Circumstances surrounding the sale of a controlling equity stake in David Whitehead Textiles to businessman Praduman Kumar Ganeriwal were suspicious and raise conflict interest concerns, gross undervaluation and cronyism, a key shareholder says.
By Chris Muronzi
In a High Court affidavit, DWTL majority shareholder Edwin Chimanye attacked the textile company’s Judicial manager over how he sold the company’s shareholding to Ganeriwal.
“The circumstances of the sale itself are suspicious and raise a sordid tale of conflict of interest, gross undervaluation of company assets and favouratism,” Chimanye’s affidavit reads.
Chimanye, who was cited as a respondent by Hofisi, for using DWTL letterhead to dispute the sale of the group, said he was at loggerheads with applicant for his conduct.
Hofisi, who was representing David Whitehead in the High Court application, applied for an urgent order to compel Chimanye and Justice Gutsa to compel Chimanye and Justice Gutsa cited as first and second respondent respectively, to be interdicted from using the textile company’s logo for their personal notices and be barred from “misleading the public.”
In his affidavit, Hofisi said his standing as a competent court official had been tainted by the statement retract a statement they issued after he announced the sale of DWTL to a vehicle owned by Ganeriwal.
“My standing as a competent court official has been tainted and soiled by the use of the logo to capture a huge audience when in fact the representation does not represent the thoughts and achievements of my office or the Applicant,” Hofisi said.
But Chimanye said that David Whitehead, the applicant in the matter, had suffered no harm from the publication of the statement.
“The statements issued are in fact true as the judicial manager has grossly failed to carry out his duties and has engaged in action that demonstrate serious ethical and competency shirtcomings on his part,” Chimanye’s affidavit reads.
“All I have done is try and protect my shares in the Applicant (DWTL). From the time the judicial manger failed to account for his actions at the said meeting, we have always been at loggerheads regarding his conduct in trying to ‘resucitate’ the company reposes with the judicial manager.
“The judicial manager is still bound to act in consultation with the shareholders abnd creditors of the company. In fact, he is obligated to comply with the provisions of section 306 if Companies Act. Section 306 (g) makes it mandatory for judicial manager to call in meetings of shareholders and do everything that a director would have done had the company not been placed under judicial management.”
Chimanye added that no harm had been suffered by the applicant.
“What is apparent from the foregoing is that no harm was suffered by the Applicant in the publication of the press statement,” he said.
He added that the statement was necessary after the Judicial Manager elected to perform what he described as “clandestine actions”.
Chimanye added that the disposal of the majority of the company’s issued stock should have complied with section 183 (1) (2).
“(1)Notwithstanding anything in the articles, the directors of a company shall not be empowered, without the approval of the company in general meeting to 2. Dispose of the undertaking of the company or of the whole or the greater part of assets of the company,” he said.
Chimanye added that Hofisi did not have authority to dispose of a majority stake of the issued share capital of DWTL.
Hofisi said Chimanye’s statement was designed to discredit his efforts.
“I have no doubt that the content of the press statement in issue are clearly designed to discredit the efforts that I have undertaken as a statutory authority. In particular, the article carries the following deliberate stings: that the judicial manager is acting ultra vires the companies Act, that the judicial manager showed favour in the selection of the new investor, that the decision to accept the offer made by the new investor is insanely dangerous and unlawful as to induce shock, that the judicial manager is corrupt and unethical,” Hofisi said.
“The harm that been suffered is that the press statement was on the Applicat’s official logo and yet carried misleading information which does not represent the Applicant’s appreciation of the issues represented in the statement. The applicant’s official position on nthe subject of the press statement appeared in the press statement which I inserted in the Herald Newspaper of the 1st of June 2019 which the respondents now seek to discredit.”
The High Court dismissed the application by David Whitehead.