Former executives at South Africa’s VSS Financial Services (VSS), a wholly-owned subsidiary of Frankfurt-listed Fintech and African banking group MyBucks, are in hot water after a probe fingered them into financial irregularities
MyBucks instituted a forensic investigation into dealings of VSS, which is now in the process of liquidation.
The company said it has recently received the forensic report from Kahamelo Forensic Services.
“The findings justify, in the opinion of the Board, that MyBucks should, together with other affected parties and stakeholders, consolidate their resources to bring justice to bear and to seek rectification from those individuals that the report clearly identifies as having prejudiced VSS and its stakeholders,” the FinTech firm informed investors on Friday.
“MyBucks believes that certain former directors and executives, as well as certain service providers, should answer for the clear lack of corporate governance, as well as financial mismanagement, accounting irregularities and failure to act in the best interests of the company and its stakeholders.”
MyBucks’s controlling shareholder, Afristrat Investment Holdings Limited, has agreed to collaborate in the process.
Last September, MyBucks advised shareholders that it has received a letter and a copy of a forensic accounting report from a significant shareholder, Ecsponent, regarding some issues concerning VSS.
At the time, MyBucks noted that Ecsponent invested, on 3 January 2018, R100 million into VSS by way of an issue by VSS of redeemable preference shares. It further advised its board to write by Ecsponent that it instituted an independent forensic investigation after completing an internal investigation.
The investigation probed possible misrepresentation on the merits and purpose of the investment at the time of the initial investment proposal. The company added that Ecsponent felt the investment might have resulted in a financial loss to it.
The company also informed investors that it sought legal representation from the external legal counsel and instructed it to institute legal action against certain parties.
Last year, the Financial Sector Conduct Authority suspended Ecsponent Financial Services for breaches of financial sector laws following complaints about how the company had marketed the preference shares of JSE-listed Ecsponent Limited to potential investors.
Independent financial advisor Magnus Heystek, of Brenthurst Wealth Management, was among those who signalled that returns seemed to good to be true.
Many pensioners were sucked into the investments, only to find themselves in dire straits when Ecsponent defaulted on payouts to preference shareholders.
Ecsponent is still listed on the Johannesburg Stock Exchange, but it has changed its name to Afristrat. Ecsponent or Afristat is part of a global network of companies, including a company called MyBucks. Last week the Bank of Zambia ordered a Zimbabwean entrepreneur George Manyere to exit MyBucks Zambia after violating banking rules.