(Bloomberg) -- The former directors of African Bank Investments Ltd., which failed in August 2014, said in court documents that they aren’t liable for a 2.03 billion rand ($142 million) damages claim lodged by black shareholders who held stock in the collapsed lender.
The 10 directors, including former Chief Executive Officer Leon Kirkinis, owed fiduciary duties to the company and not to shareholders, so “a breach of those duties cannot found a claim for damages,” they said in court papers lodged last week in the North Gauteng High Court in Pretoria. Only Abil, as the bank was known, could have suffered a loss, the directors said, denying that a violation of their duties led to the bank’s demise.
Daniel le Roux, an attorney representing the 10 former directors of Abil, confirmed that court papers were filed on April 15 and declined to comment on his clients’ behalf.
Abil set up two ownership plans with black investors, starting Eyomhlaba in 2005 and Hlumisa in 2008. When the lender collapsed 20 months ago amid soaring bad debts and a lack of funding, shareholders were left with nothing. Having held a combined 4.9 percent of the bank, the two shareholder groupings first filed court papers in December, claiming that Abil’s directors acted recklessly and misled investors. No court date for a hearing has been set yet.
Following the demise of Abil, the South African Reserve Bank stepped in to save the remaining viable assets. These assets started business again as African Bank Ltd. on April 4. The central bank also asked advocate John Myburgh to investigate Abil’s collapse, and his report was delivered to the Reserve Bank in the first quarter of last year. The report, which was to probe whether there had been any wrongdoing, has not yet been made public.
The court papers filed by the former directors of Abil last week requested that some of the black shareholder’s claims be struck out of Hlumisa’s and Eyomhlaba’s original summons. It was not a full response to all of the allegations made against the former directors of the failed bank.
To contact the reporter on this story: Renee Bonorchis in Johannesburg at firstname.lastname@example.org. To contact the editors responsible for this story: Dale Crofts at email@example.com, Vernon Wessels, Sarah McGregor
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