Axed Fedusa boss Dennis George’s R32m Ayo share gamble

Former Fedusa general secretary Dennis George. Picture: Michelle Bao
Former Fedusa general secretary Dennis George. Picture: Michelle Bao

Former Fedusa general secretary would have made a huge profit had he convinced unions to buy shares

Dennis George, who was fired as the general secretary of the Federation of Unions of SA (Fedusa) last month, stood to make a R32 million profit on shares he tried to sell to two of the federation’s affiliates.

The shares in the controversial Ayo Technology Solutions were offered to the Public Servants Association of SA (PSA) and to the National Union of Leather and Allied Workers, both of which are affiliated to Fedusa.

Ayo shares have featured prominently in the Mpati commission of inquiry into the Public Investment Corporation (PIC) and how and why it funded certain companies.

The PIC paid Ayo R4.3 billion for shares sold at R43 each – shares that were sold to George for R1.50 each.

This is one of the facts that emerged after checking some of the statements made during the past few weeks by George in a series of interviews on radio, television and in print.

In them, he consistently maintained that his involvement with Ayo was aimed at benefiting Fedusa affiliates and their members.

But it seems clear that George would have profited hugely had the PSA and Nulaw taken up an offer that was made in writing by him and dated January 16.

In a four-page letter extolling the virtue of investment in Ayo, he offered the unions the opportunity to each buy 20% of the shares held by Difeme Holdings Group (DHG) “at a 50% discount”.

The prevailing price then was R23.50.

George did not reveal that the 11 million shares taken up by DHG cost just less than R16 million, or R1.50 a share.

Had the unions taken up his offer, it would have cost each of them R24.1 million, leaving George with a profit of more than R32 million, and he would still own 60% of the shares.

Explaining the transaction in his letters, George wrote: “The R24.1 million will be utilise [sic] to strengthen growth in DHG focusing on buying shares in mining, technology, housing, student accommodation and financial services companies.”

Also not mentioned is the fact that the purchase price for the shares was provided to George and DHG by 3 Laws Capital, an investment company that is part of the group of companies, including Ayo, that is controlled by Iqbal Survé, a media mogul notorious for making false claims about his background and experiences.

Among his claims are that he was former president Nelson Mandela’s doctor and was the “mind coach” to the victorious 1996 Bafana Bafana Afcon squad.

A Fedusa official said: “I am also sure there is something very wrong with one company lending money to another company to buy shares in a linked company.”

He had seen one of the share offer letters and was amazed to discover that DHG appeared to be “a one-man band” linked to Survé.

This was because George wrote that DHG comprises “a skilled and experienced management team that will be doing transactions for the benefit of the union group shareholders”.

This is in line with his frequently stressed claim that DHG was established only to “warehouse” Ayo shares until Fedusa set up its own investment company.

But Fedusa president Masale Selematsela has stressed that it had never made a decision about establishing an investment company.

“I kept asking Dennis: ‘Who gave this permission? Where are the minutes of any meeting?’” said Selematsela.

PSA general manager Ivan Fredericks and his deputy, Tahir Maepa, who both serve on the Fedusa management committee that comprises the leadership of the federation, support this contention. However, it now appears that DHG was in existence well before the controversy over the Ayo shares.

The company was registered on June 4 2015, with its place of business being George’s family home in Randburg. The sole director was Dennis Henry George.

It was in the process of deregistration when all outstanding R150 a year fees were paid up in June last year, just one month before DHG received a R1.6 million grant.

The grant, reportedly to “a Fedusa investment company”, came from the Lancaster Foundation to “help kick-start a quartz mining and beneficiation hub in the Northern Cape”.

The foundation is the nonprofit company headed by Jayendra Naidoo of the J&J Group, which has also become embroiled in the PIC inquiry regarding a R9.3 billion investment in the collapsed Steinhoff retail empire.

Naidoo would not comment on the quartz project last week, referring all queries to George.

George, in turn, refused to answer queries, stating: “I am referring my unfair dismissal to the Commission for Conciliation, Mediation and Arbitration and cannot comment as the matter is sub judicata [sic].”

Earlier, during several interviews, he blamed his woes on “white monopoly capital” and “the media” being opposed to economic transformation.

He also noted that he would be “travelling overseas” this month to seek investments in projects that apparently involve semiconductors.

Semiconductors are essential components in most electronic circuits, and high-grade quartz can be used in their construction. However, there is currently a glut in the market due to surplus productive capacity.

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