Explosive revelations about Project Isizwe

New information emerged about Project Isizwe, raising concerns about the project and its founder, Alan Knott-Craig Jr.

The information was uncovered when MyBroadband looked into Knott-Craig’s allegations about Herotel in his new book, Life Lessons: How to Fail and Win.

In 2013, Knott-Craig founded Project Isizwe, a non-profit organisation that brings free Wi-Fi to rural communities and townships.

Its very first project was to build and operate a free Wi-Fi network in the greater Pretoria area for the Tshwane metropolitan municipality.

A year after launching Project Isizwe, Knott-Craig started Herotel to create South Africa’s largest fixed wireless broadband network and take on Telkom.

Knott-Craig served as executive chairman at Herotel until March 2021, when the company’s board dismissed him.

He wrote that he decided to resign as the relationship with the Herotel chief executive broke down.

However, the Herotel board told MyBroadband that he was fired for serious corporate governance breaches following a forensic report.

Around the same time, Herotel announced an aggressive fibre rollout to underserviced communities around South Africa.

After leaving Herotel, Knott-Craig launched a new for-profit venture called Isizwe.com to roll out fibre broadband to townships.

They launched the Kayamandi fibre project in November 2022, offering residents 100 Mbps uncapped broadband for R5 per day.

“My former partners had been watching the Kayamandi fibre project with ill-disguised envy,” Knott-Craig wrote in his book.

“They’d mistakenly assumed Isizwe.com was the same as Project Isizwe, so they latched upon a heinous scheme.”

According to Knott-Craig, Herotel sued Project Isizwe for R14 million over a loan it had advanced to the non-profit in 2018 to “cleanly wrap up” the Tshwane free Wi-Fi project.

Knott-Craig explained that as a non-profit, Project Isizwe had no way to repay the debt.

“The intention was never for the loan to be repaid, but rather for Hero to write off a portion to corporate social investment every year,” he wrote.

He said that Herotel insisting on immediate repayment would have bankrupt Project Isizwe had it not been for the organisation’s CEO, Shireen Powell.

Knott-Craig said Herotel chairman, Thinus Mulder, met with Powell and said it was unfair that Project Isizwe was competing with them in township fibre.

He wrote that Powell offered a compromise — one board seat in exchange for the debt being written off.

According to Knott-Craig, Herotel countered by demanding that it get two directors on the Project Isizwe board.

“It was at this point that Shireen blew her stack,” Knott-Craig said. He said that Herotel eventually backed off and reason prevailed.

“There is a great story to how that saga ended with (yet another) black eye for the CEO of Hero,” he said, without elaborating.

Herotel provides details 

MyBroadband contacted Herotel for comment, and the company’s version of events differs in almost every detail — beginning with the claim that the R14 million was a loan.

“Herotel did not give Project Isizwe a loan,” the company told MyBroadband. “We did not sue them or try to stop them from rolling out connectivity to townships.”

Herotel said it had delivered products and services valued at R14.2 million. Project Isizwe had yet to be paid in full by their customer and was therefore not in a position to pay Herotel. The amount owed originated in 2017.

“Project Isizwe was contracted to build free Wi-Fi networks for its customers, and it contracted a subsidiary of Herotel at the time to build portions of the network on their behalf,” said Herotel.

“This outstanding balance is still recorded as a trade receivable in Herotel and is provided for as a potential bad debt in accordance with Herotel’s accounting policies.”

Herotel said that Project Isizwe had always been a non-profit that provided connectivity to disadvantaged communities.

“This aligns with Herotel’s vision, so we have always supported them as we do other similar organisations such as Digital Villages,” the Herotel board said.

“It was certainly bad having to provide such a large amount as bad debt, but we have always tried to be pragmatic and stay true to our vision.”

Herotel sent Project Isizwe a letter of demand for the outstanding debt after the organisation told the press in October 2022 that it aimed to monetise its township Wi-Fi using a crypto token called VulaCoin.

The articles quoted Project Isizwe CEO Shireen Powell — not the CEO of Isizwe.com.

“These articles created the impression that they were busy commercialising their network,” Herotel explained.

