PIC must go back to the drawing board on some subpoenas in AYO court case

The three subpoenas were served on Amina Moodley, a director of 3 Laws Capital and Sagarmatha Technology; and Gaamiem Colbie, a director of Sekunjalo Capital. All three companies are related to the defendant, AYO Technology.

The Public Investment Corporation (PIC) is still trying to recover a R4.3-billion investment in AYO Technologies, where the PIC alleges that due process was not followed and AYO apparently misrepresented key information. As such, the PIC is looking for the transaction to be declared unlawful and set aside.

The three subpoenas in question were served on the two directors, requiring them to produce certain “documents and communications” in relation to dealings between the companies of which they are directors and AYO. 

Their counsel put forward the argument that the subpoenas were too broad and lacked “specificity”.

There was also a dispute as to whether one of the subpoenas served on Moodley called on her to produce documentation related to a company known by the acronym AEEI (of which she is not a director), rather than 3 Laws Capital. However, her attorney agreed to assume that the subpoena related to 3 Laws Capital.

The wording of the three subpoenas was identical, save for a change in the relevant company name, and called on the two directors to produce “all documents and communications in relation to all transactions and agreements between the Defendant (AYO) and 3 Laws Capital South Africa (Pty) Ltd entered [into] or considered from November 2017 to date”.

November 2017 was entered as the starting date because the agreement in terms of which the PIC subscribed for the shares in AYO was concluded in December 2017. A prelisting statement, as required in terms of the rules of the JSE, had been issued on 13 December, and a preceding draft prelisting statement had been under consideration by relevant employees and executives of the PIC in the weeks before that.

Visit Daily Maverick’s home page for more news, analysis and investigations

Senior counsel for the PIC, advocate Vincent Maleka, confirmed that the agreements or transactions required to be produced could be only agreements or transactions in terms of which funds raised through the PIC’s subscription for the shares in AYO were diverted or channelled, for any purpose not concerned with AYO’s growth strategy, from AYO to the three related companies concerned. However, the judge noted that the wording of the subpoenas was such that their reach extends well beyond that.

“In fact, their reach is unlimited,” said the judge.

In handing down his decision regarding the validity of the subpoenas, the judge said: “It is readily conceivable that there could have been any number of agreements or transactions of all manner of types between AYO and its named-related companies during the five-year period involved that have no connection or relevance whatsoever to the issues involved in the action, yet the plain tenor of the subpoenas requires any documentation related to them to be produced.

“It might be argued that that is an unbusinesslike construction of the subpoenas and that the recipient might be expected to understand that relevance was implied. But even on that approach, the subpoenas would still be objectionable because the effect would be to leave it to the recipient’s judgment to determine what was relevant or not.” 

Since the trial is continuing, the judge noted that there was nothing stopping the PIC from issuing fresh subpoenas in a more directed and rule-compliant form.

“That can be done at any stage of the trial when it is still open to the plaintiff to lead its own evidence or cross-examine the defendant’s witnesses,” he said.

The subpoenas were set aside, and the PIC and GEPF were ordered to pay Moodley and Colbie’s legal costs. BM/DM