited) (“Eswatini Investigation”).
9. Independent consideration of the action and/or settlement arrangements to be taken against certain former service providers to MyBucks whose work was relied upon by the Company in making investment decisions is underway, subject to availability of funding where needed to meet legal and other experts’ costs.
10. Independent consideration of the action to be taken against certain former members of management of the Company and MyBucks in relation to certain transactions identified from the forensic investigations is underway, subject to availability of funding where needed to meet legal and other experts’ costs.
The above transactions have had a significant negative impact on the Company’s balance sheet due to full impairment on its investment instruments in Mybucks and its subsidiaries, which resulted in default on its obligations, solvency, and liquidity challenges. The Board has initiated various legal claims to pursue recovery of some of the amounts, however prospects of recovery are considered low, due to amongst other reasons, the need for funding to finance the legal claims process.