It never rains but pours, complete with hailstones, for the embattled multinational EPCM Consultants.
The Pretoria-based engineering firm and its subsidiary, EPCM Tanzania came out of the Pretoria High Court licking their wounds after their court application to interdict Guardrisk Insurance was dismissed with costs by Judge Omphemetse Mooki recently.
The applicants (EPCM Consultants and EPCM Tanzania) wanted to prevent Guardrisk from making an insurance payout to Standard Chartered Bank SA (SCB SA) or Standard Chartered Bank Tanzania (SCB Tanzania) for performance guarantees or counter-guarantees.
In this complex transaction, TSK Tanzania Company required risk coverage in case something went wrong with the project it had awarded EPCM Tanzania. TSK Tanzania approached SCB Tanzania in the East African country for a guarantee; in turn, SCB Tanzania then went to SCB SA for underwriting, which went to Guardrisk to cover that risk, with the local EPCM providing surety and guarantee.
This meant that if TSK demanded payment from SCB Tanzania, that would set off a chain reaction, with each entity paying the other all the way to EPCM SA. And the amounts were astronomical; up to $861 000 or R15.3-million, from the local EPCM’s pocket.
So TSK declared EPCM Tanzania had done something wrong, both EPCMs, which share Dirk Odendaal and Tom Cowan as directors, went to court first to dispute that EPCM Tanzania had done anything wrong that would necessitate the TSK claim, and secondly to stop Guardrisk from paying SCB SA.
But as the court would finally rule, this didn’t prevent SCB Tanzania from paying TSK, then claiming from SCB SA, which would then claim from Guardrisk, which in turn would claim from EPCM SA.
Both EPCMs are contesting the TSK claim in Tanzania, claiming, according to the judgment, “invalid” or “fraudulent” claims and wanted the Pretoria High Court to stay payments until the court dispute in Tanzania was finalised.
Mooki dismissed the EPCM Consultants’ application with costs “because the applicants did not meet the requirements for an interdict”.
Now the troubled EPCM Consultants sits exposed to further debt of up to R15.3-million plus the costs of the litigation in South Africa.
In a series of articles, Sunday World wrote about the financial troubles that have beset the multinational, including allegations of fraud sparked by a fight between the company directors and its BEE shareholders, Ebrahim Patel and Nicole Patel, who want to sell their shares in EPCM Bonisana.
Last week, this publication wrote that former company lawyers, Van Greunen and Associates had approached the Johannesburg court demanding that EPCM Consultants be liquidated because it couldn’t pay its growing debts.
That fate was averted when the parties settled out of court at the eleventh hour.
EPCM lawyer, Riaan Venter said: “You first need to understand what the matter was about and the consequent processes that followed from there. Unfortunately, I don’t think you would understand this as it relates to complex issues. As I have seen from complaints raised against your paper and yourself I doubt that any meaningful explanation will make any difference in what you will write and publish. This is but a piece of the matter and by no means a loss. But I am sure you will spin this to suit your paper and your reporting.”
