NEWS24 / 27 JUNE 2019 - 15.07 / KYLE COWAN
Embattled Bosasa CEO Gavin Watson is facing a multi-million rand headache after the Gauteng High Court in Johannesburg ruled that he has to pay back the BEE mining shares that complainants say he "stole" more than a decade ago.
In a scathing judgment handed down on Tuesday, Judge Fayeeza Kathree-Setiloane ordered that Watson must return 550 shares in Ntsimbintle Mining to Smuts Ngonyama, who is South Africa's ambassador to Spain and a former ANC spokesperson.
Bosasa CEO Gavin Watson (File)
Watson must also pay back any dividends paid to him on these shares since 2006, plus 10% interest per year – which, by rough calculation, is likely to result in a multimillion-rand headache for the Eastern Cape businessman.
Ntsimbintle owns 50.1% of Tshipi é Ntle Manganese Mine, near Hotazel in the Northern Cape.
Gavin Watson,, CEO of Bosasa, tackles staff over mistakes in their work submitting tenders. He mentions one contract worth R800-million which was nearly lost due to such a mistake. The video was taken during a Bosasa 'Imbizo', at Silverstar Casino.
In recent years, Tshipi became the largest manganese exporter in the country. Ntsimbintle is majority owned by Safika Resources, chaired by business tycoon and former ANC NEC member, Saki Macozoma.
Meanwhile, Watson has come under pressure in recent weeks.
He is embroiled in a scandal involving a R500 000 donation to the 2017 ANC presidential campaign of President Cyril Ramaphosa, which Public Protector Busisiwe Mkhwebane is investigating.
Watson is also facing a tax inquiry by the South African Revenue Service (SARS), which is seeking to establish if he and the Bosasa group of companies (now named African Global Operations) were honest about their tax affairs.
Bosasa has made headlines since 2006, and more recently as result of testimony before the Zondo commission of inquiry this year, where former Bosasa COO Angelo Agrizzi revealed the company had paid bribes for multibillion-rand tenders over more than a decade.
How the scheme worked, according to court papers
In 2003, Watson, Ngonyama and a third business partner, Sabelo Macingwane, entered into an agreement which would see them each owning a third of a company, Nkonjane Economic Prospecting and Investment.
Nkonjane would, in turn, hold 11% of Ntsimbintle, which paid out R300m in dividends in 2017. As a result, Nkonjane would have received around R33m that year alone.
Around 2006, Watson convinced Ngonyama and Macingwane to donate 8% of their 33.3% shares to Bosasa Youth Development Centres, a company wholly owned by Bosasa Operations.
Watson had convinced Ngonyama and Macingwane that 250 black youths and women would be identified to be beneficiaries of the shares, which would then fulfil Nkonjane's commitments to broad-based black economic empowerment.
As of 2013, Watson had told them Mela Woman's Investments, Nzunzo Investments, The Bosasa Employees Trust and Mpako Investments were the ultimate beneficiaries of Bosasa Youth and accordingly, both men trusted Watson and donated the 25% of Nkonjane shares.
On Tuesday, Judge Kathree-Setiloane found this was a "material misrepresentation" by Watson, as the ultimate owners of Bosasa Youth were in fact Watson and his family.
"Mr Watson committed a material misrepresentation. He failed to give effect to an agreement entered into between the three parties in good faith to meet the transformation goals of our Constitution," the judgment reads.
"Mr Watson acted dishonestly and reprehensibly by taking benefits allocated by the parties, under the agreement, to a broad-based black economic empowerment entity and appropriating them to himself and his family."
He owed Macingwane and Ngonyama a duty to disclose that the beneficiaries of Bosasa Youth were the "antithesis" of black empowerment.
They only became aware of Watson's scheme when a whistleblower approached them, the judgment revealed.
Watson did not immediately respond to a text message request for comment on Thursday.
'He didn't do what he promised'
Xolani Njokweni, the attorney representing Macingwane and Ngonyama, said his clients had trusted Watson at the time and he had "stolen" the shares.
"It was a long battle. Watson had stolen their assets and broken their trust. He didn't do what he promised to do and he arrogantly refused to give back what was not due to him. And that's what the battle is about all along," Njokweni told News24 on Thursday.
"The shareholding was entrusted to Watson for purposes of him setting up a BEE entity, which was intended to benefit broad-based groupings, women and youths in particular. What he did, was to take the shares for himself. That is reprehensible conduct and that is in breach of constitutional imperatives which are to transform the economy," he added.
Njokweni agreed that his clients would never have donated the shares had they known Watson and his family were going to benefit.
The court order is only in respect of shares donated by Ngonyama. Njokweni said the "consequences" followed for Macingwane's shares as the order effectively cancelled the donation agreement, which in effect spells more trouble for Watson in the near future.
By Thursday morning, Njokweni had not received any indication that Watson would appeal the judgment.
LINK : https://www.news24.com/SouthAfrica/News/dishonest-bosasa-boss-gavin-watson-ordered-to-pay-back-millions-in-bee-mining-shares-20190627
Disclaimer - The views expressed here are not necessarily those of the BEE CHAMBER