Six former Dimension Data executives, who were found by the high court last week to have engaged in a “brazen and dishonest” scheme to sell the company’s Johannesburg head office have vowed to appeal the judgment.
“The perception that this was no more than a surreptitious conspiracy by ‘six white males’ to arrest control of The Campus property to feather our own nests at the expense of empowerment is just plain wrong and deeply distressing to us,” the six said in a statement on Monday.
“Particularly disturbing are findings of dishonest conduct made against us based on inferences drawn from correspondence, including an e-mail that had nothing whatsoever to do with The Campus transaction,” they said.
“What has been described as a defining piece of correspondence for which there is no explanation other than definitive evidence of wrongdoing by us in fact related to the potential acquisition of an entirely different and unrelated business.”
TechCentral first reported last week that the high court had found that the former senior executives – including former executive chairman Jeremy Ord – had “entered into an illegal scheme” designed to benefit them personally at the expense of the company and its Japanese parent, NTT Group.
The court declared the sale of The Campus property in Bryanston null and void and awarded punitive costs against the former executives.
But in a joint statement on Monday, the former executives said the judgment, by high court judge Denise Fisher, “came as a surprise to us and our legal team, who are preparing an application for leave to appeal”.
‘Resolute’
“We are resolute in our commitment to ensuring that we are exonerated from any wrongdoing,” the statement said.
“The basis for the application and the grounds on which we maintain the judge made findings which are unjustified and unfair will be fully canvassed in the notice of application for leave to appeal and in the ensuing argument before the court,” they said in the statement.
Although the statement is unsigned, the six former executives are:
- Jeremy Ord, who until mid-2021 served as Dimension Data’s executive chairman;
- Jason Goodall, a former Dimension Data CEO who later took the reins at NTT Ltd;
- Grant Bodley, who served as Dimension Data Middle East & Africa CEO until March 2021;
- Steven Nathan, Dimension Data’s former head of corporate finance, who resigned in mid-2021;
- Saki Missaikos, a former MD of Dimension Data’s Internet Solutions who was group head of strategy prior to his exit, also in mid-2021; and
- Bruce “Doc” Watson, a Dimension Data stalwart who left around the same time.
But the six insist they did nothing wrong – and have vowed to fight to have their names cleared.
“All the matters traversed in the judgment took place in the context of NTT looking to sell its African business through a management buyout (MBO),” they said in their statement. NTT later decided to retain the asset.
“To achieve the best possible price (whether in the MBO or otherwise), NTT knew it needed to address the South African business’s weak BEE score. NTT had a choice either to fund the sale of shares in the business to a BEE partner or to achieve the requisite BEE credentials by helping a BEE group to buy The Campus property and leasing it back from them,” the former executives said in the statement.
“NTT opted for The Campus transaction to achieve its objectives, despite the protestations of South African management and the executives who thought a sale of shares achieved a more sustainable form of empowerment,” they said.
“Aside from the fact that The Campus was sold … for fair value (which was approved by NTT executives), it also resulted in the achievement of a meaningful wealth-creation opportunity for broad-based black economic empowerment (not including the executives) and simultaneously addressed the concerns NTT had about the South African business’s BEE credentials. We also point out that the transaction resulted in NTT’s South African business achieving a meaningful reduction in operational costs.”
TechCentral broke the news in January 2022 that several former executives – unnamed at the time – had become embroiled in a fraud scandal following a forensic probe into the December 2019 sale of The Campus in a complex BEE transaction.
NTT Ltd, which is owned by Japan’s NTT Group, appointed international law firm Herbert Smith Freehills to conduct a forensic investigation into allegations brought forward by a whistle-blower.
In the judgment handed down on Monday, the high court not only found in favour of NTT but awarded punitive costs against the former executives and made several damning findings against them.
Judge Fisher found that the executives had “entered into an illegal scheme designed to appropriate for themselves a secret financial benefit which placed them in conflict with their boards”. She described the scheme as “brazen and dishonest” and said it was orchestrated “without due regard to the relationships between the Japanese holding entities (NTT) and the South African interests”.
