Mine Restoration Investments lays charges against former directors
Company alleges that former CEO and chair were involved in a corrupt loan scheme
Mine Restoration Investments (MRI), an environmental services company that has spent the past few years seeking an operating asset, has laid criminal charges against its former CEO and chair over an allegedly corrupt loan scheme.
The directors have denied the allegations and say they may go to court themselves.
Though much smaller in scale, it is the latest corporate scandal to rock SA investors after the implosion of Steinhoff in 2017 due to dodgy accounting practices, and the discovery of the alleged corruption in the awarding of tenders at technology group EOH. Tongaat is also in the middle of cleaning up its balance sheet due to inflated asset values and profits.
MRI said in a statement on Wednesday that former CEO Richard Tait and former chair Quinton George notified the board that they have struck a syndication loan agreement, which refers to group lenders pulling together to advance credit, to fund the company’s working capital requirements.
MRI maintains it was not in fact a syndicated agreement, rather a single agreement, and that the executives appeared to have substantive control over Growth Equities. The amounts were in the region of R375,000.
MRI said loans, worth about R375,000, were advanced by one company, Growth Equities, a creditor and current shareholder of MRI. It added that both executives appeared to have substantive control over the agreement by Growth Equities.
“The implicated directors utilised the syndication façade as a mechanism to monetise the Growth Equities loan position for personal gain,” the company said.
Tait, who was removed as CEO along with George as directors of the company in July, denied any wrongdoing, saying statements by MRI were defamatory as the police dropped charges in late July due to lack of evidence.
The Growth Equity transaction in 2017 had been fully explained to the board at the time, and had not been criminal, said Tait.
In a separate statement, MRI said that Growth Equities, which holds a 17.38% stake in the company, had demanded a shareholder meeting to reappoint both George and Tait and fire five directors including current CEO Michael Miller.
MRI said its board was “of the view that the demand is frivolous and vexatious and is currently obtaining legal advice on the matter”.
MRI listed on the AltX in 2012 in pursuit of capital, but has remained a cash shell. Its first two ventures after listing, into acid mine drainage technology and coal briquette making, were ultimately abandoned.
A third project, which involved iron beneficiation, also fell through, while the group has recently been pursuing a deal that would see it acquire a chrome processing business.
In July, the company said discussions on the chrome transaction continued, but that a share transaction agreement had lapsed, and that there was the danger of the business being carried on recklessly.
The group had entered business rescue in July 2020, but this was set aside in August, after a court bid from one of its creditors.
Tait said relationships on the group’s board had ultimately broken down over the chrome transaction, which had been repeatedly delayed, and the issue of putting the group into business rescue.
Legal options were still being considered, but it was likely that a shareholder meeting would have to be called. Tait added he was confident that the five directors would then be removed, and following this a new board would likely move for an orderly business rescue process.
MRI could then possibly pursue damages against various parties, as well as orders of delinquency against some directors, he said.
The group’s share had been suspended in 2016, and MRI said at the time it could not finalise its results, and had doubts about its future. At the end of February 2019, the group’s liabilities exceeded assets by R16.1m.
Would you like to comment on this article or view other readers' comments?
Register (it’s quick and free) or sign in now.
Please read our Comment Policy before commenting.