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NJM DIRECTORS IGNORE COURT ORDER, FAIL TO REPORT TO HAWKS FOR BEE FRAUD

Ngwako Malatji, Bongani Mdakane | 16 July 2023


The directors of a Joburg-based engineering company, NJM Heat Treatment & NDE Services (NJM), failed to report to the Hawks for alleged fraud after the Joburg High Court ordered them to do so more than three weeks ago.


The apparent decision to cock a snook at the court order is likely to open them to contempt of court charges.


In her judgment, which we have seen, judge Fiona Dippenaar said the three directors Mark Smith , Vanessa Chungu and Alex Roditis should report to the law enforcement agency after they stated in their answering affidavits that they fraudulently supplied a signed shareholders’ agreement to Eskom for the purpose of misleading and misrepresenting NJM shareholding to win a tender at the struggling state-owned utility a few years ago.


The shareholding agreement was intended to prove black business shareholder ownership of the company.


It appeared that the directors’ conduct was tantamount to committing broad-based black economic empowerment (BBBEE) fraud.


This shocking detail came to the fore when a female shareholder, Baleseng Zinyana, who held 26% of the shares, which she paid for in cash, took the other directors to court after they refused to hand her the company’s accounting records to conduct an audit to determine the value of the business.


In her application, Zinyana said she suspected manipulation of the company’s financial performance as the management accounts did not tie up with the financial statements.

The application also stated that the financial records of the company were manipulated in order to reduce the company’s profit margin to below R50-million in 2019 to enable the entity, which also scored millions of rands from Sasol, to generate a BBBEE affidavit to maintain a BBBEE level 1 status.


Zinyana also approached the company auditors and requested them to review the contents of the audited financial statements, but they refused to do so.


The company’s woes are likely to pile up as Jack Madzivhandila, who was appointed by Zinyana as director of NJM, also reported the company’s questionable activities and BBBEE fronting to authorities.


Madzivhandila, who was booted out of the company in 2019 after raising concerns about the dubious activities, reported NJM to BBBEE commission of the Department of Trade and Industry (DTI) and Sasol.


In the letter, addressed to the DTI in February 2021, Madzivhandila said he was informed in 2017 by Smith and Roditis that they intended to sell the shares of other shareholders, other than those held by Zinyana, equalling 25% to Chungu to enable the company to be 51% black woman owned.


He said he was later informed that Chungu bought the shares but because she did not have the capital she would pay for them from dividends. He said four years later Chungu still had not paid for the shares because the company had not declared or paid dividends.


He also said the company’s turnover was reduced so that the profit margins would remain low, thereby diminishing the chances of dividends being paid out. As a result, Chungu would forever be indebted while on the other hand, the company continued to benefit from a good

BBBEE assessment scoring.


“I am of the view that Chungu’s ownership is only on paper but not which will economically empower her as a black woman.” NJM lawyers, Knowles Husain Lindsay Attorneys, did not respond to written questions while Chungu declined to comment on specific questions sent to her.


However, in the letter they sent to Sunday World last week, the lawyers disputed that Zinyana won the case against NJM in court. They said the businesswoman brought an application to court and they opposed it and the matter was set down for May 8 this year. They said the merits of her case were never dealt with, saying they were of the view that her case was without merits. They said the parties agreed to a settlement in order to resolve the matter practically, which was made an order of court. In terms of the agreement, they said, Zinyana’s shares would be purchased by the other directors if they agree on their value.


DTI and Hawks spokesperson Katlego Mogale also failed to respond to our written questions.


Eskom spokesperson Daphne Mokowena said they did not have the records of NJM in their system.


‘Disclaimer - The views expressed here are not necessarily those of the BEE CHAMBER’.



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