Kgori Capital relentlessly fight for frozen funds

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Kgori Capital has made it clear that it intends to appeal the seizure of its funds. The asset management company recently lost access to its funds after a court order was issued to freeze its accounts again. This was after the funds were put back on ice at the request of the Directorate of Public Prosecutions (DPP).

Kgori Capital has not been able to stay off the radar of the Directorate on Corruption and Economic Crime (DCEC) since it was implicated in the biggest money laundering scandal involving the National Petroleum Fund (NPF). Its former director, Bakang Seretse was charged for, amongst others, money laundering in the ongoing NPF case.

Now, in a brief statement Kgori Capital said it will fight to stay in operation by challenging that the funds be released when they appeal the judgement.

The statement was issued in the wake of the Wednesday’s press briefing by the new DCEC director general, Brigadier Joseph Mathambo where he revealed that they have recovered P10 million from the investment manager.

Kgori Capital’s main reason is that they have not broken any laws.

“Kgori believes that it committed no wrong, either civil or criminal, in the management of NPF funds. It has been a long process to-date since the case began, and while we respect due process necessary, it is of course a disappointing development, which we intend to appeal. We are thus unable to comment further on this ongoing case,” Kgori revealed in the statement.

Kgori indicated that even though the matter was still very much an issue to be handled within the courts, they want the release of their funds, as the business needs to be run.

The statement explained that the issue at hand was not the recovery of funds, but release of the funds for continued day-to-day operations. “This remains a point of contention, largely around whether said funds are to be considered management fees owed to Kgori Capital or not,” stated the firm.

Kgori Capital has not been able to steer clear of controversy. Last year DPP applied to court seeking pronunciation that Kgori Capital benefited from serious crime activity.

DPP was on contention that Kgori Capital was sub-contracted by Basis Point Capital to be the investment and asset managers of the NPF. The company argued that it was merely a sub-contractor in respect of the Consultancy Agreement with the government and that it had no lawful basis for debiting the NPF ostensibly as management fees.

During the court hearing before Justice Godfrey Nthomiwa, Kgori Capital’s attorney Busang Manewe argued that his client did not commit and benefit from serious crime activity and only received what was due to it as outlined in the interim mandate for the management of the fund portfolio.

He was arguing against a civil penalty order application made by the DPP in relation to the frozen P9,081,382.15 held in the asset management company’s accounts as management fees. The DPP has applied that the court pronounce that Kgori Capital, which was sub-contracted by Basis Point Capital to be the investment and asset managers of the NPF, benefited from serious crime activity and thereupon to order a civil penalty order against it for the respondents to pay to the government the money which the court ultimately determines, after assessment, were benefits from serous crime related activities.

The DPP argued that the fees were contrary to the P15.6 million Consultancy Agreement entered into by the government and Basis Point Capital.

Manewe said that the government’s case was sketchy and was based on unsupported or unsupportable assertions and averments.

He said that his client did not commit any crime as the contract of the Consultancy Agreement clearly explains that the P15.6 million excluded management fees, which was to be calculated at 0.8% annually or 0.067% per month.

For his part attorney Ernest Mosate of the DPP submitted that Kgori Capital had benefited from proceeds of crime related activity, as it was merely a subcontractor in the respect of the Consultancy Agreement with the government.

He said that the respondent had no lawful basis for debiting the NPF ostensibly as management fees.

“The only substantive party to the Consultancy Agreement entitled to fees under the agreement was Basis Point Capital who in turn was under a contractual duty to pay its subcontracting parties. There is not evidential legal basis for the so called interim mandate on which the respondent seeks to rely,” submitted Mosate.

He further submitted that Seretse, who was the director of both Basis Point and Kgori Capital, was aware that it was a sub-contractor under the Consultancy Agreement.

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