The executives are appealing a 2024 Joburg High Court case that found they had subverted empowerment legislation for their own benefit in acquiring The Campus. From Moneyweb.
Five former Dimension Data (Didata) executives have fired back at claims that they were involved in black economic empowerment (BEE) fronting and improper conduct over the R1.4 billion sale of the company’s The Campus office park in Bryanston.
The executives in question are former CEO and co-founder Jeremy Ord, Bruce Watson, Grant Bodley, Saki Missaikos and Steven Nathan. The fact that they are all white and male has added sting to the accusations that they subverted BEE legislation in acquiring The Campus – an accusation they reject as not just untrue, but an inversion of the truth.
Read: Dimension Data said to be poised to sell The Campus (2019)
“These allegations form part of a sustained and sinister campaign launched by Nippon Telegraph and Telephone Corporation (NTT), the Japanese parent company that acquired Dimension Data in 2010 against us, to deflect attention from their responsibility for the poor performance of their African business, to conceal a BEE fronting scheme they conceived and implemented in order to exit South Africa and to excuse this conduct by promoting a malicious falsehood that this was attributable to our corporate malfeasance. Nothing could be further from the truth,” said the former executives in a statement on Monday.
“We are confident that we will expose the falsity of these allegations in the court cases instituted against us. However, NTT and its advisors have seen fit to seek to advance their case outside of court with the sinister intention of causing damage to our good names and reputations and with the intention of drumming up support for our prosecution. We have therefore decided to set the record straight.”
NTT’s allegations of improper conduct have already been decided in its favour in the Joburg High Court in 2024, when Judge Denise Fisher ruled that the executives entered into “an illegal scheme designed to appropriate for themselves a secret financial benefit.”
The scheme was, she added, brazen and dishonest. Allowed to go unpunished, it would be a travesty of South Africa’s commitment nationally and internationally to upholding of the values of honesty and integrity which are so intrinsic to proper commercial relationships.
“From a South African Black empowerment perspective, it is of grave concern that these White Captains of Industry have subverted the empowerment legislation for their own benefit,” reads the judgment.
The Hawks are also reportedly investigating the case.
(Note, Jason Goodall was not a signatory to the statement but was cited as a respondent in the high court case brought by NTT. Goodall was CEO at Didata before assuming the helm at NTT subsidiary NTT Ltd.)
Fisher ruled that the transaction was void and the property should be returned to Didata Facilities, along with other assets and contracts.
It did not help the executives’ case that Martin Epstein, the property consultant on The Campus transaction, deposed an affidavit that Ord voted in favour of a resolution to acquire The Campus without disclosing a conflict of interest.
The executives were granted leave to appeal the high court judgment to the Supreme Court of Appeal, which is currently pending.
The former executives believe the judge should not have decided the disputes on affidavit without giving the executives the benefit of trial proceedings. They claim NTT launched legal proceedings but denied them access to documents and emails on the Didata servers which corroborate their claims and disprove NTT’s allegations. They say the legal approach adopted by NTT relied on selective disclosure of documents which the executives say concealed evidence from the court.
They add that evidence has subsequently come to light that further corroborates their version.
“By granting us leave to appeal to the SCA, the court recognised that there are sound, rational and reasonable prospects of another court coming to a different conclusion. We look forward to the day that NTT’s representatives present themselves to testify, including Messrs Jun Sawada, Tsunehisa Okuno, Aki Hattori, David Sherriffs, Ismail Moola, Barry Curtin, Larry Levin, Hideaki Ozaki and Abhijit Dubey.”
Conflicts of interest?
Ord and Nathan, apparently at NTT’s insistence, engaged in formal discussions for the management buyout (MBO) of NTT’s African operations, between January 2019 and April 2021. They say the potential acquisition of The Campus was included in these negotiations. NTT was negotiating with Ord and Nathan with a view to selling the property to the MBO consortium, whose members would in time be disclosed. The executives say this crucial fact was omitted by NTT in its court filings in an attempt to mislead the court.
Read:
Dimension Data: its past, present and future (2020)
Massive fraud scandal hits Dimension Data (2022)
The Joburg High Court ruling hinged around Section 75 of the Companies Act, which requires directors to disclose any interests they have in a deal so as to avoid potential conflicts. The executives, then in management positions at Didata, say it was always clear to both sides that The Campus was part of the MBO negotiations. NTT attorney Ian Small Smith responds that if that was true, why was the structure to acquire it set up in secret, using Sonja de Bruyn and her Identity Property Fund as the vehicle.
Asked by Moneyweb to respond to this, the executives say NTT was negotiating to sell The Campus (and the other assets attributed to the African business) to the MBO Consortium. They say that in July 2019, NTT entered into a binding sale of The Campus and that the executives had to declare their potential future interest in that transaction and that they did not do so.
“In fact, NTT knew that the executives had a potential future interest in The Campus because they were busy negotiating with the MBO Consortium to sell the Campus to them. NTT preferred a narrative in which they had no idea that the executives might acquire an interest so they did not disclose the MBO to the court. They did not want to admit that they knew that the executives had a potential future interest. When the MBO was disclosed, NTT tried to argue that the MBO negotiations had ended before The Campus was sold.”
Secrecy
If there was secrecy around the vendor loan to acquire The Campus, it was NTT and Identity Partners (the BEE vehicle) that was responsible, say the executives.
NTT and Identity Partners allegedly structured a secret vendor loan “with terms so restrictive that the BEE fund and any investor in the fund had no meaningful economic interest in The Campus property, undermining the legitimacy of the empowerment transaction. The investor in the fund was lied to about the terms of the vendor loan and when it found out about this in September 2022, a complaint was laid with the BEE Commission. The BEE Commission now says that this matter needs to be investigated which we fully support. We are confident that the BEE Commission will find that it was NTT that abused empowerment and was the architect of a fronting scheme.”
The former Didata executives add that NTT lowered the value of the SA business to increase the BEE points they would gain from selling The Campus, but used a higher valuation when it came to selling the property. This ‘misrepresentation’ compromised those who relied on NTT’s BEE certification.
When the management buyout agreements fell through, the executives left the company and offered The Campus back to NTT for zero gain – there being no interest in the property without the business.
Other legal proceedings
Several other legal proceedings are running in parallel, where NTT is trying to claim back money it paid to the executives in terms of employment contracts and share schemes on the basis that they did not disclose their interests in The Campus transaction.
Moneyweb reached out to NTT for comment but had not received a response at the time of publication.