“Herotel had to date been very accommodating of Project Isizwe, annually providing letters of support to their auditors because they are technically insolvent due to the amount owed to Herotel,” it added.

“This seemed like a change in their business model to for profit, and on that basis, we requested that our outstanding debts be settled on 7 March 2023.”

Herotel confirmed that its chairperson met with Powell, who explained that there was no intention to commercialise their network.

Herotel requested two board seats at the non-profit, with Powell countering with an offer of one.

Herotel settled for one because having one director on the board for oversight still achieved their objectives.

Herotel subordination agreement

Herotel disputed that it wrote off Project Isizwe’s debt in exchange for the board seat, as claimed by Knott-Craig.

It said it was never Herotel’s intention to write off the debt, which was clearly stated in the annual letter to the Project Isizwe auditors.

“To our surprise, Project Isizwe provided us with a subordination agreement, signed by Knott-Craig as chairperson of Herotel in 2017.”

A subordination agreement establishes one debt as ranking behind another in priority for collecting repayment.

“Herotel has no knowledge of this subordination, and neither can we find any board — or any other approval — for the subordination,” the network operator said.

“The subordination is also not recorded in Hero Telecoms’ financial statements. The Herotel memorandum of incorporation requires very specific approvals for subordination of any debts.”

Most concerningly, the agreement was between the wrong entities. Hero Telecoms — the creditor — was not a party to the subordination.

“All this aside, we agreed to assist Project Isizwe once again, this time with a new subordination agreement, properly entered into with the proper authority and approvals.”

Herotel said its board approved the new subordination agreement on 9 June 2023.

“It was clear from the Project Isizwe financials that without the subordination, they would be technically insolvent,” it explained.

“From our part, we just want the governance to be in order, and the integrity of the relationship between the parties to be intact,” Herotel said.

“If Project Isizwe was ever able to repay outstanding debts, it should repay Herotel first, as it has been Herotel that has supported them all these years.”

Herotel also said it knows of monies paid by Project Isizwe to companies related to Knott-Craig.

It learned of these payments as part of the process to resolve the matter, during which Project Isizwe provided the financial statements to prove that the company was technically insolvent.

This raises the question — if it could pay Knott-Craig, why can’t it repay Herotel?

“Therefore, we have requested a board seat for governance oversight. As their largest creditor, we are one of their most important stakeholders,” Herotel said.

The Herotel board also said there was a meeting on 7 August 2024 between several of its non-executive directors and Knott-Craig, where he acknowledged that he would change his book to reflect the correct facts of the matter.

Alleged link between Project Isizwe and Isizwe.com

Since the blowout with Herotel in 2022, Isizwe.com has been rebranded to Fibertime. “No conflicts of interest. No fear of missing out. No confusion,” Knott-Craig wrote.

However, even before the launch of Isizwe.com and the Kayamandi township fibre project, an industry source contacted MyBroadband regarding concerns about financial malfeasance at Project Isizwe.

They highlighted that Knott-Craig had established a for-profit sister company to Project Isizwe called Isizwe Advisory Services in 2020.

Following the publication of his book, more sources have come forward with similar information — that money was funnelled out of the non-profit Project Isizwe in the form of consultancy fees.

Interestingly, Fibertime’s terms of service list Isizwe Advisory Services, Fibertime Networks, and VulaCoin in the header.

Furthermore, the CIPC registration for Isizwe Advisory Services shows that it was renamed on 3 November 2023 to Fibertime Group.

MyBroadband asked Knott-Craig about the link between Project Isizwe, Isizwe Advisory Services, and Fibertime.

We also asked whether he derived any financial benefit from Project Isizwe and if any money flowed from it to any companies he owns.

Our questions also requested details about the money Project Isizwe owed to Herotel.

He declined to comment.

“I honestly don’t have the detail, it all happened a long time ago,” Knott-Craig said.

“I suggest you reach out to CEO of Hero. He was Financial Director of Herotel at the time and has all the detail.”

The person he’s referring to is Van Zyl Botha — the same person about which Knott-Craig wrote that there was a “great story” behind how he got a “black eye” during this whole R14-million saga.

Project Isizwe and its CEO, Shireen Powell, did not respond to a request for comment.