SecZ piles pressure on Turnall over fraud charge

Published: 03 August 2017

TURNALL Holdings is studying a complaint by LHG Malta Holdings Limited to regulators over possible contravention of the Securities and Exchange Commission of Zimbabwe (SECZ) Act and the validity of a management agreement with FBC Holdings Limited (FBCH), a company announcement disclosed last week.

Noel Hayes, a representative of the Maltese-based company who sits on the Turnall board and controls 15 percent shareholding in the construction-focused firm, filed a complaint in May over a $3,4 million management fee paid to FBCH by Turnall.

This resulted in misunderstandings between FBCH and LHG, which accused FBCH of "misrepresentations, fraud and material non-disclosures".

He demanded compensation equivalent to 76,1 million share, in addition to 18 percent interest for a loss estimated at $1 million.

The matter had been referred to SECZ, which was said to have pressed the Turnall board to present its explanation.

In a statement released last week, the Turnall board said it was studying the complaint and taking advice before responding to SECZ.

"The board confirms that it received a request for a response from the Securities and Exchange Commission of Zimbabwe pertaining to the complaint made against FBC Holdings Limited by Mr Noel Hayes who is a non executive director and shareholder in Turnall Holdings Limited," the statement said.

"The board requested and received a copy of the complaint from the SECZ. The complaint primarily relates to the validity of a management agreement between Turnall Holdings Limited and FBCH in terms of which management fees were payable to FBCH; and alleged contraventions of Section 97 of the Securities Act during the period when the management agreement was in operation."

LHG became a shareholder after it bought significant shareholding in Turnall, which was held by FBCH.

FBCH had a management contract with Turnall.

After making its acquisition in Turnall, LHG gained a seat on the company's board, but the deal would later go sour.

LHG would later claim it had uncovered fraudulent activities by FBCH and Turnall, sparking a shareholder fallout.
- fingaz