A company with ties to prominent Durban businessman Vivian Reddy that spearheaded a multibillion-rand hotel and mall development in Umhlanga, north of Durban has been accused by investors of leaving them in the dark some seven years after they poured money into the ambitious project.
Disgruntled investors complained to Business Times this week about the way the company, Oceans Hotel, was communicating with them. The 200-room five-star hotel in the development is managed and operated by global luxury hospitality group Radisson Blu.
But the company rejects the complaints, saying it responds to shareholder queries through a dedicated contact centre and via e-mail, telephone and a third party contracted for this task, Finic.
The unlisted Oceans Hotel’s investment arm — Oceans Invest — invited members of the public to purchase shares in the venture in 2017. Shares were launched at R20 each and prospective buyers had to buy a minimum of 50 shares for R1,000.
Billed as a scheme for ordinary people to have a stake in the mega development, it was announced in 2017 that more than 460 domestic workers would be offered highly discounted shares. At the time, Reddy was said to have bought R10,000 worth of shares for each of his two domestic workers.
I don’t know how to access my shares, or maybe this was a scam
— Annie Appalsamy
Two years after Oceans Umhlanga — a mixed-use development comprising the hotel, two residential towers consisting of 460 apartments all with sea views, and a 33,000m2 shopping mall — opened, some shareholders say they are yet to receive their share certificates and have not heard a word from the company since buying shares. The entire development cost R4bn.
Investors who spoke to Business Times claimed individual correspondence to Oceans Invest and telephone calls have gone unanswered for years, and some panicked shareholders even formed a WhatsApp group to raise their concerns together.
Sanjeev Lutchman, one of the disgruntled investors, said a Facebook page that updated shareholders on the status of their investments had been taken down.
“I am one of the investors, and since the opening of the hotel their Facebook page has been removed, which was basically the only form of any updates. There has been numerous e-mails and complaints from investors about updates from the group, which is basically leaving us in the dark.”
Lutchman said that when he first parted with his money, he received a share certificate and was told investors would start reaping rewards in five years. He said he and others had since been informed by the company contracted by Oceans to communicate with shareholders that their shares are still valued at R20 each, seven years later.
“Their website said after five years people can cash their shares. However, each year they just sent AGM minutes, but nothing regarding our shares and dividends was discussed at these meetings. When I requested to know the value of my shares, there was no response.
“It’s over five years now and I have heard nothing from the company. At one time I was told the shares were transferred to a company called Motif, and this was done without my knowledge. When I followed up with Motif, I was told the value of my shares was still at R20 each and this was after seven years. How can that be?” he asked.
Shantal Naraidu said she bought shares valued at R50,000 in 2017 believing that seven years later she would receive some form of dividend.
“To date I have not received a dime. I understand our shares were being handled by Compushare, but if you follow up with that company, there is no response. As shareholders, we need a public announcement from Mr Reddy to tell us what’s really happening.”
Angela Nokuthula Mbili from Claremont said she bought shares for R20,000 in 2017 and was anxious because she had since heard nothing from the company. “We don’t know what’s happening. We saw on social media that they had sold some apartments, but we were never told as shareholders. Instead, we are told they are still paying the loan they got to build the hotel.”
Annie Appalsamy, who invested R2,000 in 2017, said she was told the shares would be locked for five years before they could be traded or dividends would be paid.
It’s over five years now and I have heard nothing from the company. At one time I was told the shares were transferred to a company called Motif, and this was done without my knowledge
— Sanjeev Lutchman, one of the disgruntled investors
“Now it’s seven years later and we are still unable to access the shares. None of my e-mails, WhatsApp messages or calls are answered. Instead, they moved our shares to another company without notifying us. The new company also doesn’t respond. I don’t know how to access my shares, or maybe this was a scam. I am an average person and R2,000 is a lot of money for me. This is just heartbreaking. They mock at us on Facebook when we query, which is very unprofessional,” she said.
Ashika Maniram, an administration clerk who invested R2,000, said she trusted Oceans because of the Vivian Reddy connection.
“I didn’t think this would become a scam with 100 excuses. I’m very disappointed with Vivian, especially watching him and his family live a lavish lifestyle. I hope we find a way forward.”
Another disgruntled shareholder, Simthembile Qalaba, who is unemployed and bought 50 shares with the hope of building some form of investment income in future, said: “Vivian is rude, he doesn’t care when we ask questions [about the shares].”
When Business Times contacted Reddy, Oceans Hotel COO Brian Mpono responded. He denied the company had failed to keep shareholders in the loop.
He confirmed that Lutchman owned 500 shares, having invested R10,000 in the R650m hotel development. He attached a report that he claimed proved the company was in constant communication with Lutchman about the status of his shares.
“We also advise that the company secretary advised him; we have proof/confirmation that he received the company reports/communication [and] he admitted that he, in fact, did receive such communication.”
Mpono said Oceans Hotel holds regular AGMs, the most recent on February 26, which was attended by more than 600 shareholders. He said 23,000 individual, institutional and corporate shareholders had taken up the offer to invest in the entity that owns the hotel.
“We point out that with a very large shareholder base and with some changing e-mails or contact details and addresses without informing us, or when a shareholder is deceased, it does create a communication issue (albeit minor occurrences). This gets rectified and updated immediately when we are contacted.”
Shareholders, he added, were updated periodically and provided with annual financial statements, shareholder meeting notices, and copies of minutes of shareholder meetings.
“This was initially operated by Computershare and now by Motif Capital Partners.”
Mpono said the company was not in a position to pay dividends yet as it was focused on repaying debt acquired to build the hotel. He said shareholders were free to sell their shares on the open market to other willing buyers if they so wished.
“Numerous volumes of shares have been traded and we receive regular requests from current shareholders wanting to purchase more shares.”
Asked to respond to similar complaints from other disgruntled shareholders about lack of communication, Mpono referred Business Times to Matthew Clark, owner of Finic.
Clark said he communicated with shareholders once a year when sending them notices to attend the AGM. He said some did not even open the e-mails.
