HAMILTON Property Holdings provisional judicial manager Mr Knowledge Hofisi has said the company should strike a mutually beneficial agreement with borrowers who defaulted to end protracted disputes over attached properties.
The High Court granted an order to place HPH under provisional judicial management in September last year. This was the culmination of a High Court application filed by Ritem, a company that acquired a property from HPH, in which the occupant was disputing having sold the property in question to Mr Frank Buyanga’s company.
The report said there was an element of contributory negligence on the part of both parties — clients and company — hence they needed to agree on a deed of compromise.
HPH owned by fugitive businessman Mr Buyanga claims the company bought the assets, a position being disputed by clients, who argue they only got loans.
“The company ought to realise reasonable returns from its investments while at the same time, its clients will discharge their financial obligations with uberrima fides,” said Mr Hofisi. “If HPH implements ethical and contemporary business practices, it could be a viable entity whose fortunes can be turned around.”
After examining the company’s records, the provisional judicial manager found that the company’s records showed that assets worth about US$5 million were acquired by HPH at a cost of US$1,8 million. If transactions consummated through subsidiaries or associated companies were included, assets with an estimated value of US$15 million were acquired at US$5,2 million.
However, valuation of these assets to determine the total value has not been possible. The PJM report also noted that the company could be indebted to the tune of US$3,5 million, mainly from debt equity procured to finance its business operations. Only US$30 000 has been recovered since the company was placed under judicial management.
Mr Hofisi, of Aurifin Capital, said HPH loan scheme was a culmination of liquidity challenges emanating from the introduction of the multi-currency system in February 2009 when funding was not readily available in the formal banking system.
“In determining the exact nature of the transactions and without derogation to the advisory committee, legal form and substance relating to the transactions should be considered. Is it fair that adult persons, some of them learned lawyers and men of substance, would attempt to seek abrogation of seemingly valid agreements of sale on the basis of deception?
“On the other hand, if HPH was indeed acquiring properties, why is it that there was no effort to collect rental income ordinarily derived from immovable properties?
“Are the current tenants enjoying usufructs? In addition, the entering and subsequent signing of an agreement of sale resulting in payment of a nominal purchase consideration raises eyebrows about the authenticity of the underlying transactions.”
Mr Hofisi noted that the HPH transactions resembled building society operations or money-lending activities, but they are not regulated in conformity with the requirements of the Building Societies Act or the Banking Act.
HPH is embroiled in legal battles with its clients over allegedly irregular transactions. There have been two recent cases in the High Court.
The first involved Mr Douglas Munzvengi, who was suing Frank Buyanga, HPH and the Registrar of Deeds.
On August 1, 2012 the High Court granted an order cancelling the sale of property agreement which the parties had entered into and directing HPH and Buyanga to return the title deeds of the property to Mr Munzvengi upon him repaying the loan.
Then, there is a case in which the Attorney-General, as plaintiff, sought an interdict order against Buyanga and HPH directing the Registrar of Deeds not to transfer any of the properties.
In the affidavit filed by the AG’s Office, the application was being made in terms of the Serious Offences (Confiscation of Profits) Act.
It had received complaints about illegal money lending, fraudulent agreements of sale of immovable properties, creation of fraudulent powers of attorney and declarations by seller, prepared to further the concealment of proceeds of “crime”.
On February 21, this year, the High Court handed down the order sought by the AG by consent.
The disposal, sale or transfer of the properties are now stopped until the High Court’s determination of the merits of an application by the Attorney-General who filed for the nullification of the sales of the properties in question and the conclusion of the purported agreements of sale of the said properties and their subsequent transfer.
In his affidavit the Attorney-General stated that on August 31, 2009 Buyanga was blacklisted by Interpol as a wanted person.
Mr Hofisi said it was necessary to remove legal technicalities to allow determination of the issues on merit. He said a deed of settlement will “undoubtedly” restore normalcy and ensure attainment of closure and finality over the matter. Martin Kadzere – Herald