Massive damages claim over ‘sabotage’ of Umuthi Healthcare’s London listing

Members of the Umuthi Action Group are being served with summons this week for roughly R250 million in damages for what Umuthi Healthcare CEO Gert Viljoen says amounts to sabotage of the company’s listing on the London Stock Exchange (LSE) last year.

Head of the Umuthi Action Group, Anthony Morris, is also wanted by members of the South African Police Service (SAPS) at the Kempton Park Police Station in relation to a charge of alleged extortion.

Umuthi is the South African company that was listed on the LSE in March last year, but trading in the shares was suspended after what the company says was a procedural error made by a consultant in releasing financial statements without consent.

That suspension was lifted when the discrepancies were addressed, but trading was again suspended when a group called Umuthi Action Group, led by Morris, raised further concerns, mainly around the claim that shares had been fraudulently sold before the listing.

In July, the LSE announced that it had discontinued the listing, without giving reasons.

Viljoen says the negative publicity from the Umuthi Action Group contributed to the LSE’s decision.

He says the company has accepted the delisting, but those responsible must be held to account. Hence, the damages claim for roughly R250 million.

Share transactions

While some share sales are claimed to be fraudulent, other buyers say they bought shares but were not issued share certificates.

Morris alleged that the fraud might be as much as R50 million, but Viljoen says a forensic audit of the share sales was undertaken, showing “99% of the Umuthi Action Group did not invest funds into Umuthi or its subsidiaries”.

Many of these shares were earned as sales commissions, but some of them as a result of fraudulent transactions conducted without the knowledge or authority of the company.

The claims of fraudulent share sales, however, led to the arrest of several individuals, including the company’s CEO Gert Viljoen, Tony McKeever and one of its consultants, Connie van Nieuwkerk.

Charges were dropped against Viljoen shortly after the arrest, McKeever was released on bail , and Van Nieuwkerk, who was arrested in relation to a separate charge, is also currently out on bail.

Read: Two LSE-listed Umuthi Healthcare execs arrested on charges of fraud

The problem appears to be that shares were being fraudulently sold by some brokers and consultants without authorisation by the company, and the proceeds of these sales never reached Umuthi. Those shares sold by Umuthi itself were legal.

Arrest warrant

It has now emerged that the police in Kempton Park issued a warrant of arrest for Morris related to alleged extortion. The police have yet to track him down, and he remains at large.

“He’s a fugitive from justice, and has been for months, and is intentionally delaying justice,” claims Viljoen.

“He should present himself to the police so that he can answer the charges against him and the charges to follow for his devious actions to destroy the company’s reputation and its board as part of an elaborate plan to claim from the listing advisor’s indemnity insurance.”

Morris denies the claim that he is a fugitive or that there was any extortion. “If the [investigating] detective wishes to know where I live in order to come and arrest me, he has my number and is welcome to ask,” he said via email in response to Moneyweb questions, soon after the arrest warrant was issued in February.

He further advised Moneyweb to contact the “provincial head of detectives” for verification.

He also claimed in a further communication that the investigating officer, Sergeant Mulaudzi of the Kempton Park Police Station, confirmed that the warrant was in the process of being cancelled and that it would not be executed.

Last week we contacted Mulaudzi at Kempton Park Police Station. The warrant is still very much alive, we were told.

“Where is he? Why doesn’t he come to the station?” said Mulaudzi.

“He knows we are looking for him.”

Anthony Morris, head of the Umuthi Action Group, denies that he is a fugitive. Image: Supplied

When we asked for an official SAPS statement on the matter, we were referred to the investigating officer, Malaudzi.

In April, senior public prosecutor PF Erasmus also notified Morris that a warrant for his arrest has been issued.

Vassan Soobramoney of the central crime intelligence unit of the SAPS – who is named as an accomplice in the alleged extortion – told Moneyweb that there is no basis for the charge and agrees with Morris that the warrant of arrest, apparently based solely on the statement of the complainant, was irregularly issued.

As to the claims that the warrant was irregularly issued, Viljoen says: “Soobramoney and Morris can only speculate about the contents of the police docket and should leave the matter to the authorities in charge.”

