Axed Letlole La Rona Limited (LLR) chief executive officer Chikuni Shenjere Mutiswa tried to dupe board members over an executive long-term incentive plan (LTIP).
When he was caught out, he demanded LLR pay him about P15 million (P14,948,368,29). All the same, he was charged with “tampering with and falsifying records without authority and with or without intent to defraud”.
Sunday Standard can reveal for the first time that LLR enlisted the services of FTI Consulting South Africa Proprietary Limited (FTI) Limited (LLR) to investigate the conduct of Mutiswa in relation to two versions of LLR’s executive long-term incentive plan (LTIP).
It was alleged by a whistle-blower that the original LTIP agreement had been unlawfully altered by Mutiswa and that the second version of the LTIP was unauthorised and illegitimate.
FTI were provided with two differing executed LTIP agreements. One agreement was titled “Letlole La Rona Limited Executive Long Term Inventive Plan”, which title is bordered. This agreement, referred to was dated 11 December 2019.
The second agreement, like LTIP1, was dated 11 December 2019. The LLR logo appeared on its front page above the heading “Executive Long Term Incentive Plan” and the signature page was signed by Mogopa and Mutiswa. The pages of the agreement have been initialed by the CEO only i.e. the chairperson has not initialed any of the pages.
In addition, it is noted that clause 18.3 of the LTIP2 does not appear in LTIP1. The clause provides: “The Parties record that is not required for this Plan to be valid and enforceable that a Party shall initial the pages of this Plan and/or have its signature of this Agreement verified by a witness”. 3. FTI conducted the investigative processes detailed in the following section titled “Investigation Processes”. 4.
In December 2019 he amended the LTIP agreement drafted by the law firm. On or about 6 December 2019 he inserted a change of control provision into the LTIP agreement which would trigger the vesting of the LTIP on the appointment of three or more directors.
He. was aware of the imminent appointment three directors to the LLR board and included the draft LTIP agreement in the agenda for the board meeting to be held on 9 December 2019.
He instructed his executive assistant, Dinah Jonah, to personally obtain the board members’ signatures for approval of the LTIP agreement on 11 December 2019. He presented the LTIP agreement to the board chairperson for signature on 11 December 2019 (LTIP1).
At the time of signature of LTIP1 was aware that Oteng Keabetswe would be appointed to the LLR board on 12 December 2019 and that two further directors representing GRIT would be appointed soon thereafter. During early 2020, he amended the LTIP1 agreement and instructed Dinah Jonah to place the LLR logo on the new version of the agreement.
He instructed Jonah to present the amended agreement (LTIP2) to the board chairperson for signature on the basis that the only change was the insertion of the company logo. This was not the case.
On 3 April 2020 he uploaded the LTIP2 to Convene in a folder titled “Approved HR Policies and instructed Jonah to exclude Kamogelo Mowaneng from the process for the appointment of two directors during and around April 2020. On 22 April 2020 he downloaded the LTIP1 from the Convene agenda for the board meeting of 9 December 2019 and then deleted the document from Convene.
On 22 April 2020 he disabled Kamogelo Mowaneng’s Convene account. Onn 27 April 2020 he instructed Jonah to disable his account from Convene. He created an Excel spreadsheet titled Change Of Control _ April 2020” in which he calculated his portion of the LTIP carry pool and calculated amounts still owing on his employment contract. He kept record of the time spent by board members reading the LTIP agreement in an Excel spreadsheet titled “LTIP Access by LLR Board Members’ May 2020”.
FTI obtained and analysed mailboxes of three identified custodians, Chikuni Shenjere Mutiswa, the chief executive officer, Kamogelo Mowaneng, the chief financial officer and Baalakani Nlumbile, the property manager.
The mailboxes were exported from Office 365 to a cloud storage facility, then onto FTI’s local storage and finally processed and loaded onto a searchable eDiscovery platform.
FTI obtained Mutiswa’s company laptop, imaged the laptop to create an exact copy of its contents, and loaded the contents to the eDiscovery platform. In doing so, FTI was able to access documents which were held in a Dropbox folder.
