‘They used me’ – man sues BEE partners
In a case his lawyer has labelled “grand scale fronting”, a 46-year-old Gauteng man has taken his partners in a BEE venture to court for shortchanging him in a panel beating business worth an estimated R16.2 million.
Joseph Masana claims in papers before the North Gauteng High Court that his 40% share at Elegant Square Panelbeaters improved the company’s BEE rating and drew it a lot of business over the past 11 years.
Although he is the company’s managing director, his partners, couple Willie and Petronella Saunders, restricted his position to staff supervisor and excluded him from the management of the company. Willie is a director with a 51% stake while his wife holds 9%.
The couple allegedly used Masana’s signature and ensured they all stood surety for a R2.5 million loan in 2004 to purchase the company’s head offices in Pretoria. In 2010, Masana claims that they all stood surety again for an R8 million loan to purchase a building when the company expanded to East London.
“Over 11 years the Saunders dominated and retained full and exclusive control of all the financial records, bank statements and accounting books of the company,” he says in his affidavit. “To this end, I’ve not been paid any dividends commensurate to the 40% member’s interest I hold in the company. They are using me as a mere token to secure business,” Masana complains, adding that the company has, since attaining its BEE status, clinched deals with reputable insurance companies and government departments such as the police and correctional services.
Elegant Square Panelbeaters has 78 employees at its Pretoria and East London branches. On its website, it prides itself on its level 3 BEE status. “The company can be rated as a black empowered panel beating shop. We also make use of BEE suppliers … ” it claims.
Willie declined to comment. “You can’t speak to me, but my lawyer,” he said, but refused to provide his lawyer’s contact details. Masana’s lawyer, Ronald Lamola, said this was a “case of grand scale fronting”.
“My client is living from hand to mouth as an employee while the white people are swimming in luxury through the blackness of the client as they are able to access lucrative government and private sector contracts countrywide,” Lamola said. Masana was initially employed in the company in 1998 when it was still a secondhand car business. In 2003 he agreed to form a closed corporation with the couple and three other men – Peter Mashaba, Pieter Oosthuizen and George Meyer. Mashaba, Oosthuizen and Meyer resigned in 2004 and Masana’s share was increased to 40%. Masana further states he only saw from the 2012 audit statements that the company had assets worth R16.2 million.
“I suspect that they have been secretly drawing dividends from profits derived from the business for their exclusive use and personal enrichment,” he says, adding that the Saunders couple had allegedly bought nine properties throughout the country. Recently, he alleges, the couple bought a R1.4 million house in East London and another for R2.1 million in Pretoria.
Elegant Square Panelbeaters