Didata fraud: BBC calls for harsh penalties

• High court rules senior executives conspired to bypass broad-based BEE legislation

The Black Business Council (BBC) has issued a strong and unequivocal call for accountability and justice after the high court’s decision to void the R1.4bn sale of Dimension Data’s (Didata’s) Bryanston Campus, citing a conspiracy by senior executives that include cofounder Jeremy Ord to bypass broad-based BEE legislation.

“The law must take its course, and those white executives must face the full might of the law. The law enforcement agencies must do their job,” Kganki Matabane, CEO of the business lobby group, said on Thursday.

Matabane’s comments came days after judge Denise Fisher’s judgment this week exposed a web of deceit involving special business arrangements, such as nominee and en commandite partnerships, to conceal the true beneficiaries of the transaction, which also implicates former CEO Jason Goodall and Grant Bodley, Didata’s former Middle East and Africa head.

The latest corporate malfeasance scandal paints a worrying picture of corruption in the private sector. It follows the multibillion-rand accounting fraud that led to the collapse of Steinhoff,

a once-promising contender in the European discount furniture market, and similar dodgy bookkeeping practices at Tongaat Hulett, an industry stalwart that collapsed into the arms of business rescue practitioners in recent years.

“Anyone who is trying to circumvent the broad-based BEE legislation should be dealt with harshly in order to create a deterrent to other white people who were thinking of doing the same thing,” Matabane said.

The ruling not only invalidates the sale, but also mandates the restitution of the campus property, art collection and other assets to Didata, a company that survived the dot.com bubble more than two decades ago and grew into a stable business selling everything from networking equipment to IT security.

The case centres on allegations that six executives — Ord, Goodall, Bodley, Steven Nathan, former corporate development head, Saki Missaikos, former head of strategy, and Bruce Watson, a long-time executive — as well as Martin Epstein, a property developer, conspired to gain control over the campus property through clandestine manoeuvres.

“The scheme was brazen and dishonest,” Fisher said in the judgment. “If this kind of flouting of foundational and universal commercial values remains unchecked and unpunished this would represent a travesty of SA’s commitment nationally and internationally to the upholding of the values of honesty and integrity which are so intrinsic to proper commercial relationships.”

Under the scheme, the executives set up a private equity fund, managed by Identity Fund Managers, presenting it as black women-owned BEE initiative to gain favourable empowerment ratings. The true investors of the fund were the executives themselves, who kept their identities hidden through the complex partnership structures.

According to the judgment, the executives manipulated the valuation of the property to secure it at a low price, negotiating the sale price internally to ensure it was favourable to their interests as buyers. They further unduly benefited by reducing the immediate financial outlay through vendor financing.

When it became necessary to disclose the identities of the investors, they used fronts such as Epstein and his firm Kula Investment Solution, to maintain the anonymity.