Dimension Data co-founder and former top executives to appeal fraud ruling

Former Dimension Data executives recently found to have orchestrated an “illegal scheme” when they allegedly presided over the sale of The Campus business park have said they will appeal the Johannesburg High Court’s ruling.

Last week, NTT (formerly Dimension Data) announced that the court had ruled in their favour after launching legal action against the former executives in 2023.

NTT took legal action against a Dimension Data co-founder and several former executives in 2022 after a whistleblower provided enough evidence to spur the company to appoint Herbert Smith Freehills to investigate the matter.

NTT said the investigation revealed that former senior executives did not disclose their personal financial interest in the transaction and wrongfully induced its conclusion.

When NTT confirmed the legal action against the six former Dimension Data executives last year, it also named them for the first time: Jeremy Ord, Jason Goodall, Grant Bodley, Steven Nathan, Saki Missaikos, and Bruce Watson.

The court found in favour of NTT, effectively ruling that they had orchestrated the transaction in such a way that it lined their own pockets.

However, in a statement on Monday, the executives said the ruling was wrong and that they would appeal it.

They said the judgement came as a surprise to them and their legal team, who are preparing an application for leave to appeal.

“We are resolute in our commitment to ensuring that we are exonerated from any wrongdoing,” the executives said.

“The basis for the application and the grounds on which we maintain the judge made findings which are unjustified and unfair will be fully canvassed in the notice of application for leave to appeal and in the ensuing argument before the court.”

The executive said they were not issuing a press release to argue their case, but to correct certain misconceptions regarding the Black Economic Empowerment (BEE) portion of the property transaction and their role in it.

“All the matters traversed in the judgement took place in the context of NTT looking to sell its African business through a management buy-out,” the executives stated.

“To achieve the best possible price (whether in the management buy-out or otherwise), NTT knew that they needed to address the South African business’ weak BEE score,” they continued.

“NTT had a choice to either fund the sale of shares in the business to a BEE partner or to achieve the requisite BEE credentials by helping a BEE group to buy the Campus property and leasing it back from them.”

According to the executives, NTT chose to sell The Campus to achieve its objectives, despite the protestations of South African management and the executives who thought a sale of shares achieved a more sustainable form of empowerment.

“Aside from the fact that The Campus was sold to BEE for fair value (which was approved by NTT Executives), it also resulted in the achievement of a meaningful wealth creation opportunity for broad-based black economic empowerment (not including the Executives),” they said.

Simultaneously, the transaction addressed the concerns NTT had about the South African business’ BEE credentials.

“We also point out that the transaction resulted in NTT’s South African business achieving a meaningful reduction in operational costs,” the executives said.

“In the end, the BEE outcome was achieved through two transactions — the sale of the Campus to a BEE entity and the creation of a long-term incentive plan for black employees of the business.”

They explained that The Campus was sold in July 2019 to a wholly owned subsidiary of a financial services group (Propco), whose principal person with BEE credentials was a non-executive director of Dimension Data, Sonja de Bruyn.

“The sale of The Campus to Ms de Bruyn’s group, which incorporated a majority black-female owned investment manager, was the obvious choice for NTT,” the executives said.

“Ms de Bruyn’s company was 87% owned by black women. A sale to any other party would not have been more optimal in the context of what NTT sought to achieve.”

In November 2019, Propco was transferred to a fund established by De Bruyn’s group. In terms of the relevant BEE Codes, the BEE result flowed from the fund being managed by a black fund manager regardless of who invested in it.

“This is so because the purpose of the Code is to transform the fund management industry, and that purpose cannot be achieved by allowing black fund managers to only manage money invested by black investors,” they stated.

“NTT decided, of its own volition, to vendor fund the acquisition with surplus cash from Japan, sidelining local Bank funding that could have been used. It was the decision of NTT — and not the Executives — to provide vendor funding.”

According to the executives, there is nothing sinister or inappropriate about the structure that was used to facilitate and house The Campus transaction.

“The structure is a normal private equity fund structure used for investments of all kinds. The fund structure that was used for the Campus transaction was the product of advice received by NTT from Eversheds and Webber Wentzel, two leading law firms, and a commercial bank.”

They said NTT took its cue to sell the Campus to achieve its BEE objectives from a similar Barloworld BEE transaction in which De Bruyn’s group had previously participated, and Webber Wentzel had been the advisors.

“The perception that this was no more than a surreptitious conspiracy by ‘six white males’ to arrest control of The Campus property to feather our own nests at the expense of empowerment is just plain wrong and deeply distressing to us,” the executives stated.

“Particularly disturbing are findings of dishonest conduct made against us based on inferences drawn from correspondence, including an email which had nothing whatsoever to do with The Campus transaction.”

The executives said that what has been described as a defining piece of correspondence for which there is no explanation other than definitive evidence of wrongdoing, actually related to the potential acquisition of an entirely different and unrelated business.

“This correspondence bears the project name of ‘THUMBZUP’, which has nothing to do with the Campus transaction,” they said.

“We look forward to being given the opportunity to explain the true meaning to be given to this (and other) correspondence, from which inferences of wrongdoing have been incorrectly drawn.”

The executives said they facilitated a number of transactions that have had meaningful benefits for empowerment and gender equality during their tenure at Dimension Data.

“We have always been and remain fully committed to the achievement of transformation and the sharing of wealth with the less fortunate to redress the wrongs of the past.”