Former executives of Dimension Data (Didata), one of the country’s tech pioneers that survived the dot-com bubble, violated the law when they oversaw the sale of the company’s sprawling head office without adequate conflict of interest disclosures, CEO Werner Kapp said.
Kapp’s comments to Business Day came after an anonymous letter alleged that an independent investigation into the 2019 transaction, which was meant to boost the company’s BEE credentials, had found evidence that implicated executives who engaged in unethical and illegal activities to line their pockets.
Though Kapp confirmed that Didata’s parent, Japan’s Nippon Telegraph & Telephone (NTT), had ordered the investigation, he said the preliminary findings did not reveal any irregularities in the negotiation or conclusion of the transaction, in which the property known as The Campus was offloaded to Identity Partners, a black-owned investment house founded by veteran banker and former Discovery Holdings board member Sonja de Bruyn.
“What it did reveal was the presence of certain conflicts of interest, which were not disclosed to the company at that point in time,” he told Business Day, declining to disclose the identities of those involved because the company considered potential legal recourse.
“The preliminary findings of this investigation basically revealed to us that certain executives did not reveal their personal financial interests in The Campus [transaction], which is required by the Companies Act and also required by our internal policies and procedures.”
The disclosures came months after NTT, which has been parent to Dimension Data since 2010, said it would double down on its investment in the Johannesburg-based company, shutting the door on the possibility that the regional unit would make a return to the JSE after a review of the Tokyo-based company portfolio triggered the speculation.
Kapp said NTT remained committed to Didata, which competes with Telkom’s Business Connexion, Altron and EOH in a market where strong BEE credentials stand any company in good stead, more so when it is bidding for contracts with the government and state-owned companies.
Kapp said the company had taken steps to ensure the transaction, the value of which was not disclosed, was not reversed.
“We have taken the decision to ratify The Campus transaction, subject to dealing with the exit of the executives in a manner which preserves the original objectives of this transaction. Based on that step, which we took today, the BEE status remains unchanged,” he said.
In late 2019, Didata, which employs about 15,000 people across 15 countries, concluded an empowerment transaction that resulted in the company achieving a 51% black-ownership status.
Core business
The transaction had two elements: the first was the sale of the head office and premises in Bryanston, Johannesburg, which has been its home since 2003 and has been owned by the company since 2006.
The commercial property has been sold to a company owned by De Bruyn, which is part of the recently established Identity Property Fund, managed by Identity Fund Managers.
At the time, the company occupied less than 50% of The Campus.
Didata said the sale of the premises was part of a wider restructuring exercise to enable it to focus on its core business. It will continue occupying the premises.
The second element was a 15% equity transaction through an employee share option plan, which will vest in three years for qualifying employees.
Correction: January 25 2022
An earlier version of this article incorrectly referred to Sonja de Bruyn as a current Discovery Holdings board member. She is no longer a board member.
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