FTI obtained three batches of non-email documentation from the LLR Board on 4 May 2020, 11 May 2020, and 22 May 2020. This documentation included legal opinions obtained and minutes of board meetings.
Convene Azeus FTI consulted with Jones of LLR as well as technical specialists from Azeus Convene. We were able to reinstate Chikuni Shenjere Mutsiwa’s account, which had system administrator capabilities, and review the audit trail of the platform. FTI conducted interviews with the following Serty Leburu, board member, Bafana Molomo, former board member, Dinah Jonah, executive assistant to the chief executive officer, Baalakani Nlumbile, property manager, Boitumelo Mogopa, chairperson of the board, Kamogelo Mowaneng, chief financial officer, Jeffrey Bookbinder, partner at Bookbinder Business Law and Chabo Peo, partner at Peo Legal.
FTI found that Mutiswa was responsible for the drafting and execution of the LTIP agreement; instructed two law firms, Peo Legal and Bookbinder Business Law, to work on the draft LTIP agreement during November 2019 created an Excel spreadsheet titled “Change of Control_Nov 2019” in which he calculated his portion of the LTIP carry pool.
FTI found no evidence that the board approved the amendment or replacement of the LTIP1, nor that the beneficiaries had consented to this.
Both Mowaneng and Nlumbile advised in their interviews that they were not aware of this second agreement at the time that it was presented to the chairperson for signature. Nlumbile stated, however, that the CEO subsequently informed him that he had altered the change of control clause to remove any ‘ambiguity’.
FTI found that the LTIP2 was unauthorised and accordingly void. The evidence indicated that Mutiswa, acting alone, amended a Word version of the LTIP1, purported to merely update the branding of the document and had Mogopa sign the document.
He then manipulated the documentation available on Convene so that the only available version was the LTIP2. FTI found that Mutiswa secretly amended the LTIP1, created the LTIP2 and attempted to erase any record of LTIP1.
FTI discovered that Mutiswa kept a record of the time spent by board members reading the LTIP agreement in an Excel spreadsheet titled “LTIP Access by LLR Board Members’ May 2020”. In addition to recording the minutes spent reading the agreement, Mutiswa also kept record of the board members’ accessing the documents on Convene.
As the ultimate author of the LTIP agreement, Mutiswa had unfettered discretion on the inclusion of clauses which favoured him and the other beneficiaries.
FTI interviewed Jeffrey Bookbinder, partner at Bookbinder Business Law. Bookbinder advised that he dealt with Mutiswa, Nlumbile and Mowaneng, in drafting the agreement.
He stated that he did not think it was strange that he was instructed by the beneficiaries of the LTIP and that he understood the instruction to originate from LLR and not that he had been appointed directly by the beneficiaries. 11.2.2. FTI identified correspondence from Mutiswa to Bookbinders in November 2019 requesting advice as to the “potential of varying the draft” without the consent of the participants. Jeffrey Bookbinder explained that Mutiswa had been concerned that the board would unilaterally amend the LTIP, and that accordingly they made provision for this in the agreement.
Mowaneng advised FTI that during 2019 when BDC sold 24% shareholding to GRIT she informed Mutiswa that change of control clause would have to be removed as the transaction would trigger the clause as worded at the time.
Mowaneng did not indicate which version of the draft agreement she disputed and FTI understood that the concern was in relation to the change in ownership/shareholding of LLR. Apparently Mutiswa dismissed her concerns, saying that the board had approved the draft agreement and advised that she go on leave.
Mowaneng explained that Nlumbile then contacted her and asked if they could meet to discuss the issue. After some debate, apparently Mutiswa agreed to remove the provision from the agreement and advised that going forward she would be excluded from LTI communication so that she did not breach her “professional code of conduct”.
FTI asked Nlumbile whether he was are of any concerns or reservations that Mowaneng had raised regarding the LTIP. Initially Nlumbile said “no”. When told that Mowaneng had advised FTI that she had raised an issue with the change of control provision in the draft LTIP, Nlumbile eventually admitted that Mowaneng had in fact raised the issue.
