By Staff Reporter
West Properties, a company that is partly owned by controversial businessman Kenneth Raydon Sharpe and is seeking to list on the Victoria Falls Stock Exchange (VFEX) has been accused of misleading potential investors.
The company announced its plans to list on the United States dominated bourse understated the number of active court cases against it, misleading potential investors, which is a violation of listing rules.
In its prospectus, WestPro Holdings Limited (as the company will be known) did not mention litigation that has the potential to wipe out all the company’s land holdings.
WestPro, a property development company, intends to list on the VFEX on 28 April 2023.
In the stock market prospectus, a mandatory filing prior to listing, a company must indicate if there is any pending litigation that might affect its future.
WestPro published its prospectus on 28 March and its lawyers, Scanlen & Holderness, listed four completed cases, three outstanding summons and three pending cases in its legal advisor’s report.
According to the report, the finalised cases are HC 4544/20 George Katsimberis v Ken Sharpe & Others, SC 636/22: REF HC 425/21 & SC 229/22 Allan Markham v Augur Investments & 7 Others, SC 382/22 REF HC 549/21 Zimbabwe Homeless People’s Federation vs City of Harare & 8 Others and the HC 6212/22 Sunshine Developments v Warren Hills Golf Club.
The outstanding summons, all initiated by property developer, George Katsimberis are HC 3809/20- b) HC 3810/20- c) and HC 3811/2, while HC 3809/20 George Katsimberis v Ken Sharpe, Kilimanjaro Trust & 3 Others, HC 3810/20 George Katsimberis v Ken Sharpe & 7 Others and HC 3811/20 George Katsimberis v Ken Sharpe & 2 Others and ACC 26/21 Borrowdale Residents & Ratepayers Association & Others vs. City of Harare & Others are listed as pending cases.
Missing from the list is the case of Giorgios Katsimberis v Prosecutor General & Others, HC 5623/22. All pleadings have been filed and the parties are waiting for a hearing date.
In that application, Katsimberis is seeking a declaratory order invalidating the deed of settlement signed between Local government minister July Moyo, City of Harare and Augur Investments (OU).
Augur is a company that is variously owned by Sharpe, Oleksander Sheremet and Tatiana Aleshina. It is the company that was the beneficiary of the deed of settlement. That deed of settlement gifted all the land that is in WestPro’s portfolio to Augur.
Curiously,Augur Investments does not feature in the prospectus.
The circumstances in which it seems to have divested itself of all the land to Alpha Holdings, is not explained in the legal statement or in the prospectus.
Whether that was done to insulate the new company from Augur’s legal baggage, and the murky circumstances in which the land was acquired is not clear.
“But, given the many question marks about the deed of settlement behind all the land now owned by Alpha Holdings, this is puzzling,” a legal expert who has seen the prospectus observed.
Also surprising is that Scanlen & Holderness represent Augur Investments in the key case that it omitted on the list of pending cases.
Legal experts say if that deed of settlement is invalidated, Augur Investments, and resultantly, WestPro will be left owning nothing.
This is information which any potential investor would like to know.
“The entire property portfolio that is the bedrock of WestPro’s VFEX listing stands on a knife edge and will all be lost if the applicant prevails in HC 5623/22,” one lawyer said.
“The seriousness of the implications of that one case to the entire edifice means that there is no way that a diligent lawyer applying their mind to the matter would fail to include it unless if the omission was deliberate.”
It was the opinion of experts contacted by this publication that what makes the omission even more serious and suggests a deliberate ploy to mislead investors is that in the list provided by Scanlen & Holderness, they are not representing WestPro or any of its affiliates. But in 5623/22, Scanlen & Holderness, are the lawyers of record. They could not possibly have been unaware of the case in the circumstances.
It is an act of misconduct for a lawyer to provide misleading information in a document that is either filed in court or on which reliance will be placed by the public.
The legal advisor’s report also omitted several cases where Augur Investments is being challenged by Fairclot, a company that was subcontracted by Sharpe’s company to construct the Airport Road before it downed tools after doing only 2.7 km due to non-payment by Sharpe’s company.
Title deeds for part of the land that was transferred to Doorex, but is now marketed by WestPro, 654 Pomona Township, are still being held in escrow by a Coghlan, Welsh and Guest, a local legal firm because the courts are still to resolve the dispute.
The stand 654 Pomona Township measures 233.2923 hectares, according to the latest independent valuation of the West Pro’s investment properties conducted by Phoenix Real Estate on 23 February 2023, the prospectus read.
Scanlen & Holderness represents WestPro in the dispute against Fairclot that is before the courts.
Fairclot is also challenging the deed of settlement which will have serious ramifications for the listing.
The report by Scanlen & Holderness, which is part of the prospectus concluded: “We are unaware of any encumbrance against such land and properties.
“Hence WestProp business partners should be more than happy and free from doubt to engage with it in its vision to develop its land and properties.”
Given what Scanlen & Holderness know from the ongoing litigation in which they are involved, it is hard to see how that statement can possibly be true.
WestPro also made averments to the truthfulness of the information in the prospectus.
“The directors of WestProp Holdings Limited accept full responsibility for the accuracy of the information given in this prospectus and certify that, to the best of their knowledge and belief, there are no other facts, the omission of which would make any statement false or misleading, that they have made all reasonable enquiries to ascertain such facts and that this prospectus contains all information required by law,” part of the prospectus read.
Source: Bulawayo 24