The judge also found that should “this kind of flouting of foundational and universal commercial values remain unchecked and unpunished, this would represent a travesty of South Africa’s commitment nationally and internationally to the upholding of the values of honesty and integrity which are so intrinsic to proper commercial relationships”.
‘Strong stand’
The former executives were also lambasted by Fisher for “subverting” black economic empowerment legislation for their own benefit. The judge described the behaviour of these “white captains of industry” as of “grave concern”.
In a statement e-mailed to TechCentral last Tuesday in response to the judgment, NTT Data said it had instructed its legal representatives to “take the necessary steps to implement the judgment”.
“NTT Group takes a very strong stand against breaches, abuses and ethics violations, and is pleased with the judgment,” it said.
In its statement, it said that:
- In October 2022, NTT Group instituted legal proceedings to have The Campus transaction declared null and void based on, among other things, the executives’ failure to disclose their interests in the transaction;
- ID Propco, the purchaser of The Campus, was established by Identity Property Fund 1 to purchase the property. ID Propco is wholly owned by the fund. The fund was structured as a limited partnership, originally comprising a black-owned general partner;
- The executives held beneficial majority financial interests in the fund, through the fund’s limited partner and major investor, Areti;
- The executives’ financial interests, which were not disclosed to NTT Group, were held through a complicated partnership structure, enabled by Martin Epstein, a consultant to the then-Dimension Data Group; and
- During November 2022, Areti removed the general partner of the fund and replaced them with a company owned by Epstein, effectively securing complete control of and beneficial financial interest in The Campus by the executives and Epstein.
An anonymous source told TechCentral in January 2022 that e-mails uncovered by Herbert Smith Freehills showed how the “implicated executives conspired to sell The Campus” to Identity PropCo, a black women-owned firm led by businesswoman Sonja De Bruyn, at a “price well below its market value. Simultaneously, the implicated executives secured their participation in a separate but related entity that would see them profit handsomely from the undervalued sale of The Campus. Simply put, this amounted to the defrauding of the ultimate owner of The Campus, that being Dimension Data’s parent company, NTT.”
But the six former executives said in their statement on Monday the sale of The Campus to De Bruyn’s group (which incorporated a majority black-female owned investment manager) was the “obvious choice for NTT”.
“Ms de Bruyn’s company was 87% owned by black women. A sale to any other party would not have been more optimal in the context of what NTT sought to achieve,” they said.
“In November 2019, Propco was transferred to a fund established by De Bruyn’s group. In terms of the relevant BEE codes, the BEE result flowed from the fund being managed by a black fund manager regardless of who invested in the fund. This is so because the purpose of the code is to transform the fund management industry, and that purpose cannot be achieved by allowing black fund managers to only manage money invested by black investors.
“NTT decided, of its own volition, to vendor-fund the acquisition with surplus cash from Japan, sidelining local bank funding that could have been used. It was the decision of NTT (and not the executives) to provide vendor funding,” they said.
“There is nothing sinister or inappropriate about the structure that was used to facilitate and house The Campus transaction. The structure is a normal private equity fund structure used for investments of all kinds.
“The fund structure that was used for The Campus transaction was the product of advice received by NTT from Eversheds and Webber Wentzel, two leading law firms, and a commercial bank. NTT took its cue to sell The Campus to achieve its BEE objectives from a similar Barloworld BEE transaction in which De Bruyn’s group had previously participated, and Webber Wentzel had been the advisors,” the former executives said.
‘Fully committed’
The six said they had in the past facilitated a number of transactions that had “meaningful benefits for empowerment and gender equality during our tenure at Dimension Data”.
“We have always been and remain fully committed to the achievement of transformation and the sharing of wealth with the less fortunate to redress the wrongs of the past.” — © 2024 NewsCentral Media
The application for leave to appeal by the former executives is now available to read here (PDF).
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