In a most bizarre turn of events, the Highveld Syndication Action Group (HSAG) has accused property magnate Nic Georgiou of attempting to “hijack” an imminent class action suit against him by “buying off” the six applicants in the case.
These six individuals were representatives of the 7 000 HSAG investors and their applications to institute a class action against Georgiou and the application to rescind the Orthotouch scheme of arrangement was funded by the financial contributions of their fellow HSAG members.
The HSAG claims in court papers that Georgiou approached the six individuals and paid them money to settle their claims against him and Orthotouch. The six then proceeded in terms of the transaction to secretly-appointed new attorneys and applied to the Johannesburg High Court to withdraw their original application.
If this withdrawal application succeeds it will mean the end of the class action, as the HSAG would not be able to bring a new application because the prescribed time period to bring such an application has lapsed.
From the court papers it is not apparent how much Georgiou paid the six applicants.
In a strongly-worded affidavit Jacques Theron, the HSAG’s attorney of record, says this happened behind the HSAG and legal team’s back and is a “deliberate stratagem” of Georgiou to “thwart the class action”.
“The attempted withdrawal of the application and the aim to sabotage the class action is not only an offence against the basic principles and very purpose of a class action, but also against the legal provisions, as set out in Section 38(c) of the Constitution of South Africa.”
Theron emphasises that the six individuals were chosen to merely represent disgruntled investors who wanted to have the controversial Orthotouch scheme of arrangement in 2014 rescinded and to institute a class action against Georgiou. They were carefully chosen to represent the other investors and their legal fees were paid by financial contributions of the 7 000 HSAG members.
He adds that the six did not know each other and that it is “not a coincidence” that they went to the same attorney to file their notice of withdrawal applications.
Theron also claims that Georgiou admitted to the HSAG steering committee that he settled the claims of the six applicants during a meeting in Mossel Bay, but that he only became aware of what was going on when the notice of withdrawal was served.
Moneyweb offered Georgiou an opportunity to respond to the allegations, but he had not replied by the time of publishing.
Georgiou to repay Highveld Syndication 21 and 22 investors
The latest revelations come after the Supreme Court of Appeal (SCA) last week denied Georgiou leave to appeal against a previous judgement that ordered him to repay investors of the Highveld Syndication 21 and 22 companies.
These investors signed different contracts with Georgiou which contained a buyback clause that was not honoured. Georgiou will now have to repay around R30 million to 46 investors and open the door for the other investors in these schemes to institute similar claims.
Not the first time
This is not the first time Georgiou has approached key individuals and investors that form part of the HSAG. Earlier this year it became apparent that Elna Visagie and Herman Lombaard, previously two of the most active campaigners of the class action and members of the HSAG, were approached by Georgiou and accepted employment at Orthotouch. They are apparently earning salaries as high as R100 000 a month.