A white couple who used a black man as a front for their panelbeating business for 12 years – and then fired him – is now in hot water for violating black economic empowerment laws.
Willie and Petronella Saunders, the owners of Elegant Square Panelbeaters, which has offices in Pretoria and East London, could face criminal charges, blacklisting by Treasury from getting government tenders and an investigation by the Companies and Intellectual Property Commission for violating the Close Corporations Act.
The Broad-Based Black Economic Empowerment (B-BBEE) Commission made scathing findings against the couple after their black partner Joseph Masana (48) lodged a complaint on July 22 2016. City Press has a copy of the commission’s report.
Masana challenged the couple when he realised he was being used in a window-dressing exercise to comply with black economic empowerment laws. Even though Masana is a 40% shareholder in the business, he did not receive his fair share of the profits, and was not included in any decision making, or given any financial reports or minutes of meetings.
For having a black member, the panelbeating business attracted many customers who were looking for compliance with the B-BBEE Act, such as government institutions and insurance companies.
When Masana stumbled on documents, he then realised the company had assets estimated at R16.2 million in 2012. Masana’s lawyer, ANC national executive committee member Ronald Lamola, appointed MGT Forensic Audit to determine the value of his 40% stake. Based on financial information from 2012 to 2014, they established that Masana’s share was worth R22 million.
Masana, the Saunders couple and three other men – Peter Mashaba, Pieter Oosthuizen and George Meyer – went into business together in 2003. Mashaba, Oosthuizen and Meyer resigned from the company the following year, leaving Masana and the couple. Willie held a 51% stake and Petronella 9%. Masana was made managing director after his share of the business was increased to 40%, but he claimed he was used as a staff supervisor.
Masana had been working for the couple since 1998, when they had a second-hand vehicle dealership in Pretoria.
Masana said Willie fired him in June last year after he approached lawyers to fight his case.
“Willie changed the company’s name and left me out,” Masana said.
“I have no money, but I’m happy though that the commission has found in my favour and I’m waiting for the court’s decision.”
Willie’s phone rang unanswered and he did not respond to voice and text messages.
Masana has asked the Pretoria High Court for an order to enforce his status. He claims in his affidavit that his partners used his signature to secure a R2.5 million loan in 2004, to purchase the company’s head office in Pretoria.
In 2010, Masana claims, they again all stood surety when the company obtained an R8 million loan to buy a building when the company expanded to East London. He says he was not consulted when the new branch was opened.
He claims he was not paid dividends he should have earned as a 40% stakeholder in the company.
Masana said he suspects the Saunders were using the company’s money for their own benefit and allegedly bought nine properties throughout the country, including a R1.4 million house in East London and another one worth R2.1 million in Pretoria North.
Lamola says even though the B-BBEE Commission investigated the matter, they need a court order to enforce Masana’s rightful status.
“We now have proof that my client was robbed, but the issue of quantifying how much he is owed lies with the court.
“These guys (the Saunders) fired him from work and he’s now in financial trouble.”
The B-BBEE Commission found that Willie and Petronella were trying to divert profits earned by Elegant Square Panelbeaters to ESP Body Repairers – an entity they created “with prejudice to the business of [Elegant Square] and Masana”.
The commission found the couple breached an agreement they had with Masana by making changes and company decisions without involving him and that they misrepresented the B-BEEE status of Elegant Square Panelbeaters.
“They attempted to intimidate and/or influence the commission in the exercise of its powers by making unfounded allegations of bias, which they failed to provide evidence of.
“[They] attempted to obstruct the process of the commission by withholding or failing to disclose information requested or provided false information,” the commission’s report reads.
It states that the couple refused to resolve the matter through an alternative dispute resolution process in June last year and failed to attend a meeting with the commission in November.