5 September 2022, 04:00:00
Former Akanda chairperson Louise Mojela is sticking to her guns that she liquidated subsidiary Bophelo in order to prevent funds being fraudulently diverted from Lesotho to Portugal. Not so, says Akanda CEO Tej Virk, who says Mojela is bent on revenge after she lost the confidence of shareholders.
In the latest development in the Battle for 'Bophelo' - as to who gets control of Lesotho's flagship cannabis company - Akanda’s former chairperson, Louise Mojela has appointed lawyers in the United Kingdom to challenge her dismissal.
Her attorney, Ian Small-Smith, says legal counsel has been appointed in London to challenge the "unlawful termination" of Mojela's employment with Akanda, "... orchestrated under false premises and without good or reasonable cause".
However, the company disputes this version entirely, and says in a statement quoted on Fin24 on 5 September 2022, that the liquidation was "retaliatory action" after Mojela was fired as executive chair by a 54% vote of shareholders.
"We have reason to believe that Ms Mojela's actions reflect her efforts to retaliate against the company in response to her dismissal and removal from the board of directors of Akanda on 23 June 2022, on the basis of a lack of focus on profitability under her leadership.
According to Mojela, Nasdaq-listed Akanda, and its CEO "fraudulently" solicited $16 million from investors, by highlighting the Lesotho-based Bophelo operation in a prospectus; but then conspired to divert the funds to its European operations instead.
In a lawyer’s letter to Virk and CFO Trevor Scott on 7 July 2022, Mojela alleged: "It has become plain that Akanda and Mr Virk intentionally, and fraudulently, misled and made misrepresentations to the public and prospective investors – including our client – to invest in Akanda under the false pretense that the proceeds would be used to develop Bophelo and its employees, the relevant communities and Lesotho when the true intention is in fact to use the proceeds to advance the business of Akanda in Europe."
Virk denies Mojela's allegations and accuses her of "recklessly jeopardising" Akanda's ability to run the Lesotho operation. He confirmed to Fin24 that Akanda will dispute the liquidation order. The liquidator appointed by the court has also confirmed receiving correspondence from Akanda.
In an email to Fin24, Virk says his instructions were, "... taken out of context", and were intended to, "... communicate revised delegations of authority as determined by the new board to make sure capital would be allocated effectively at Bophelo, with the CEO's express oversight."
"The board ruled to halt all 'capital projects' which we define as project capital expenditures, and not day to day operating expenditures such as payroll. Payroll was never at risk," he said.
"The company intends to contest and seek to reverse the determination by the Lesotho Court to place Bophelo in liquidation. Akanda will seek to recover significant loans made to fund Bophelo's business plan, in the event that the court does not reverse its determination."
Mojela founded Bophelo Bioscience and Wellness in 2018 and sold it to Canada’s Halo Collective. Halo in turn unbundled its African and European assets into a new vehicle Akanda which was listed on Nasdaq earlier this year. Mojela claimed in her application for Bophelo’s liquidation, that Akanda and Virk "intentionally and fraudulently" solicited the $16 raised in the IPO, by highlighting Bophelo in the prospectus; but then acquired Holigen in Portugal and conspired to divert the funds to the European operation instead.
Akanda says it has invested heavily in Lesotho and is intent on regaining its operations. Even if it succeeds in opposing the liquidation, it will still supply its European distributors with flower from Portugal because the Holigen facility produces consistently high quality, high tHC medical cannabis, whereas Lesotho has been beset by quality problems since cannabis was legalized for export in 2017.
"Having a presence in Africa was always about building for the long-term and making a social impact on our communities. Akanda's prospects in Lesotho have been severely compromised by the reckless actions taken by Louisa Mojela, which we have reason to believe was in retaliation to her lawful ousting from the board of Akanda Corp by concerned shareholders," Akanda's statement said.