JSE imposes sanctions on two former directors linked to Iqbal Survé’s entities

Two former directors of businesses linked to Iqbal Survé’s Sekunjalo group of companies have landed in hot water with the JSE for engaging in various business practices that contravene the bourse’s listing rules — another example of governance problems at Survé’s entities.

The JSE has censured and fined the former CFO of Ayo Technology Solutions, Naahied Gamieldien, and the former director of African Equity Empowerment Investments (AEEI), Abdul Malick Salie, for business dealings dating as far back as 2017. They have each been slapped with a fine of R250,000 by the JSE.

AEEI is indirectly controlled by Survé through his family firm, Sekunjalo Investment Holdings, which owns 62% of AEEI at the last count. AEEI is the largest shareholder in Ayo, owning 49.3% of its shares, and Sekunjalo also owns a small direct stake in Ayo.

It is these cross and related holdings that have paved the way for the former director of Ayo and AEEI to be in trouble with the JSE. The sanctions imposed by the local bourse against Gamieldien and Salie relate to Ayo shortly after the technology investment firm listed on the JSE on 21 December 2017.

The listing of Ayo has since been stalked by several controversies.

First, several asset managers regarded Ayo as being overvalued on the JSE, with each of its shares set at R43 (allegedly determined by Ayo and non-negotiable). Since Ayo’s debut on the JSE in 2017, its shares have been in freefall, closing at R3.02 on Tuesday, 29 November.

Second, the Public Investment Corporation (PIC) invested R4.3-billion into Ayo when other asset managers refused to do so. The PIC acquired a 29% stake, valuing the company at R14.8-billion. Ayo’s former chief investment officer, Siphiwe Nodwele, testified at a commission of inquiry into the PIC’s governance affairs that even a R1-billion valuation on Ayo “would have been extreme”.

Today, Ayo is worth R1-billion on the JSE, meaning that the PIC got burnt as its investment into the company has soured.

Events that led to the JSE censure and fines

On 22 December 2017, the day after Ayo was listed on the JSE, it entered into three agreements with 3 Laws Capital, an investment management firm that would manage Ayo’s investments. For managing Ayo’s investments, 3 Laws Capital would be paid management fees by Ayo. Survé, through Sekunjalo Investment Holdings, is also invested in 3 Laws Capital, with an 85% shareholding in the firm.

This meant that 3 Laws Capital was related to Ayo (as was AEEI) in terms of the JSE’s listing requirements, which would have required it to disclose any business dealings between them to shareholders via the JSE’s news service (called Sens).

Ayo would also be required to provide the JSE with written confirmation from an independent professional expert, making the bourse aware of the relatedness among the companies, and confirm that any business dealings would be conducted fairly.

But in a series of business dealings with 3 Laws Capital from 22 December 2017 to 22 February 2019, Ayo didn’t inform the JSE or its shareholders. In these dealings, funds worth R870-million moved back and forth from the bank accounts of 3 Laws Capital and Ayo in several instances, which include:

• The first amount of R70-million was paid to 3 Laws Capital on 22 December 2017 and returned to Ayo on 22 February 2019.


• The second included a R400-million payment to 3 Laws Capital on 5 March 2018, which was returned to Ayo on 20 August 2018 (or the same year).


• A further R400-million was transferred to 3 Laws Capital on 29 November 2018 and returned to Ayo on 22 February 2019.

Flouting of JSE rules and investment agreements

In the asset management world, it is normal for investment firms to transfer money to investors on whose behalf they invest. These transfers can include withdrawals of investment funds by investors or dividend payments to investors that arise from their investments over a sustained period.

But what made the money transfers pernicious in Ayo’s case is that its shareholders or the JSE were never informed of the transfers. 

And the transfers, according to the JSE, breached the terms and conditions of various agreements between Ayo and 3 Laws Capital. The broad agreements stipulated, among other things, that no funds should be transferred to 3 Laws Capital or any bank account in the name of 3 Laws Capital; the funds should be transferred and placed into an Ayo custodian account (not one linked to the company’s day-to-day operations), and 3 Laws Capital was only entitled to earn a market-related fee.

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But these terms and conditions were flouted, according to the findings of a JSE investigation. The JSE found that all funds were transferred by Ayo directly into 3 Laws’ current bank accounts held with Nedbank and Standard Bank.

This happened on multiple occasions.

Funds worth millions of rands were transferred to the bank accounts of 3 Laws Capital (accounts bearing the firm’s name), which is in contradiction to the terms and conditions of the broad agreements between Ayo and 3 Laws Capital. 

Funds (mainly R35-million) were also transferred to the account of Sekunjalo and Africa News Agency, another company linked to Survé.

The JSE investigation hasn’t yet made findings about the source of Ayo’s fund transfers and whether it is using, for example, funds received from the PIC to bankroll its day-to-day operations, without which the company being unable to stand alone.

Gamieldien and Salie sanctions 

Gamieldien, the former CFO of Ayo, made the payments and therefore, according to the JSE, “through her actions, caused and/or contributed to Ayo’s breach” of the listing requirements.

The JSE added that Gamieldien omitted the R400-million payment to 3 Laws Capital (referred to above) in the company’s unaudited interim financial statements to end February under “events after reporting period”, in line with international accounting standards.

On 26 April 2018, and before going on leave, Gamieldien emailed a copy of the draft unaudited interim results to Ayo nonexecutive director Khalid Abdulla and Salie, a former director of AEEI, who served as AEEI’s chief investment officer from February 2018 to January 2019.

In Gamieldien’s absence, Abdulla instructed Salie, who was not a director or employee of Ayo, to effect adjustments to specific line items in Ayo’s 2018 unaudited interim results, which Ayo management later approved and published.

“Mr Salie, as a director of AEEI and Ayo’s parent company and major shareholder, had no authority to involve himself in the financial and other affairs of Ayo and complied with instructions placed on him by Mr Abdulla to alter the financial information of Ayo,” the JSE said.

It added that the adjustments Salie made did not comply with international accounting standards and the figures were later restated, which affected AEEI’s results.

This paved the way for Salie to be slapped with a fine by the JSE. DM/BM