Marianne Merten
Five Khayelitsha fishermen have asked the Cape High Court to allow them to catch
their quota of hake despite a looming interdict by their employer, one of the
country’s biggest fishing companies.
The legal battle comes in the wake of a complicated paper trail of closed corporations, dormant entities and conversions to private companies in the pursuit of lucrative hake long-line allocations.
It highlights the widespread use of front companies with a strong black empowerment component usually only on paper to obtain quotas, particularly
since the government’s first efforts to transform the R2,4-billion industry.
Last month Marine and Coastal Management (MCM), formerly Sea Fisheries, established a forensic verification unit to check quota application details to
stop fraud at the start of the allocation process. Penalties like the withdrawal
of fishing rights are envisaged for offenders.
One of the five fishermen seeking the court’s help, Alwyn Bungu, said they felt
used by their employer, Lusitania Fishing Company (Pty) Ltd. ”We don’t have a
thing now. We are struggling to go ahead and fish our quota. To this day we have
nothing to show for it. We don’t feel good.”
Promises of money to move his wife and five children from whom he had been
separated for 25 years from the Eastern Cape have not materialised.
Documents before the court show how he and four others Zwelinzima Ndibi, Cecil
Diko, Xolisile Ndibi and Mxolisi Mcitwa became members of Deus Te Ajude cc,
formed from a dormant closed corporation owned by Lusitania director Joao Fernandes.
This corporation was one of several linked to Lusitania that has successfully
applied for long-line hake quotas since 1998. In its application, it was described as a black-owned corporation based in Khayelitsha. Joint venture agreements were signed days before submitting the applications.
The fishermen, who have between 16 and 25 years’ experience, want the court to
allow them to catch the quota and keep the proceeds in a trust account until the
dispute is settled.
According to their court documents, a Lusitania manager in 1996 informally asked
them to participate in a ”scheme” to apply for long-line hake quotas. The men
agreed after several meetings with Fernandes.
”We were made to believe that we were going to be empowered … quotas that would be given to us would be quotas that would benefit us, because our employer
after a long period of time of dedicated and loyal service to him was wanting to reward us, especially because he realised there were no pension benefits accruing to us,” Bungu says in his affidavit.
”The fact of our illiteracy, semi-literacy and lack of sophistication is a notorious fact … We were relying on what we thought was good faith.”
Fernandes’s responding affidavit says that in 1996 he ”devised a scheme for empowering long-serving crew” through the West Coast Fishermans and Workers Company (Pty) Ltd, previously a dormant company of which he is sole director.
The company unsuccessfully applied for quotas and ”this led to the scheme being
adapted”. He outlines how a number of separate closed corporations were formed
in the understanding that any fishing right obtained by any one of them would
accrue for the benefit of all crew and staff.
”The way this was to occur was for the corporation in question to be converted
to a private company and for the shares in such a company to be transferred to
[West Coast Fishermans and Workers Company (Pty) Ltd] and for the crew and staff
[of] aforesaid to receive shareholdings,” Fernandes said in his affidavit, adding the members of that private company were 31 fishermen.
A company search shows Fernandes is linked to 67 closed corporations. These include 12 related to various aspects of Lusitania, to several vessels and dozens related to other fishing interests, including the lobster sector.
For example, Cape Reef Products successfully obtained a West Coast rock lobster
quota in 2000/2001. Although the register of companies lists a ”D van Wyk” as
contact person, the postal address is the same Fernandes listed on the registration documents of at least one other company.
Fernandes referred all queries to Lusitania’s lawyers.
‘The underlying intention was that all employees forming part of the project
would benefit from the granting of such [fishing] rights, in this case 31 fishermen and workers … Lusitania has an obligation to ensure that all the
original beneficiaries of the scheme are not exploited by other opportunists in
the fishing industry,” the lawyer’s response read.
Bungu recounted how fellow fishermen told him and the others that the quota was
theirs to catch because it had been awarded to their corporation.
By August 2000 the five briefed a lawyer who informed Lusitania the group would
terminate their joint venture agreement and catch their quote through another
company’s vessel. The men obtained the transfer of the fishing permit from a
Lusitania vessel to that of another company.
In April 2001 Lusitania instituted legal proceedings to revoke the permit transfer and prevent the five from asking anyone else to catch the quota and
from representing Deus Te Ajude cc because it no longer existed.
In December last year the first steps were taken to convert the closed corporation into a private company, Deus Te Ajude Fishing (Pty) Ltd. This company was officially registered on February 6 with Fernandes as director and a day later 100 of the 1 000 shares were transferred to the West Coast Fishermans
and Workers Company (Pty) Ltd.
The case will be heard in the Cape High Court on August 8.