A Pretoria husband and wife embroiled in a complicated “fronting case” have had to wait for more than a year for EPCM Bonisana to buy them out of the company despite a court ordering this be concluded within 10 days.
In May last year, Nicole and Ebrahim Patel obtained a Pretoria High Court order compelling Thomas Cowan and Dirk Odendaal, two directors of EPCM Bonisana to buy them out after the parties fell out.
The complicated story starts on March 7 last year.
The Patels had threatened to remove Cowan and Odendaal as directors of the oil and gas company based in Monument Park, Pretoria, after the pair refused to hand over documents the couple needed to get a valuation of their shareholding in the company.
In her judgment, Judge Mabaeng Lenyai traced the origin of the dispute to the Patels asking “the applicants” – Cowan and Odendaal – to furnish them with the documents that would help them value the company before disposing of their shares.
When they were refused this, they called a shareholder meeting to remove the pair as directors.
However, because the applicants did not attend the meeting, they then approached the Pretoria High Court 25 days later to dispute their removal on the grounds that, among others, the shareholders’ meeting did not have a quorum in their absence.
Lenyai noted in her judgment that “the applicants” had been given sufficient time and opportunity to attend but did not.
“The applicants further contend that, in their absence, there was no majority of directors present at the meeting of the 7th March 2024 to carry the proposed resolutions… and it is evident that a quorum of the board of directors could not be achieved in the absence of the first applicant.
“The first and second respondents (the Patels), on the other hand, contend that they were justified in their actions and their decisions and actions are valid and binding. They aver that they are directors and majority shareholders of EPCM Bonisana. They aver that they had the intention of selling all their shares in Bonisana either to the applicants or to a third party.
“In contemplation of the sale, they needed to have their shares valued, with reference to various documentation, including but not limited to the company’s financial statements and current debts.”
The judge wrote that on December 1, 2023, the Patels claimed that they were forced to use lawyers to obtain the information after their attempt to get it from the applicants on their own failed.
The court said the Patels gave the applicants 14 days to supply the requested information after they became “aware of an alleged misappropriation of funds… at EPCM”.
The court notes that both parties accept that the applicants kept asking for extensions of deadlines despite being warned that failure to comply with the request would constitute a criminal offence.
“The applicants having failed or refused to comply with a lawful and reasonable request, the Patels sent another letter to them on the 14th February 2024 demanding that the directors of Bonisana meet to resolve that a shareholders meeting be convened regarding the removal of the applicants as directors of Bonisana [because] the shareholders have lost faith in the applicants and there has been a breakdown of trust
between the parties.
“The shareholders’ meeting was called for 29 February, but the applicants indicated they would not attend. [So], the meeting was postponed to 7 March, but again the applicants said they would be unavailable.
“They were advised to join the meeting via Microsoft Teams and were also afforded an opportunity to appoint either a proxy or an agent. The applicants refused to attend the meeting or give any cogent reasons for not availing themselves. But the meeting, which had proceeded without the applicants, resolved to call a shareholders’ meeting for 22 March,” the judge wrote.
This is the meeting that the applicants went to court to stop because it would have discussed their removal as directors. But the court ruled the Patels were within their rights to act as they did, and that the directors meeting was legal.
The court dismissed Cowan’s and Odendaal’s application with costs.
Two months later, on May 9, Pretoria high court’s Judge Phiwokazi Mali reiterated Lenyai’s order and further ordered that Cowan and Odendaal furnish the Patels’ accountants with the documents they needed to value the company.
To date, that is yet to happen as the battle rages on.
In his affidavit deposed to the court, Ebrahim said during evaluation that his agent found financial irregularities that contradicted prior internal assessments, “exposing financial mismanagement, B-BBEE fronting risks and irregularities within the company’s financial reporting structures”.
“Mr Cowan and Mr Odendaal were either directly or indirectly involved in decisions or positions that came under scrutiny,” Ebrahim wrote.
He said that disagreements arose over how to manage the implications of the valuation, particularly on stakeholder disclosures, as well as financial transparency and internal controls.
“I observed that funds were moved through structures linked to B-BBEE companies not to empower black stakeholders or communities [but] rather to benefit themselves and those already in power. The system was manipulated under the guise of compliance, while real black ownership and participation were systematically sidelined,” said Ebrahim.
Ebrahim said in court that he was removed from his positions as the managing director and tender director in 2022 by Cowan, and Nicole was removed from her HR position and reduced to the junior position as a business administrator and tea lady in 2020.
“It became evident that this was more than financial misconduct – it was an assault on the principles of equity, dignity and justice,” said Ebrahim.
In her affidavit, Nicole writes that it became increasingly clear that Cowan and Odendaal did not regard her and Ebrahim as equal partners.
“Our presence appeared an instrument only for securing a Level 1 B-BBEE status, which was crucial for winning high-value tenders like Sasol, Eskom, RBM and Forkor. Despite holding majority shares, I was denied access to key financial information, including bank accounts and financial statements.
The Patels declined to comment, claiming they feared Cowan and Odendaal would use the publication of the story against them in court but a source close to the matter told Sunday World that Cowan and Odendaal failed to realise that by giving the Patels 73% shareholding, they would end up with all the power that they are now using.
Cowan and Odendaal’s lawyer, Riaan Venter of GMI Attorneys said: “From the onset we wish to make it clear that the allegations raised by Mr Patel is (sic) simply false and was done (sic) by a disgruntled shareholder with whom our clients are embroiled in a
legal battle in the High Court of Pretoria.
“It is clear from your message that you have not investigated the matter and simply wish to publish an article on the strength of hearsay evidence provided by Mr Patel and you are advised that should you proceed with the publication of false and defamatory allegations, you and your newspaper will be held liable for any damages that our client might sustain.”
