| Mon 26 May 2003, 14:44 | | ANNOUNCEMENT |
|
SEKUNJALO INVESTMENTS LIMITED -
SEKUNJALO INVESTMENTS LIMITED
Share code : SKJ
ISIN : ZAE000017893
MONDAY, 26TH MAY 2003
Sekunjalo Investments Limited has today instructed its attorneys, Mallinicks
Inc., to institute an action for damages in the sum of R200 million against the
auditors firm, Deloitte & Touche, a member firm of Deloitte Touche Tohmatsu
International.
Deloitte & Touche were the auditors of Leisurenet (Proprietary) Limited which
was placed in liquidation in October 2000 because of it being unable to settle
its creditors.
Sekunjalo, a black empowerment company, made substantial investments in
Leisurenet to the extent that at the time of Leisurenet"s demise, Sekunjalo was
a major shareholder in Leisurenet holding 18% of Leisurenet"s equity. Along
with all the other shareholders and various financial institutions who funded
Leisurenet, Sekunjalo has, as a result of Leisurent"s collapse, lost its entire
investment in Leisurenet.
An enquiry is presently being conducted into the circumstances leading to the
collapse of Leisurenet. From the evidence which has already been led it has
become abundantly clear to Sekunjalo that a substantial portion of the
responsibility for the losses sustained by Sekunjalo and many of the other
investors may be attributable to Leisurenet"s auditors, Deloitte & Touch, for
the following reasons:
1. Year after year Deloitte & Touche prepared the financial statements on a
basis which, it now appears, may not have been in accordance with acceptable
accounting practice, which may have created a false impression as to the
financial position and profitability of Leisurenet. In December 1999, based on
the financial results approved by Deloitte"s, Leisurenet showed an after tax
profit of a R115 million whilst, in September 2000, after Deloitte"s had
restated Leisurenet"s interim results in accordance with its amended accounting
practice, it reflected an after tax loss of R53 million, a reverse of
profitability of R168 million;
Deloitte"s had knowledge of Leisurenet"s extensive liabilities for the financial
year end December 1999, and particularly the contractual liabilities namely the
guarantees which Leisurenet had bound itself to for almost R900 million, but did
not disclose them in Leisurenet"s annual report and financial statements as at
December 1999. In evidence led at the enquiry it emerged that Deloitte"s
working papers clearly made provision for a number of contingent liabilities
which, for a reason unknown to Sekunjalo, were not disclosed. Sekunjalo
believes that Deloitte"s knew of the guarantees and owed a duty to Leisurenet"s
shareholders to ensure that the financial statements of Leisurenet reflected the
true and proper position. The failure by Deloitte"s to insist on the disclosure
of these material facts in the financial statements or in turn to qualify the
financial statements of Leisurenet led Sekunjalo and many other investors to
believe that Leisurenet"s financial position was far stronger than it actually
was and resulted in Sekunjalo, the other investors and their financiers being
deceived;
Deloitte"s in addition to rendering auditing services rendered consulting
services to Leisurenet and to members of its executive management. Deloittes
failed to insist on proper disclosure of the business relationship between the
related parties in Leisurenet and Leisurenet itself.
Significant similarities can be drawn between the demise of the American
Multinationals such as Enron and WorldCom, and of LeisureNet and the roles
played by these companies" auditors and consultants in amongst other things
utilising accounting policy which had the affect of inflating their financial
figures and forecasts, and failing to make full disclosure of information within
their knowledge that would have had a substantial affect on investor confidence
and the financial position of the company.
As Sekunjalo is a black empowerment company, many of its black community
shareholders have suffered extensively as a loss of the investment in
Leisurenet.
Sekunjalo is determined to recover for them, and to give back to the community
shareholders, every cent which is legitimately claimable from the parties
responsible for that loss.
There must be many hundreds of investors who bought and held on to Leisurenet
shares in the same way that Sekunjalo did. Many of them will have lost what is
to them a significant amount, yet may be too small an amount for them to
individually institute an action against the parties responsible. Sekunjalo is
of the opinion that a claim of this nature could run into hundreds of millions
of rands.
Sekunjalo realises that this may well be a situation where a class action will
afford an appropriate remedy for these shareholders. For this reason, they are
delaying instituting action for a period of 2 weeks in order to ascertain
whether in fact there are other shareholders in the same position as Sekunjalo
which would justify a class action.
Should anyone wish to enquire about joining in a class action, they are
requested to call Rael Gootkin or Gavin Fitzmaurice at Mallinicks Inc. at 410
2200.
Issued by: Mallinicks Inc on behalf of Sekunjalo Investments Limited
For further information, contact: DR IQBAL SURVE, CEO of Sekunjalo Investments
Limited, on
Telephone: 021 683 9100 or
Cellular: 082 491 0179
Date: 26/05/2003 02:30:04 PM Supplied by www.sharenet.co.za
Produced by the JSE SENS Department
