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Vision Investments laid the charge against RGS Holdings at the Sandton police station on April 2 2024

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Sizwe sama Yende

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The new owners of Tongaat Hulett Limited have not taken their competitors’ underhand tactics during the bidding process lightly as they have pressed a fraud charge against a Mozambican company RGS Group Holdings Ltd, its chairman and owner Acquil Rajahussein, directors , legal and financial advisors . 

Tycoons Robert Gumede and Rute Moyo’s consortium, Vision Investments, eventually won the race to take over the assets of the multinational sugar company in January following months of haggling and questionable actions from competitors who were trying by all means to convince the business rescue practitioners (BRPs) to be considered as the selected equity partner (SEP).

The RGS fiasco follows on the footsteps of the ill-fated and fraudulent Tanzanian company Kagera Sugar who were also accused of having provided fraudulent proof of funds when bidding against Vision Consortium. 

Vision Investments comprises Gumede’s Guma Agri & Food Security Group, Remoggo Investments, headed by Moyo, a Zimbabwean businessman, and the Terris Fund led by Samancor, and agriculture investor Amre Youness, who has been investing in Southern Africa for many years, and Almoiz – a hugely successful sugar operator from Pakistan whose sugar business is larger than that of THL and is a major Pepsi Cola bottler. 

Vision Investments laid the charge against RGS Holdings at the Sandton police station on April 2 2024.

RGS mired the Tongaat Hullet bidding process in controversy when they allegedly submitted a fake proof of R2billion funding held in ABSA’s Mozambique branch, and further letters allegedly from Millinium and BIM banks (both in Mozambique) to the BRPs. RGS withdrew from the process on the eve of the voting by creditors amid concerns that the BRPs had kept them in contention despite having failed to show they had real money other than the fake and fraudulent banks letter. 

In an affidavit to the police, Moyo said that RGS’s misrepresentation had sought to sway the BRPs to draft plans in favour of the Mozambican company.

“To the extent that RGS senior officials and advisors only became aware of the forged ABSA letter after 15 December 2023, they continued to participate in the fraud by creating a misrepresentation by their omission in informing the BRPs and the creditors of the forged ABSA letter and their inability to acquire the Lender Group debt on the basis which they had proposed,” Moyo said.

He also added that due to the potential risk of being eliminated from the bidding process, RGS kept silent about the forgery and allowed the BRPs and Lender Group to be “induced by misrepresentation.” 

RGS BLAMES JUNIOR MANAGER FOR FIASCO

Moyo’s affidavit lays bare how RGS allegedly tried to remain in the race. Vision became aware of the forged ABSA letter, Moyo said, when RGS wrote a sworn affidavit as an intervening party in a High Court application brought by Powertrans Urgent to interdict the drafting of business plans. “Although RGS had withdrawn the amended RGS plan prior to the [creditors] meeting, RGS persisted in making vexatious allegations against Vision, the BRPs and the Lender Group in which RGS vilifies the business rescue process which culminated in the adoption of the amended Vision plan.”

“In his affidavit, Rajahussein disclosed that during the bidding process, RGS provided the Lender Group and the BRPs with a forged ABSA letter purporting to emanate from ABSA Bank Mozambique,” Moyo said.

RGS has blamed a junior manager who decided against depositing the R2billion in ABSA Mozambique because of a concern of interest that would be forgone. 

“This junior manager,” RGS stated in the affidavit, “without the knowledge of RGS senior management, took it upon himself to arrange for an ABSA Mozambique official to be provided with evidence of the funds held by RGS in its BCM and BIM accounts and to issue the ABSA Mozambique letter on that basis alone (i.e in the knowledge that RGS held the funds but in the absence of the funds being deposited with ABSA Mozambique.” 

“Senior management of RGS only became aware of this issue for the first time when the genuineness of the ABSA bank Mozambique letter was called into question by ABSA South Africa on 15 December 2023.”

RGS TURNED PIC AND IDC AGAINST VISION CONSORTIUM

RGS had also written several threatening letters to the Public Investment Corporation (PIC), Industrial Development Corporation (IDC) and the Lenders group to dissuade them from backing the Gumede consortium. It is alleged RGS threatened to publicly and legally challenge the financial institutions’ so-called bias against his Mozambique company inflict reputational damage upon them. The company’s gambit worked as the PIC and IDC eventually did not support Vision Consortium’s plan adopted on January 11. 

Legal firm, White & Case, and Buffet Investment director, Ron Goldstein, who works for multi-billionaire Jonathan Beare’s investment company, Buffet Investments, were alleged to be partners and advisors of RGS on the bid. Goldstein is alleged to have spearheaded the engagement with the BRPs and the due diligence process on behalf of RGS . 

“It is important that RGS and its agents understand that SA is not a Banana  Republic.

There are rules of law and good corporate governance  in business and, most importantly, consequences if you breach the laws . The police will leave no stone unturned in both SA and Mozambique,” said attorney, Ian Small-Smith, of Vision Consortium.

RGS is a well-known trader company in the north of Mozambique where it is a distributor of products and has the smallest sugar mill, which contributes 3% to the country’s sugar market whilst Tongaat Hullets Mozambique enjoys over 97% of the market share. Tongaat Hullets Mozambique is the single largest employer with over 11 000 staff members. 

Rajahussein, who deposed the sworn affidavit that disclosed the Absa fraud letter, did not respond to questions sent to him by WhatsApp.

IRREGULARITIES FROM THE ONSET

The bidding process for the THL assets was beset with irregularities from the beginning.

Tagera Sugar also attempted to win the bid to be SEP with a fraudulent letter from the IDC and a Tanzanian bank in June 2023.

The IDC’s bogus letter promised R2 billion in funding for Kagera. It was later proven that the letter was fraudulent, and a senior IDC executive was forced to resign after the IDC conducted a forensic investigation.

However, the BRPs defended their action and said that they underwent a stringent adjudication process to choose Kagera.