Watson ordered to pay back mining deal partners
The Gauteng High Court (Johannesburg) has ruled that embattled African Global Operations (formerly Bosasa) CEO Gavin Watson has to pay back the BEE mining shares that complainants say he ‘stole’ more than a decade ago.
In a judgment handed down this week, Judge Fayeeza Kathree-Setiloane ordered that Watson must return 550 shares in Ntsimbintle Mining to Smuts Ngonyama, SA’s ambassador to Spain and a former ANC spokesperson. Watson must also pay back any dividends paid to him on these shares since 2006, plus 10% interest per year – which, by rough calculation, is likely to result in a multimillion-rand headache for the Eastern Cape businessman, says a News24 report.
Ntsimbintle owns 50.1% of Tshipi é Ntle Manganese Mine, near Hotazel in the Northern Cape. In recent years, Tshipi became the largest manganese exporter in the country. Ntsimbintle is majority owned by Safika Resources, chaired by business tycoon and former ANC NEC member, Saki Macozoma
In 2003, Watson, Ngonyama and a third business partner, Sabelo Macingwane, entered into an agreement which would see them each owning a third of a company, Nkonjane Economic Prospecting and Investment. Nkonjane would, in turn, hold 11% of Ntsimbintle, which paid out R300m in dividends in 2017. As a result, Nkonjane would have received around R33m that year alone, notes the News24 report.
Around 2006, Watson convinced Ngonyama and Macingwane to donate 8% of their 33.3% shares to Bosasa Youth Development Centres, a company wholly-owned by Bosasa Operations. Watson had convinced Ngonyama and Macingwane that 250 black youths and women would be identified to be beneficiaries of the shares, which would then fulfil Nkonjane's commitments to broad-based black economic empowerment.
As of 2013, Watson had told them Mela Woman's Investments, Nzunzo Investments, The Bosasa Employees Trust and Mpako Investments were the ultimate beneficiaries of Bosasa Youth and, accordingly, both men donated the 25% of Nkonjane shares.
Kathree-Setiloane found this was a ‘material misrepresentation’ by Watson, as the ultimate owners of Bosasa Youth were in fact Watson and his family.
‘Mr Watson committed a material misrepresentation. He failed to give effect to an agreement entered into between the three parties in good faith to meet the transformation goals of our Constitution,’ the judgment reads.
‘Mr Watson acted dishonestly and reprehensibly by taking benefits allocated by the parties, under the agreement, to a broad-based black economic empowerment entity and appropriating them to himself and his family.’
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