After four years of litigation, a non-profit research organisation has received an out-of-court settlement from former employees whom it accused of poaching clients for their own new consultancy while still in the NGO’s employ.
The Community Agency for Social Enquiry (Case), a key think-tank during the apartheid years and now a trimmer organisation working in the socio-economic, political and developmental fields, sued former executive director David Everatt and three colleagues for taking some of its clients to their new business in 1998.
Experts say the case highlights gaps in the non-profit sector on issues of good governance, transparency and accountability.
Documents filed in the High Court, where Case sued for R737 466,01 in damages, allege that ”the defendants, while still appointed, springboarded themselves into a position where the [they] were able to compete unfairly with Case”.
A week before the trial date, on April 19, the case was settled out of court with a R775 000 payment to Case from Everatt and his colleagues at Strategic & Tactics (S&T).
The substance of the matter, said Case executive director Dr Zaid Kimmie, was that Everatt and his partners planned ”from at least June 1998 to set up an alternative research company and to divert research projects to that company”.
Everatt resigned from Case in August that year, giving three months’ notice, but incorporated the new company on September 4, while still in Case’s employ.
Case sued in 2000. Transmed and the Department of Public Works are two of the clients named in an audit where discrepancies arose in payments to S&T for work done while the four S&T directors were still working for Case.
Everatt said the decision to leave Case was based on a professional need to go back to research.
”I was doing nothing but managing 49 people, whereas I am a researcher, and wanted to go back to research. But it was impossible, so I left.”
He said no attempt was made to negotiate a restraint of trade agreement. When he left Case, he said, a number of clients expressed their preference for working with him or their doubts about working with Case in his absence.
”All were declared to the Case board. Case made the allegation about 15 months after I had left .”
Kimmie said the issue at stake was not about clients choosing to work with a particular agency.
”We believe we had a very strong case, which is why we pursued the matter over a period of four years.”
Both parties agreed that the reason for the settlement was that neither could afford expensive litigation. Kimmie said there is documentary evidence to substantiate allegations against S&T, and that Case has suffered serious financial damage.
”The specific [scenario] of Case teaches us that we need to look at the issue of governance urgently, and all the stakeholders need to participate in a code of governance and implement it,” said Damaria Senne, communications manager at the Charities Aid Foundation of South Africa, a non-profit body that will be holding a conference on May 25 on governance in the non-profit sector.