The star News Online
Monday, 22 January 2007-01-23
A black former director of a small company has accused his white partners of using him as a front to secure black economic empowerment deals.
Victor Moli thought he'd been given the chance of a lifetime when he was offered a 30% stake in a company that his boss was starting doing heavy lifting and heavy lifting inspection.
However, just months after his name was put on the letterheads of Alfa Africa Testing and the company began to secure lucrative contracts because they qualified as a BEE company, Moli, a qualified rigger and lifting tackle inspector, says he was sidelined by his two white partners.
He claims they did not allow him to get involved in the day-to-day running of the company.
"I was a director of this company in name only and I soon realised I was being used as front for them to secure contracts," Moli said.
Now, in one of the first BEE fronting cases, Moli is suing partners Frederick Greef and Gerhardus Oosthuizen for R1,5-million in a civil dispute which he has launched in the Johannesburg High Court.
Greef and Oosthuizen, who each own a 35% share in the company, plan to contest his application.
Jeffrey Ndumo, a director at the BEE unit at the Department of Trade and Industry, said this was not an isolated alleged incident - fronting was increasing in the business environment.
"This is probably the biggest problem we face when it comes to business in South Africa," Ndumo said.
"Fronting is basically corruption and we will, after investigating companies who do this, haul them before court, where they will be charged.
"We take such acts in a serious light because it stifles the economy and inhibits growth," he said.
Moli believes that the R1,5-million he is claiming is the amount owed to him by Alfa Africa for his shares in the company and the profits he never received.
According to Moli, in October 2002, while he was working for as a rigger at a company in Boksburg, he was approached by Oosthuizen, his then boss, who offered him 30% shares in a company he was starting.
At the beginning of 2003, he says, he was given documents to sign which gave him a 30% share in the company. But in February 2004, when the business became operational, things began to change.
"I was not allowed to look at the financial statements of the company, I was not allowed to ask any questions regarding the running of the company nor was I invited to any of the directors' meetings," Moli said.
"The only thing I was required to do was to put my signature on tender documents."
In addition, Moli claims that when he first started working at the company, he was paid a meagre salary of R6 400, which was increased to R9 564 in August 2005. He says he was never paid his share of the profits.
In April last year, after more than two years of allegedly being sidelined and underpaid, Moli resigned.
But, despite his resignation, Moli claims that Alfa Africa Testing continues to use his name to secure contracts with various companies including Sasol, Eskom and Rand Water.
Two weeks ago, after he had written letters to these companies informing them that Alfa Africa Testing was using his name as a BEE front, Sasol Mining blocked Alfa Africa from tendering for any more contracts.
A letter written by Christo van der Walt of Sasol Mining to Greef and Oosthuizen states that they will no longer enter into transactions with Alfa Africa until proof is supplied that the matter with Moli has been resolved.
"Sasol Mining does not prescribe to one conclusion or another regarding the matter, but in light of the seriousness of the allegations, and in light of Sasol Mining's own commitment to black economic empowerment, it was decided to suspend the business relationship," Van der Walt wrote.
Greef said they were dumbstruck by Moli's claims as they always regarded him as an equal partner.
"We are not going to accept these allegations we will be going to court to contest them.
"He was a member of the company just like all of us and we all had our roles to play.
"Gerhard's (Oosthuizen's) role in the company was to deal with the financial stuff, which was off-site, while we had to work on-site.
"What has now become clear is that he maybe wanted to sit in the office the whole day looking at papers, which was not his job," he said.
Barney Creighton, a lawyer who is representing Moli, said: "He was the only qualified person at the company, and despite the fact that he owned 30% shares in the company, he was never paid any dividends."