The Hawks have made two arrests in connection with the shambolic listing of SA healthcare company Umuthi on the London Stock Exchange, claiming the listing involved fraud on 30 shareholders who lost around R50-million.
Umuthi CEO Gert Viljoen and Connie van Nieuwkerk, who was for a time in charge of the listing process, appeared in Palm Ridge Magistrate’s court on Thursday, charged with fraud. Viljoen was granted R20,000 bail and Van Niewenkerk was remanded in custody until her bail hearing on October 21.
A Hawks spokesman said it is alleged that the two accused persuaded the shareholders to buy shares that did not exist, on the basis that it was going to list on the main board of the London Stock Exchange. “The shareholders were further threatened that if they do not pay a certain amount of cash, they will forfeit their existing shares”, the statement said.
The investors were given bank accounts where the cash was deposited but it was later discovered that these were the suspects’ personal bank accounts. It is alleged that thirty shareholders lost R50-million due to misrepresentation.
“The investigation is continuing and more arrests are imminent,” the Hawks said.
The arrests are a sequel to one of the most disastrous listings in the history of the London Stock Exchange, after Umuthi was admitted to the main board in March this year, only to be suspended six days later, which poses some embarrassing questions for the exchange’s due diligence process.
After new auditors were installed, trading was restored on 25 May 2021 after a supplementary prospectus was issued.
But then the company was again suspended on 10 June 2021 because the UK Financial Conduct Authority (FCA) was concerned that “some shareholders who were involved in a share exchange agreement prior to the Company’s Admission to trading, [were] not able to trade all of their shares”.
One of the things the LSE appears to have missed in the listings process was that Connie van Nieuwkerk has been using her maiden name, Van Vliet, apparently to disguise the fact that she was debarred by SA’s Financial Services Board (the predecessor of the current Financial Sector Conduct Authority or FSCA) in 2017 for five years.
She is not only prohibited from giving financial advice but was also fined R31-million by the FSCA last year for no less than six instances of manipulating audits and other acts of financial deception.
She is currently fighting fraud charges in respect of these cases. The instances concern the AIM-listed company African Dawn, where she was chief financial officer at the time, and was found by the FSCA to have increased earnings during the 2008/09 financial year by R23-million.
The initial prospectus suggested the listing price would be around £4, but it was eventually listed at just 30 pence. After trading at 65p shortly after listing, it’s now listed just above its listing level at 35p, the level at which it was trading when it was suspended in June.
The company remains suspended, despite announcing that it would relist on 23 June. It announced on 10 August 2021 that it was still working with the FCA, to “address the operational issues regarding the shares as raised by the FCA and [had] applied every effort to facilitate an expeditious restoration”.
Viljoen declined to comment on the arrest. BM/DM