The gloves have come off in the application for leave to appeal by property magnate Nic Georgiou against a judgment that he illegally tried to scuttle a potential class action suit against him.
In a strongly worded affidavit Jacques Theron, the attorney representing the Highveld Syndication Action Group (HSAG), responded to allegations made by former HSAG member Helgard Hancke in an application to become an intervening party in Georgiou’s application for leave to appeal against a judgment in May.
This judgment found that Georgiou acted unethically and abused the court process when he secretly settled the claims of the applicants of the class action application on the condition that they withdraw their application.
Hancke stated in his affidavit that some facts in Theron’s founding affidavit, on which the judgment was based, were false. He also strongly criticised Theron and said Theron was not acting in the best interest of investors and was only driving the process for his personal financial gain.
But in his opposing affidavit, Theron alleged that Hancke “jumped ship” after Georgiou secretly settled his wife’s claim and that he was now waging a smear campaign to discredit Theron in an effort to turn investors against the class action.
Theron strongly denies Hancke’s allegations. “The fact is that Hancke was paid an undisclosed amount to settle his (Hancke’s wife’s) claim, and that he is now actively campaigning against the class action and against me personally on social media and has even set up a disparaging website to ‘stop Theron’ and to ‘prevent a national disaster awaiting investors’.”
Elsewhere in his affidavit, Theron states: “It is clear that Hancke is dancing to the tune of Georgiou, who is funding and using Hancke as another of his ‘front persons’ to further frustrate the class action litigation with delays and additional costs.”
Theron also questioned why Hancke is applying to become an intervening party as his wife’s claim was settled, and asked who was paying his legal fees.
In response to a draft version of this article, Hancke in turn strongly denied Theron’s allegation that he “jumped ship”, stating that he decided to turn against the class action when believed it was no longer to the benefit of investors. Hancke stated he was opposing the HSAG’s application to have the section 155 Scheme of Arrangement set aside as it would be “devastating” to investors.
He also rejected Theron’s contention that Georgiou paid money to him in secret to settle his wife’s claim or that he had received funding from Georgiou. Regarding legal fees, Hancke said that he instructed his attorneys and that he was responsible for the payment of the fees.
‘Orthotouch owns only two properties’
Another point of contention is Georgiou’s settlements with investors. In his original affidavit, Hancke alleged that Theron was against investors settling their claims, as it was not in his financial interest to do so.
These settlements refer to a process through which Georgiou, via Orthotouch, offers to repay around 50% of the capital value of investors’ original investments in the Highveld Syndication companies over a period of around three years.
Settlements are negotiated individually between investors and Orthotouch.
Theron denied that he was against the settlements per se, but said investors should be aware that such agreements with only Orthotouch could severely damage investors’ rights.
“…Orthotouch is a public company, which currently owns a mere two adjacent properties as per the recent deeds search that my offices performed. Of the 50 properties it previously owned, 48 properties were sold or alienated. It is inconceivable that a company that bought two properties for R143 million, with a bond of R72 million in favour of Accelerate (a company steered by Georgiou’s son, Michael Georgiou), can now pay monthly the approximately R10 million (an amounted hinted to by Georgiou to Stander, Hancke and myself)… from these two properties.”
He added that investors who settled with Orthotouch would be left destitute if the company went into liquidation. Moneyweb sent questions to Georgiou to confirm or deny this statement, but he had not responded prior to publication.
1% commission and the 800 HSAG settlement agreements
Hancke also alleged in his original affidavit that Theron demanded a 1% negotiator’s commission on settlements and that Georgiou refused to pay this commission. This demand, according to Hancke, resulted in Georgiou not settling the claims of around 800 HSAG members who were keen to settle.
Theron strongly denied he ever demanded a 1% commission for settlements. “The allegation that I demanded a 1% commission payment is a blatant lie. I never even mentioned payment of commission to me, let alone demanding some.”
Theron said it was, in fact, Georgiou who did not want to sign the 800 settlements after the parties met for two days to do so. He also alleges that Hancke “betrayed” the HSAG as he conveyed confidential strategies to Georgiou which resulted in Georgiou not signing the agreements.
Theron reaffirmed that the six applications in the certification application, who settled with Georgiou on condition that they withdraw their application, did not know each other.
Hancke contended in his affidavit that they did, in fact, know each other.
Theron said that “the only ‘proof’ that they knew each other, is a blank screen-print of a WhatsApp group of which two of them are members (with me and Visagie). They may have been aware of one another, but they certainly did not know each other – especially in the sense to have gone to the same attorney simultaneously with the same instructions to withdraw the litigation.”