Africa Bitcoin Corporation (ABC) founder Warren Wheatley’s efforts to have two new directors installed have snowballed into a spectacular board implosion.
Interim CEO Stafford Masie, chair Norma Sephuma, and non-executive directors Snowy Masakale and GG Alcock all quit the board of Africa’s first bitcoin treasury corporation on Friday after a dramatic souring in their relationship with Wheatley.
In a SENS statement released on Monday, the four said they “did not take the decision to resign lightly”, but blamed “material differences” for their exit. While Masie resigned from the board, he intends to remain in his executive capacity until the end of February to ensure an “orderly transition” to a permanent chief.
According to papers seen by the FM, Wheatley’s private investment vehicle, WGW Capital, as well as a clutch of shareholders collectively representing about 76% of ABC’s stock, had proposed the addition of two new directors — Fay Mukaddam and Ian Temba — to serve on the board. Temba, according to his LinkedIn profile, was head of Absa Wealth from March 2015 to December 2020 before founding IMT Advisory.
Mukaddam is an advocate and governance specialist at the Institute of Directors in SA (IoDSA), and was founding CEO of 4 Africa Exchange, now the Cape Town Stock Exchange. Her IoDSA profile furthermore lists her as chair of the Themis Investments group and the Sugar Association of South Africa. She is also a former non-executive director of Wheatley’s original investment firm, Altvest, which was renamed ABC last year.
“She has institutional memory of the business and she knows how to speak in the language of regulators,” says one insider. “We were astounded that they wouldn’t bring Fay on when the biggest risk to the business now is regulatory.”
The two candidates are not yet a given.
The board, the insider says, rebuffed the shareholders’ proposal and threatened to leave if WGW installed the two directors. The FM understands that correspondence between the shareholder bloc and the directors became increasingly heated, after which the shareholders called for a special meeting to be convened — and then, in a supplementary demand, called for the directors to be removed.
In the letter seen by the FM, the shareholders say the board should be “reconstituted”, and that shareholders “should be afforded the opportunity to determine its future composition”.
In Monday’s SENS announcement, the four directors insisted “they have at all times acted in what they believe to be the best interests of the Company”, but once the shareholders demanded their removal, they “concluded that these differences could not be resolved” and quit. In an October 8 SENS statement, the board said its opposition reflected concerns about governance and regulatory integrity, rather than the candidates’ professional experience or capability.
The ownership conundrum
ABC has been in a state of turmoil since the Financial Sector Conduct Authority (FSCA) announced in early September that it had debarred Wheatley, his wife and ex-Miss SA Tatum Keshwar-Wheatley, and former chief investment officer Akshay Karan for 20 years.
The regulator found that they contravened section 80 of the Financial Markets by coordinating trading in Altvest shares on the Cape Town Stock Exchange in September 2022, creating “an artificially inflated share price and/or a false or deceptive appearance of the demand for, supply of, or trading activity” in the stock. All three dispute the findings and have indicated their intention to seek reconsideration from the Financial Services Tribunal. Wheatley says the trades were a test he ran on a trading platform, involving only 50 shares, worth R301.
The FSCA also slapped a R5m penalty on Wheatley and WGW Capital, a R3m penalty on Keshwar-Wheatley and Tatum Keshwar Investments, and a R1m penalty on Karan.
The trouble is that WGW holds a chunky 35.04% of ABC. Tatum Keshwar Investments owns 14.95% and Akshay Karan holds 0.92%. Between them, including Wheatley’s 0.36% personal stake, the three debarred parties hold at least 51.27% of the company.
Fellow shareholders, including Altvest co-founder Koshiek Karan and the 27four Alternative fund are signatories to the shareholder letter of demand.
ABC has yet to call the shareholders’ meeting, while the mass resignations leave it with just two directors: Robin Coode, an independent non-executive director, and Jonathan Phillips, the company’s financial director. Coode had not responded to calls and messages by the time of publication.
