Disputes caused tension that shut a company

Isaac Moledi and Langelihle Chagwe

Isaac Moledi and Langelihle Chagwe

Fear of challenging his bosses when things did not go according to their contract has left a former co-owner of a company without a job.

Ollington Nyathi, 50, said his colleague, Lindiwe Moloi, and he were invited by their bosses, Malcolm Passmore and Hendrik Combrink, sole shareholders of Smart Light, to form a black-owned and managed company.

Now a court has ordered Nyathi to allow payments and the company he co-owned has closed. A case is still before the court.

The company, Molathi Manufacturing, was then contracted to assemble and wire light fittings for Smart Light. Nyathi said he and Moloi became partners.

In terms of the agreement, Smart Light would transfer more than 35 of its employees to Molathi, with the Combrink and Passmore helping to run the company.

Smart Light would help Nyathi and Moloi for two years and then hand over management to them, said Nyathi.

Nyathi and Moloi had worked for the company for about 10 years before they formed Molathi.

A contract signed by the four parties in December 2003 confirms that Molathi was contracted to assemble and wire light fittings from components supplied by the company, as well as other "incidental" services.

The parties agreed that Molathi would operate from the company's premises at no cost, as long as their operations did not interfere with their contractual obligations to Smart Light.

Molathi would be paid 5percent of the price at which the company sold the items.

But the agreed price payable would "from time to time be calculated with regard to the benefit of Molathi for the gratuitous usage of the premises and its facilities, and whatever variations may be agreed between the parties".

Molathi was to be paid within three working days after delivery of a weekly invoice, and late payment would accumulate interest at the prevailing prime rate.

But the agreement did not prevent Molathi from trading on its own. It allowed the company to, among other things, buy Smart Light lighting components and assemble the finished product to sell to third parties for its own profit.

But Nyathi said Passmore and Combrink did not abide by the agreement.

"I observed some irregularities, but was afraid to challenge them," he said.

After Molathi was handed over, Passmore and Combrink still wanted to be in charge.

"Tension flared when I tried to challenge Passmore. I was victimised every time I challenged him," claims Nyathi.

This led to the companies going to court instead of resolving the differences through arbitration, as stipulated in the contract.

One of the irregularities, said Nyathi, was that Passmore did not pay the 5percent of turnover he promised Molathi.

Nyathi said proper auditing was not done and his calculations showed that Smart Light owed Molathi more than R4million.

The transfer of employees from Smart Light to Molathi also created confusion.

According to a memorandum sent to its management, Smart Light was hiring other people to do similar jobs and this raised fears of job security.

Employees said Smart Light transferred them to Molathi to deny them promotions.

What was more worrying, said Nyathi, was that every time substantial amounts of money were transferred into Molathi's bank account by Smart Light, they were immediately withdrawn electronically by Smart Light.

On August 22 last year, R793337 was transferred into Molathi's account and on the same day R793000 was withdrawn.

Sowetan is in possession of bank statements which show several transfers and withdrawals by Smart Light from Molathi's account.

Nyathi said his troubles worsened after Molathi secured a subsidy from Eskom.

"When I asked Passmore why Smart Light was withdrawing the money which I exclusively secured for Molathi, our relationship hit rock bottom."

He said he took action by denying Smart Light access to Molathi's account by closing it.

This led to the termination of the contract. Smart Light interdicted him to open Molathi's account, said Nyathi.

Nyathi said he was shocked when R423487 deposited by Eskom into Molathi's account a month after the contract was terminated, was also withdrawn by Smart Light.

In terms of the court ruling, Nyathi was instructed to allow all salaries, including annual leave pay and bonuses, to be effected electronically by Internet transfer to Smart Light.

All other payments from Molathi's account were to be paid by cheque, signed by Nyathi, Moloi and a Smart Light representative.

Smart Light's attorney, Michael Bernstein, said the proceedings were still before the court.

But he confirmed that Molathi's contract with Smart Light was terminated in February and all Molathi's employees were now working for Smart Light. Nyathi was not employed because he did not apply, said Bernstein.

He said Nyathi was not paid for February because he was responsible for freezing Molathi's account. Bernstein dismissed as false, Nyathi's allegations of victimisation.

He described as "false and ludicrous" Nyathi's allegation that a proper audit was not done, referring Sowetan to Molathi's auditors for verification.

Bernstein said: "Not only has Molathi been paid all amounts to which it was entitled, but it has a substantial liability to Smart Light."

According to court papers, Nyathi owes Smart Light R200000.