Corruption ruling shocks South Africa’s business world

Six former Dimension Data executives linked to an illegal scheme in a recent Johannesburg High Court ruling said they would launch an application for leave to appeal.

This announcement followed a ruling which described a transaction they were involved in as an illegal scheme designed to secretly benefit from the deal.

The transaction in question is the sale of The Campus, which was promoted as a black economic empowerment (BEE) deal.

The Campus in Bryanston 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 explained that Dimension Data occupied less than half of The Campus and that it made sense to offload the property.

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.

The Dimension Data executives included Jeremy Ord, Jason Goodall, Grant Bodley, Steven Nathan, Saki Missaikos, and Bruce Watson.

NTT said it undertook an extensive investigation regarding the sale of Dimension Data’s The Campus property.

The investigation revealed that former senior executives did not disclose their personal 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.”

High Court ruling

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”.

She added that it conflicted them with their boards from a section 75 perspective and their common law duties as directors.

“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 ruled.

She added that this type of flouting of foundational and universal commercial values should not go unchecked and unpunished.

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

“From a South African Black empowerment perspective, it is of grave concern that these White Captains of Industry have subverted the empowerment legislation for their benefit.”

She described it as a cautionary tale for those who apply and regulate the BEE infrastructure, which is vital to the development of the constitutional democracy.

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

Fisher added that the conduct that emerged from the undisputed facts warranted a punitive cost order.

The ruling shocked the South African corporate world as all the former Dimension Data executives are highly respected.

Jeremy Ord co-founded Dimension Data in 1983 and served as executive chairman until 2021. He was widely credited with creating a global IT powerhouse.

Bruce Watson joined the company in 1984, and Saki Missaikos was the executive head of strategy and former MD of Internet Solutions.

Jason Goodall was Dimension Data CEO, Grant Bodley served as Dimension Data Middle East & Africa CEO, and Steven Nathan was head of corporate development.

Leave to appeal

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.

“We are resolute in our commitment to ensuring that we are exonerated from any wrongdoing,” the group said.

They said the judge made unjustified and unfair findings, which would be fully canvassed in the notice of application for leave to appeal.

The group said they wanted to correct certain publicly held misconceptions flowing from articles and statements made in the media.

“We want to set the record straight about the BEE Campus property transaction and our role in it,” they said.

They said The Campus in Bryanston was sold to a BEE consortium for fair value, which NTT executives approved.

“It also resulted in the achievement of a meaningful wealth creation opportunity for broad-based black economic empowerment,” they said.

An added benefit was that it addressed NTT’s concerns about the South African business’ BEE credentials.

“We also point out that the transaction resulted in NTT’s South African business achieving a meaningful reduction in operational costs,” they said.

They said there was nothing sinister or inappropriate about the structure used to facilitate and house The Campus transaction.

“The structure is a normal private equity fund structure used for investments of all kinds,” the group said.

“The perception that this was a surreptitious conspiracy by ‘six white males’ to feather our own nests at the expense of empowerment is just plain wrong and deeply distressing to us.”