Investor and SA’s ambassador to Japan, Smuts Ngonyama, has obtained an interim interdict to stop the payment of about R6.8m in dividends to a company in the Bosasa group that he has accused of BEE fronting.

A Sunday Times report says the Gauteng High Court (Johannesburg) Judge Thifhelimbilu Mudau on Friday ordered that the money be kept in a separate account while Ngonyama and the estate of the late Gavin Watson battle it out in the appeal courts over who should rightfully own the lucrative shares from which the dividend is derived.

The shares are in Ntsimbintle Holdings, and the R6.8m in the court order is a portion of the latest dividend that was payable to the Bosasa Youth Development Centres company, now in liquidation.

Ngonyama went to court urgently ahead of last week’s dividend payout, saying that, though Bosasa Youth was still registered as the holder of the shares in Ntsimbintle, he was the beneficial owner of the shares.

Ngonyama’s claim stems from a 2019 judgment, which found that Bosasa Youth had only come to own the shares – donated by Ngonyama – via a ‘material misrepresentation’ by Watson that Bosasa Youth was a BBBEE company.

In fact, said Judge Fayeeza Kathree-Setiloane in 2019, it was Watson – ‘motivated by greed and dishonesty’ – and his family, and not black youths and women, who were the real beneficial owners in Bosasa Youth.

She ordered Watson to immediately take steps to restore the shares to Thunder Cats Investments, Ngonyama’s investment vehicle.

At the time Watson was still alive and appealed the judgment to the SCA, but that appeal is still to be heard.

However, the appeal application has suspended Kathree-Setiloane’s judgment so Bosasa Youth still sits as the registered owner of the shares on Ntsimbintle’s securities register.

Meanwhile, the dividends have been rolling in.

When Ngonyama demanded Ntsimbintle not pay the latest dividend to Bosasa Youth, but rather to keep it in escrow, Ntsimbintle said it could not do that; it was constrained by law to pay the dividend to the registered shareholder in its securities register, unless there was an agreement with the liquidators or a court order.

The liquidators did not agree.

They said Bosasa Youth was in the earliest stages of liquidation and their job as provisional liquidators was only to find and preserve its assets. They had kept the earlier dividend payouts safe and would do the same with the one in dispute, they said.

Then, when it came time to pay creditors Ngonyama could put in his claim, along with everyone else.

In their court papers, the liquidators said Ngonyama was seeking to ‘disturb the operation of the law of insolvency’ by preventing the assets of Bosasa Youth from being distributed as insolvency law required.

Mudau said that if there was a conflict between the company law on the payment of dividends and the BBBEE Act, the BBBEE Act would prevail.

‘The language of the statute as well as the intention of the legislature in this regard is clear,’ he said, according to the Sunday Times report.

‘If the liquidators prove to be entitled to the dividends issued by (Ntsimbintle) no harm will have been suffered by the liquidators if they wait for the appeal(s) to be decided,’ he said.

For now, the funds would be in the hands of ‘a neutral and financially sound party’ – Ntsimbintle.

He also ordered that any further dividend payment should be treated in the same way until the appeal courts had finally determined the case.

Full Sunday Times report (subscription needed)