On the Umuthi Action Group social media forum, Morris pours scorn on the detectives, prosecutor and even members of the group, several of whom have resigned.

Extortion charge

The charge of extortion against Morris stems from a meeting at Emperor’s Palace Casino in Kempton Park, east of Johannesburg, on 2 March 2020, where Viljoen met with Morris and Soobramoney.

“I was present at the meeting at Emperor’s Palace as part of an intelligence-gathering operation,” Soobramoney told Moneyweb.

“I wanted to find out whether Tony McKeever and Connie van Nieuwkerk were authorised to sell shares in Umuthi, and Gert Viljoen informed me they were not. Anthony Morris was there to find out why investors he had introduced to Umuthi had not been issued share certificates. Morris had been promised shares for introducing some investors, and without blinking, Viljoen said he would honour those shares. There was absolutely no attempt to extort shares from Umuthi.”

What appears to have happened is that Umuthi shares were being sold ‘off book’ and without the consent of the company.

Morris says the purpose of the meeting at Emperor’s Palace was to ascertain the status of the shares issued to his cohort, and adds that no extortion took place.

Viljoen has an entirely different recollection of that meeting: “I was present at the meeting at Emperor’s Palace, of all places, as part of an invite from Morris who I met for the first time to discuss business opportunities. Present in the meeting without prior notice Col. Soobramoney from Crime Intelligence bombarded me with queries about Connie and Tony, asking if they were employed by the company, and adding that there was an open investigation into the matter at the SAPS. Morris made [it] clear that they are intending to involve the media and that will halt the listing process of Umuthi in its entirety.

“I took this extremely seriously, particularly in the presence of Soobramoney from the SAPS.”

Viljoen says he consented to this alleged extortion and, to avoid negative publicity prior to the listing, issued Morris and his cohort 1.26 million free shares in Umuthi.

It later transpired that there was no case registered at the SAPS.

Soobramoney, who was involved as a lead investigator into allegations of corruption around KwaZulu-Natal businessman Thoshan Panday, says he has been medically boarded (placed on medical leave) due to a heart condition.

Viljoen and McKeever say the reputational loss and damage suffered to the company was orchestrated by Morris, who amplified false claims of people committing suicide due to the financial loss surrounding the listing.

“Furthermore, claims that investors lost R50 million are a complete fabrication. These were and are false claims that destroyed the listing process,” says Viljoen.

Claims of impropriety

While the Umuthi listing has been discontinued, Viljoen says the information required by the LSE for addressing the suspension has been supplied, and any questions of alleged impropriety have been put to bed after an investigation launched by the board and by IRS Forensic Investigations.

He says these investigations found there was unlawful selling of Umuthi shares, but this occurred outside the company and is a matter for law enforcement, not the company.

In some cases, shares were lawfully purchased, and share certificates were not issued due to delays caused by Covid-related lockdowns. This has been corrected, and the share register now accurately reflects Umuthi’s share ownership.

Key piece of evidence

A key piece of evidence in the claim of impropriety against Umuthi is an accounting opinion drafted by Michael de Lange who was a member of the Umuthi Action Group. The report, which was subsequently withdrawn, was compiled without access to source documents or the accounting assumptions used in the audit.

“Anyone is welcome to have an opinion. Fortunately listing requirements are audited reports,” says Viljoen.

De Lange’s resignation letter from the Umuthi Action Group, which was passed on to Moneyweb by a member of the group, prohibits Morris from using any information provided to him.

“… I do not agree nor support the media strategy and website that has been created nor the slanderous publications posted by you,” reads the letter. “I fully support the pursuit of justice but believe this must follow the correct channels … I cannot and will not provide you with funding to flee the country and I advised you not to flee the country as it will make you look even more guilty.”

Viljoen says the company will not appeal the discontinuation of its listing, and a number of other possibilities for the company are being explored.

But he has no intention of letting it rest there.

Viljoen says the alleged damage caused by Morris and his group is said to run to about R250 million and is now the subject of legal damages claims against Morris and his dwindling group.