Property

Company at the centre of big corporate scandal in business rescue

Culross Property Co, which is at the centre of the Dimension Data property debacle, has entered business rescue.

Culross Property Co rose to prominence after a legal battle related to the sale of The Campus in Bryanston, which Dimension Data owned.

The Campus was sold for around R1.3 billion to a black women-led consortium. Dimension Data’s financial statements valued it at R1.6 billion.

At the time, former Dimension Data CEO Grant Bodley said selling The Campus was part of a restructuring exercise to focus on its core business.

He added that it helped the company’s BBBEE rating, which improved from Level 4 to Level 2, with ambitions to reach Level 1.

In 2023, Dimension Data and its parent company, NTT, launched legal action against six former executives and three other individuals involved in the sale of The Campus.

NTT said its investigation into the deal revealed that former executives did not disclose their financial interest in the transaction and wrongfully induced its conclusion.

“This is in breach of the law and company policy. Evidence points to the former executives having defrauded Dimension Data,” NTT said.

“In addition, the investigation revealed that the purchaser of the Campus paid a secret commission to one of these former executives.”

Johannesburg High Court Judge Denise Fisher ruled on 25 November 2024 that the sale of The Campus was an “illegal scheme”.

She said the former Dimension Data executives “entered into an illegal scheme designed to appropriate for themselves a secret financial benefit”.

“The scheme was brazen and dishonest. It was orchestrated without due regard to the relationships between the Japanese holding entities and the SA interests.”

She said it went against upholding the values of honesty and integrity intrinsic to proper commercial relationships.

She declared the transaction void and ordered that Dimension Data Facilities was entitled to restitution of The Campus and all related assets and contracts.

On Monday, 02 December 2024, the former Dimension Data executives announced they had launched an application for leave to appeal.

They said the judgment came as a surprise to them and their legal team and were preparing an application for leave to appeal against the findings made by Fisher.

Culross Property Company

The Campus in Bryanston

At the centre of the controversial Dimension Data deal to sell The Campus was the Culross Property Co.

Johannesburg High Court stated that one of the defendants, Martin Epstein, took complete control of The Campus buyer.

“He changed its name to Culross Property Co and was then appointed as its sole director,” it said.

It added that Epstein was acting and continues to act as a front for the protagonists and that he had no real control.

The protagonists include the former senior Dimension Data executives Jeremy Ord, Jason Goodall, Grant Bodley, Steven Nathan, Saki Missaikos, and Bruce Watson.

“This is evident from the protagonists’ statements that they are willing to reverse the transaction on their terms, which demonstrates their impunity,” the judgement said.

“Epstein has not even made a pretence of autonomy. He has not made an affidavit to explain the part played by him.”

 On 14 November 2024, Culross was placed under business rescue, and Lance Schapiro was appointed as the business rescue practitioner (BRP).

Epstein explained that the company was established to hold The Campus. Its focus was to own and manage this company.

It entered into agreements to finance the R1.3 billion acquisition of The Campus. However, this deal faced legal challenges.

Legal proceedings were initiated in October 2022, challenging the validity of the sale and purchase of the rental enterprise entered on 11 October 2019.

This dispute has stalled potential transactions, as the pending litigation deters potential buyers and refinancing options.

It challenged the validity of the agreement related to the sale of The Campus, seeking the return of the property to Dimension Data.

As the High Court ruling declared the transaction void, Culross Property Co received a demand for this money.

“This debt obligation has placed an unsustainable financial burden on the Culross Property Co,” Epstein said.

He explained that Culross Property Co was unable to pay certain of its debt and that it was unlikely to change.

“The Company’s major creditor issued a letter of demand on 5 November 2024, requiring repayment of the outstanding balance by 8 November 2024,” Epstein said.

Given the severity of the company’s financial situation, the board believed that placing the company into business rescue is the most prudent course of action,” it said.

“There is a reasonable prospect that business rescue proceedings will provide a pathway to resolve the company’s financial distress.”

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