CAPE TOWN – FISHING company Oceana is being investigated for a black economic empowerment (BEE) transgression after beneficiaries of a trust set out to empower them allegedly disappeared with millions due to them.
The Oceana Empowerment Trust filed a complaint of fraud with the SA Police Service (SAPS) accusing the trustees of stealing their shares.
KwaZulu-Natal SAPS spokesperson Nqobile Gwala confirmed that a charge of fraud against Oceana was laid against the group Maydon Wharf Police Station in Durban and referred to the Directorate for Priority Crime Investigation (Hawks).
Rebecca Jonathan, a representative of black employee beneficiaries, said they would also file a civil claim against Oceana.
The workers claim that Oceana short-changed members of the trust, set up in 2007, in terms of share allocation and have demanded that Oceana re-allocates the correct amount of shares.
The complainants claim that when the trust was created, shareholders were advised that shares allocated to them would be locked in for 10 years.
Thus they would be eligible to cash out the value of the shares in 2017.
A majority of the shareholders were each allocated with about 6 000 shares and black managers were each allocated with about 68 000 shares. The total number of shares allocated was 18.4 million.
The trust was intended to operate for the benefit of black employees, who are South African citizens.
However, Independent Media investigations unit has found that former chief executive Francois Kuttel, a US citizen, allegedly benefitted from a portion of the allocated shares.
The workers accused Oceana of using black shareholders to get government fishing contracts, including those of Foodcorp, which was acquired in 2013 for R445 million. Oceana, desperate to net Foodcorp’s fishing rights due to the imminent dilution of the black shareholders approached the black shareholders in 2013 requesting an extension of the lock-in period until January 2021.
Trust chairperson Jayesh Jaga said the 2013/14 amendment did not result in a dilution of shares and that the beneficiaries were fully informed about the amendment to the Trust deed. However, Jonathan said the trustees misrepresented black shareholders in 2013 – using a R100 000 payout to induce them to agree to lock in their shares.
Jaga said the Trustees embarked on an extensive countrywide roadshow in November 2013, reaching more than 2 000 beneficiaries and explained the amendment and the consequences of a “yes” or a “no” vote. “An independent external auditing firm managed all voting processes. Around 2 000 of the beneficiaries voted “yes” to the proposed amendment – nearly 100% of those voting.”
Oceana said the payout, about 25 percent of value in the trust, afforded beneficiaries the ability to realise this value tangibly. “This is a false statement,” said Jonathan. “The payout was offered so the shareholders could be retained to apply for Foodcorp’s long-term Fishing Rights.”
The trustees, however, are alleged to have fraudulently transferred shares without the knowledge or permission from the shareholders, and they only became aware of this in January 2021, upon investigation.
Jonathan said they realised that majority of the shareholders were allocated between 1 500 and 2 500 shares and a few received 5250 shares. “Why were the shares ceded without our knowledge or permission in writing?”
The balance of the shares was allocated to Kuttel, chief financial director Imraan Soomra, non-executive transformation director Althea Conrad, and other white managers.
The trustees also inserted a clause in the trust deed, that the R100 000 was a loan repayable at the end of the lock-in period, with interest.
Jaga said the cash payout was not subsequently converted to a loan. He said it was funded by a capital contribution by Oceana. “The capital contribution was referred to as a loan for ease of understanding, as the Trust had to pay it back.”
He said this was standard in trusts of this nature. – Investigations Unit
BUSINESS REPORT
