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Jessica Bezuidenhout, Pauli van Wyk14 Oct 2016 00:00
Corporate tussle: Eric Wood (left) has denied accusations of ‘gross wrongdoing’ in getting his new company to bill Transnet for work done by his previous firm. (Hanlie Konig)
Two businesspeople seeking to declare their partner a delinquent director have exposed further details of how a Gupta-linked company gained a backdoor ticket to lucrative deals at Transnet.
Investment advisers Litha Nyhonyha and Magandheran Pillay filed a delinquency application in the Johannesburg high court this week.
They accuse their former partner, Eric Wood, of sharing confidential company information with third parties. This information, they say, then paved the way for Trillian Capital Partners to make millions of rands in “illicit payments” from the transport parastatal for work the firm allegedly never did.
The pair make startling claims that Wood leaked company information to, among others, Salim Essa, a Gupta family associate who holds a 60% stake in Wood’s new company, Trillian Capital Partners.
Mining mogul and former minister Tokyo Sexwale chairs the boutique asset management firm.
The breakdown of their 11-year business relationship as the founding partners of Regiments Capital, Nyhonyha and Pillay claim, was triggered after they rejected a bid by the Guptas to buy a majority stake in their firm last year.
“Pillay and Wood came to see me after a Gupta meeting set up by Wood. Pillay and I were emphatically against selling a majority stake in Regiments because this was fundamentally against our ethos, because Regiments was a black-empowered company,” said Nyhonyha in an affidavit filed in court on Tuesday.
It further states that Wood, unhappy with this decision, wanted out and the three started negotiating a “fair” separation package that would allow him to walk away with a component of the business, some existing contracts and staff members who wanted to join him in his new venture at Trillian.
But these talks stalled when they couldn’t agree on exact terms and, once Wood had left, his partners say they came across an electronic paper trail suggesting he had been feeding company information to Essa while in their employ as chief executive.
“Wood has been party to gross wrongdoing and has acted in direct conflict with Regiments, in breach of his fiduciary duties and in a manner that has compromised the reputation” of the company, they charge.
He allegedly sought to divert business from Regiments to Trillian prior to the scheduled date of his departure and, in doing so, had caused the company severe reputational harm, papers state.
The amaBhungane Centre for Investigative Journalism revealed details of payments totalling a staggering R600‑million to Regiments and Trillian in the Mail & Guardian recently — some of which form part of an investigation by the treasury as well as the public protector’s probe into allegations of state capture.
Nyhonyha and Pillay’s delinquency application against Wood includes claims that millions of rands in alleged illicit payments were made to Trillian by Transnet.
Among those is invoice number TE 2016-CP01, dated February 19 2016 and sent by Trillian Capital, billing Transnet the sum of R10‑million.
Nyhonyha alleges that this was irregular because Wood was in effect employed by Regiments until February 29, meaning that Trillian could not have done any work to justify such a payment.
“Trillian billed Transnet for the work that Regiments had undertaken,” the document states.
Bizarrely, Wood was only registered as a director of Trillian on March 1, days after he sent Transnet this invoice listing himself as a director of the new company.
Furthermore, the court papers state that Trillian rendered three other invoices to Transnet totalling R21‑million between March and May this year. “However, the services in respect thereof had already been undertaken by Regiments and invoiced in January and February.”
The Regiments team also accuses Wood of colluding with senior staff in the weeks leading up to his exit from the company. One such case cited in the court papers involves Mohammed Bobat, the man who would slip into the role of adviser to Des van Rooyen during his controversial four-day stint as finance minister last year.
It is now alleged that Bobat resigned from Regiments — and that Wood knew this but allowed him to continue drawing his Regiments salary for two months, even while he was working as adviser to Van Rooyen, first in the treasury and later in the co-operative governance ministry.
Wood’s ex-partners say they became aware of Bobat’s resignation and controversial appointment through media reports at the time, adding that this had caused them financial and reputational harm.
Wood, in a written response to the M&G, said he would oppose the delinquency application. “I have briefed my attorneys to respond to each and every allegation contained in the application with my factual answers, supporting documentation and confirmatory affidavits of parties involved.”
He confirmed that his split from the firm had resulted in a restructuring of the business, implemented with the agreement of the shareholders and directors of the company. This was subject to signing off a complex set of agreements. Although amicable at first, this process had now become “acrimonious”, Wood said.
He said he had been first to file delinquency proceedings against Nyhonyha and Pillay, which was pending at the time they filed their application against him this week.
Wood denied “each and every allegation” in the application, and said he would respond to each of those in his responding papers scheduled to be filed on October 21.
He denied that his actions relating to Van Rooyen-linked Bobat had been questionable. “I deny any inappropriate actions on my part, and suggest that Mr Pillay and Mr Nyhonyha have included these allegations because of the topical nature of this subject in an attempt to divert attention from their own actions.”
Transnet said it had an obligation to protect its intellectual property and confidential business information and worked to ensure that its governance processes are not compromised. Regarding Trillian and Regiments, it said it does not get involved in the internal processes of its service providers.
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