Mustek BEE row
This is part of a legal wrangle set to be heard in the high court, and it raises sharp questions about why Mustek didn’t table these concerns in 2005 when it first made a deal with Puno.
Puno consists of a number of black businessmen and is chaired by former ANC whip and member of parliament Mpho Scott. It also includes ex-Telkom executive Nkenke Kekana, former parliamentarian Sipho Gcabashe and African Legend Technologies chairman Mashudu Tshivhase
Puno first got involved in 2005, when it bought 30% of Mustek’s subsidiary, Brotek, which sells office equipment under the Brother brand — a transaction Mustek hailed as “a major BEE deal”.
Brotek is integral to Mustek’s business, contributing a third (R22m) of Mustek’s overall R72m profit last year.
However, things soured late last year when Mustek told Puno it wanted to buy back the 30% of Brotek so it could do an empowerment deal at group level, rather than in individual subsidiaries.
Puno agreed to sell its 30% back to Mustek for R12m, but the deal fell apart.
Only then did Mustek raise concerns that Puno was “fronting” for two white men, Gary Harlow and John Poluta In December, it asked Puno to provide an audited certificate of its empowerment status. Though Puno provided the certificate (signed by Deloitte), Mustek wasn’t satisfied.
Puno went to court this week to get clarity on the Mustek shareholding.
Mustek financial director Hein Engelbrecht told the FM: “We’re not accusing them of anything, we just asked for certain confirmations, which we feel weren’t satisfactorily provided.”
Scott is seething. “This is the most insulting thing I’ve ever experienced in my corporate life and an abuse of BEE,” he says. If anything, Mustek was fronting if it didn’t believe Puno was empowered initially, he says.
“I and Nkenke Kekana were involved from day one and, with support from Mustek, I was appointed chairman of Brotek. We’ve worked together over this period without any white skin making our decisions.”
Scott says that previously Mustek had provided no hint that it was at all concerned about Puno’s empowerment credentials.
“I think it’s about greed. Mustek has created a dispute out of nothing because either they want to negotiate down the price for our shares, or they simply want to take those shares for nothing. They’re hunting for any loopholes,” he says.
Engelbrecht says the allegation of “fronting” is “a conclusion they made, we didn’t necessarily say that”.
When asked why Mustek had not raised the concerns initially, Engelbrecht said the deal was “done in good faith, and then we just asked certain questions, and that’s where the dispute arose”.
This dispute won’t help as Mustek searches for a new empowerment partner. An earlier deal with Saki Macozoma’s Safika was unwound and Mustek is now “assessing various proposals” from empowerment partners.
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