EC-Hold probe finds no wrongdoing

By Iain Scott for EC-Hold

Johannesburg, 02 Dec 2003

EC-Hold`s auditor, Deloitte & Touche, has closed its investigation into dealings with parent MGX, apparently finding no evidence of wrongdoing.

The probe was commissioned after minority shareholders Cycad Financial Holdings and Peregrine Holdings demanded, among other things, a forensic audit into financial deals between EC-Hold and MGX since October 1999.

MGX recently bought Cycad`s stake in EC-Hold and contributed towards Cycad`s legal costs. One of the terms of that deal was a waiver of claims by Cycad against EC-Hold, among others.

EC-Hold says the investigation has been completed. Although copies are available on request to all shareholders, it has not been made available to the public or news media.

It says Peregrine has indicated it needs time to study the report before deciding whether to withdraw the request for a vote on the resolutions originally proposed when it and Cycad called a shareholders` meeting on the issue.

The resolutions include a proposal for future proceedings by EC-Hold against MGX and a proposal for future proceedings by EC-Hold against current and former EC-Hold directors relative to any investment of surplus funds with MGX. The core issue was an R11.9 million loan EC-Hold made to MGX.

The EC-Hold board has consistently maintained that the shareholders did not adequately consider the loan account relationships between MGX and EC-Hold. It has said that an R8.5 million loan by an MGX subsidiary to an EC-Hold subsidiary and a R10.9 million loan by MGX to EC-Hold means that EC-Hold is a net debtor to MGX to the tune of R7.5 million.