The Black Business Council (BBC) is demanding harsh sanctions be taken against the six white male former Dimension Data executives for being implicated in black economic empowerment fronting.
The BBC also demanded that the former bosses of Dimension Data be declared delinquent directors. They are Jeremy John Ord, Steven Jeffery Nathan, Grant Martin Campbell Bodley, Athanasios Missaikos, Bruce Watson and Jason Mathew Goodall. The men were found guilty by Johannesburg High court judge Denise Fisher of subverting black economic empowerment legislation for their own benefit.
B-BBEE transaction
This comes after Nippon Telegraph and Telephone Corporation (NTT) Holdings, a Japanese company that owns Dimension Data, won a case against several white executives.
NNT blew the lid on one of the country’s most complex fronting schemes. The elaborate scheme was designed for them to benefit from a broad-based black economic empowerment (B-BBEE) transaction.
BBC CEO Kganki Matabane said: “In our view, this is a classic case of fronting, a very serious offence. These white males should be convicted of fronting. And they must face a fine of up to 10% of their annual turnover, or up to 10 years in prison.”
The judgment comes after the company owned by a prominent black businesswoman Sonja de Bruyn, was implicated. Her company was unwittingly used by white executives in the Dimension Data BEE fronting.
De Bruyn’s name and her company popped up in the court judgment relating to the fronting scandal. She is the daughter of ANC stalwart and former member of parliament Sophie de Bruyn.
De Bruyn is the principal partner of investment firm Identity Partners. She is also a shareholder and director of IFM.
Black female company named in court judgment
Her company, which is one of the entities that were used in BEE fronting, was named in the court matter by NTT.
According to the judgment, both companies were run by “De Bruyn with the assistance of Janice Johnston. The latter handled the direct negotiations and setting up of the private equity vehicles. She did so on behalf of IFM and, to the extent relevant, Identity Partners”.
NTT alleged that the six men conspired to unlawfully benefit from the transaction. They conspired to gain surreptitious control over and beneficial ownership of the Dimension Data Campus. The latter which is a flagship Johannesburg property in Bryanston.
Ord and Watson were the founders of Dimension Data as a brand. The two, with three of their co-executors in the group are referred to as the protagonists in the judgment. The three co-executors are Goodall, Bodley and Missaikos. Nathan is a close business associate of all five men. He was employed as an independent contractor to provide management and advisory services to the group.
Evidence presented to the court shows that the protagonist investors hid their identities from De Bruyn and Johnston.
In August 2018, Nathan was roped into the group to identify an opportunity and negotiate a transaction. This was to allow for the improvement of the score of, at least, the South African holdings. And this was under the B-BBEE Act.
Nathan paid huge commission for the deal
Nathan was ultimately paid a commission of R18-million. He also received an additional commission in the form of the art collection. The art collection was part of the assets sold in the BEE transaction.
“It is alleged by the applicants that the acquisition of the campus was achieved through a conspiracy. [The acquisition] employed the mechanisms of en commandite (also known as silent or limited) partnerships. And …it allowed the interests of these ultimate beneficiaries. This in what was intended by the applicants to be an empowerment transaction. It was to be concealed … from the public and the empowerment control structures and auditors. And also from the applicants and their Japanese Holding structures.”
According to the judgment, De Bruyn’s company was invited to the transaction by Nathan. He put together a presentation relating to the part that it could play in a BEE transaction. The said transaction would be involving the acquisition of the campus.
“Importantly from Nathan’s perspective, IFM was 100% owned by De Bruyn, a black woman. And it was assisted by Johnston. Nathan met with IFM with the objective of securing its assistance in the context of the BEE project.
“Nathan instructed Pearson as financial advisor on the project in no uncertain terms that he ‘wanted to go with’ IFM as the buyer entity. This having set about verifying that IFM would cooperate to achieve the aims of the protagonists.
NTT Data brought civil case against the six executives
“The next step indicated by IFM was confirmation that they were the selected partner. This on the transaction and agreement regarding broad terms. On 13 June, De Bruyn met with Ord and was directed to Nathan in relation to ‘the consortium’ of investors.
Dimension Data, now known as NTT Data, brought the civil case against its former six executives. This was following the sale of Dimension Data headquarters in South Africa, The Campus, in Bryanston. There the property was sold for R1.4-billion.
