Fresh affidavit closes the Didata gaps

In a dramatic twist, one of the appellants in the Dimension Data “Campus Six” case has submitted an affidavit that purportedly exonerates him – but which simultaneously undercuts the appeal of the remaining accused. 

The case is one of the most dramatic in South African corporate history, eviscerating the reputations of some of the country’s tech pioneers, but also raising complex questions around BEE legislation. 

In November, judge Denise Fisher found that Jeremy Ord, Bruce Watson, Jason Goodall, Grant Bodley, Saki Missaikos and Steven Nathan – the so-called Campus Six – had orchestrated an “illegal scheme designed to appropriate for themselves a secret financial benefit” using Sonja de Bruyn’s women-led Identity Property Fund as a front to boost Dimension Data’s BEE credentials while secretly diverting the real economic benefit to themselves. 

The Joburg high court found the six Dimension Data executives had engaged in a “clandestine” R1.4bn buyout of the company’s prized Bryanston Campus, which was declared “brazen and dishonest”. The court, however, granted the executives leave to appeal – but now their appeal strategy may be in tatters, thanks to an affidavit by one of the additional respondents, Martin Epstein, a property expert caught up in the case.

The case dates back to 2019, when Japanese telecoms giant NTT was debating whether to sell Didata back to its management after buying the company for $3.2bn in 2010. While these discussions were going on, NTT opted to do an empowerment deal first, partly to boost the company’s value, proposing to sell its flagship property, The Campus, a sprawling 75,000m² block of Bryanston offices surrounding a cricket pitch. 

The pleadings suggest Nathan contrived a plan to sell The Campus to a “consortium” of Black women, which would vault Didata’s empowerment rating two levels to level 2, one level below the highest. But in fact, The Campus would end up being owned by a sub-fund under the Identity Property Fund, which was started by businesswoman De Bruyn. 

The twist was that its only investors were those six businessmen. Incredibly, while the six of them would put in only R65m in cash, the remaining R1.3bn would be vendor financed by NTT. The deal has now been undone, and the property is in business rescue. 

The timeline

A key issue in the case was whether the six Didata executives breached their fiduciary responsibilities and ought to have disclosed that they had an interest in the company buying the property in terms of section 75 of the Companies Act. It stipulates that directors must recuse themselves from decisions where there is a conflict.

Fisher found the six directors in breach of this section, and others.

In their appeal submissions, the directors claim Fisher’s finding is wrong because, as it happens, at the precise time the deal was agreed between NTT and the property fund, the Didata directors had not actually formally resolved to invest in the property company. They claim the documents presented by NTT do not demonstrate that they had invested in the property fund at the time.

Hence, the timeline is at the heart of the matter.

The deal was finally authorised on November 5, 6 and 7 2019 by round robin resolution, including the vendor loan agreement in terms of which Dimension Data Facilities would provide finance to the purchaser of R1.125bn, payable over five years, and a further subordinated loan facility of R208,405,000, payable over five years. 

But Epstein’s affidavit contradicts the appellants’ claim. “I was told by Mr Nathan in early August 2019 that Mr Ord and Mr Missaikos would be investing in the structure and a draft agreement reflecting this was probably already prepared by Werksmans Attorneys,” Epstein says, with support of annexures that cross-reference communications and financial arrangements.

“Mr Ord voted in favour of this resolution and disclosed no conflict of interest. However, as my evidence above makes plain, before even the first resolution approving the Campus Transaction was passed by Dimension Data Facilities, Mr Nathan told me that Mr Ord and Mr Missaikos would be involved in the deal,” his affidavit says. 

“In addition, if the Werksmans’ draft nominee and option agreement was first prepared in July 2019, then even before the first resolution approving the Campus Transaction, Werksmans was already preparing draft agreements for Mr Ord and Mr Missaikos to invest in the Fund. And even if the draft nominee and option agreement was only first prepared in early October 2019, this still means that Werksmans was busy preparing draft agreements for Mr Ord and Mr Missaikos to invest in the Fund prior to the vendor financing resolution being passed in November 2019.”

Belated response

However, there are several problems with Epstein’s evidence, including the question of why he had not come forward at the time of the high court case. The court ultimately found the six Didata directors, Epstein and five corporate entities at fault.

Epstein said he had been advising Didata on its property strategy in respect of third-party ownership. In the course of providing this advice, he was in June 2019 introduced to Identity Partners, which was headed by Janice Johnson and De Bruyn, when the prospect of Identity Partners acquiring The Campus from Dimension Data was discussed. 

Hence, Epstein claims he had asked Nathan, who he knew well and was a long-time friend and business associate, whether all the approvals had been granted, and Nathan said they had. Consequently, at that time he had no idea there was anything untoward happening. 

Even at the time it was revealed that NTT was bringing a case against the six directors, he had been told by Didata’s lawyers he was not germane to the proceedings because he was not a Didata director, therefore he could not have been party to any conflict of interest.

But, he says, he was shocked by the judgment, which found that he was complicit in the executives’ breaches and acted as a “front” for them.  

“I have explained above how my silence came about. It was not a product of my complicity in what had happened but rather a combination of the incomplete legal advice I was given at the time and my understanding, arising from that advice, that this was not my fight and that I had nothing to contribute to it,” he says.

“I regret that I did not provide my version at the time of the application.”

The case is ongoing.