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'We were hoodwinked into believing we were going to benefit from a BEE deal'

By unknown | Jul 19, 2007 | COMMENTS [ 0 ]

In a similar incident of empowerment gone wrong, Veli Skhosana, Solomon Mtswatswe and Paul Dhlamini claim they were dismissed from an empowerment outfit, Lokisa Fantisi, under the pretext that they stole five batteries from the company.

The case was heard by the Commission for Conciliation, Mediation and Arbitration, which ruled in favour of the trio. A Midrand court also dismissed the case because of lack of evidence, said their lawyer Chris Mbiloni.

According to Mtswatswe, in January 2005, the management of auctioneer giant, Aucor, negotiated with seven of its permanent and non-permanent employees to be transferred to what they thought was an empowerment outfit, Lokisa.

The seven employees are Jacob Mofokeng, Joey Molepe, Kallie Letsie, Godfrey Monyele, as well as Skhosana, Mtswatswe and Dhlamini.

Besides signing a service-level agreement between Aucor and Lokisa, Mtswatswe said they never signed any document that could prove Lokisa was a BEE enterprise.

Neither did the seven "shareholders" sign the Memorandum and Articles of Association nor were they given Shareowners or Shareholders' Certificates as is the case with proprietary limited companies.

Sowetan is in possession of correspondence between Lokisa's chief executive, Clive Winterstein, and the so-called empowered shareholders, which refers to Lokisa as an empowerment outfit.

Mtswatswe said they were given a 5percent equity share each, bringing their total shareholding in Lokisa to 35percent.

A white employee was also given 5percent, while Winterstein, a director of Aucor, took the remaining majority shareholding in Lokisa.

This became a contentious issue because they could not understand why a white individual could become a major shareholder in an empowerment company.

As shareholders, they were not to claim any overtime, sleep-out allowances, bonuses or salary increases.

"We raised these issues as grievances and we were seen as trouble makers," Mtswatswe said.

Under normal circumstances, shareholders would make critical decisions affecting the direction of the company, but, Mtswatswe said, all those decisions were made by Winterstein.

Though Winterstein promised monthly shareholders' meetings, quarterly financial statements and profit reports, and half-yearly dividend payouts, the promises never took root, according to Mtswatswe.

There had never been an annual general meeting since Lokisa was formed in January 2005 until he, Dhlamini and Skhosana were dismissed in September.

Mtswatswe said they were under the impression that Lokisa was their employer, but, to their surprise, payslips reflected Aucor as the employer and Lokisa was referred to as a cost centre.

"We were hoodwinked into believing we were going to benefit from a BEE deal.

"It seems they misrepresented facts and we acted in good faith," he said.

Mtswatswe also claimed they never signed any contracts nor have job descriptions or performance documents.

Winterstein only gave them verbal instructions.

In addition, they raised issues around salary disparities because they held equal shares and all shareholders performed the same job in the company.

Their salaries ranged from R3500 to R6000, Mtswatswe said.

"The batteries issue was used as a pretext to throw us out of Lokisa," he said.

Winterstein declined to answer Sowetan's questions, referring all essential questions to Mbiloni.

Winterstein later responded by e-mail: "Did they tell you that because of their stealing of batteries they lost the major contract that Lokisa had?

"They received salary for three months until there was no more money left to pay them even though they were not working.

"Nobody was dismissed. The company had to close down because of their criminal actions," he said.

According to a letter from Aucor group's internal auditors dated September 28, each black shareholder had to receive R1600 a share in the event that Lokisa shut down. But, each black shareholder's equity might change to R14000, or R2800 a share, in the event that Mtswatswe, Skhosana and Dhlamini agreed to sell their shares and become ordinary employees or resign.

A memorandum from Winterstein dated July 28 last year stipulates that the service level agreement between Aucor and Lokisa gives Aucor the right to cancel the agreement without notice, "if in its sole opinion the service provider's representative or employees conduct themselves in a manner unacceptable to Aucor".

It is in the same memorandum that Winterstein offered the three shareholders the option to resign as shareholders of Lokisa and sell back their shares to the empowerment company at a minimal price.

In doing so, the shareholders would maintain their status as Lokisa employees.

In the event the trio did not agree, this would, according to Winterstein, leave Lokisa no option but proceed with actions.

Because of their refusal to resign, Lokisa announced it was closing down on September 13 . Mtswatswe claimed the company continues to operate as Aucor Lalamisa.

Winterstein also declined to comment on this.

The trio said they had already consulted with the National Prosecuting Authority which referred them to the specialised commercial crime court, the CCMA and the Labour Department.


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