The Johannesburg High Court has delivered a pivotal ruling against several former top executives of Dimension Data, exposing an illegal scheme surrounding the sale of The Campus business park in Bryanston. Judge Denise Fisher declared the transaction void, ordering that Dimension Data Facilities regain ownership of The Campus, along with all associated assets and contracts that had been transferred to ID Propco.
The court also directed the former executives and ID Propco to cover NTT’s legal costs on a punitive scale.
Origins of the Case
Japanese telecommunications giant Nippon Telegraph and Telephone (NTT) acquired Dimension Data in 2010, marking the end of its era as the largest technology company listed on the Johannesburg Stock Exchange (JSE). In 2019, Dimension Data was fully integrated into NTT Ltd., and by October 2023, the Dimension Data brand was discontinued altogether.
NTT initiated legal proceedings in 2022 after a whistleblower exposed misconduct, prompting the company to enlist global law firm Herbert Smith Freehills to investigate. The investigation revealed that the executives involved had concealed their financial interests in the sale of The Campus, leading to an improper conclusion of the transaction.
Key Figures and Findings
The six former executives named in the lawsuit include co-founder Jeremy Ord, Jason Goodall, Grant Bodley, Steven Nathan, Saki Missaikos, and Bruce Watson. A property consultant, Martin Epstein, was also implicated.
- Jeremy Ord co-founded Dimension Data in 1983 and served as executive chairman until 2021.
- Jason Goodall served as CEO before becoming Global Chief Executive Officer of NTT’s IT services division. He departed in 2021.
- Grant Bodley led the Middle East & Africa division until May 2021.
- Steven Nathan was head of corporate development.
- Saki Missaikos and Bruce Watson held senior positions in strategy and operations.
The executives’ financial stakes in ID Propco were concealed through a complex partnership structure. ID Propco was created by Identity Property Fund 1, a limited partnership with initial ties to a black-owned general partner, fulfilling BEE (Black Economic Empowerment) requirements. However, NTT’s findings revealed that the executives secretly controlled the fund’s financial interests through its limited partner, Areti, with Epstein’s assistance.
In late 2022, Areti replaced the black-owned general partner with a company owned by Epstein, securing full control of The Campus transaction.
Judge Fisher’s Ruling
Judge Fisher described the scheme as “brazen and dishonest,” asserting that the executives acted in conflict with their fiduciary duties under both Section 75 and common law. She emphasized that unchecked misconduct of this nature would undermine South Africa’s commitment to commercial integrity and honesty, vital for both domestic and international trust in its business landscape.
“This case serves as a cautionary tale,” she stated, particularly regarding the misuse of nominee arrangements and secret partnerships. Such structures require strict oversight to prevent corruption and abuse, especially within the context of South Africa’s BEE framework.
Implications
The ruling is a significant victory for corporate governance in South Africa, reinforcing the importance of transparency and accountability in business dealings. It also underscores the necessity for rigorous oversight of BEE-related partnerships to ensure they serve their intended purpose rather than facilitating personal enrichment.
This case is a stark reminder that corporate integrity remains a cornerstone of South Africa’s economic and democratic development, with the courts ready to intervene when those values are compromised.
Comments