Cadiz chairman calls Investec CEO a thief and QwaQwa k****r for allegedly misappropriating shares worth R46m. Investec man counters, claiming his Cadiz colleague stole R1.9m dividend and charges him with crimen injuria.
Investec’s newly minted CEO, Fani Titi is being accused by a former Robben Island political prisoner of scamming him out of his lucrative multi-million-rand shares in three thriving FM radio stations.
|Cadiz's Peter-Paul Ngwenya|
So bitter is the dispute between the Investec boss and his old struggle-veteran friend Peter-Paul Ngwenya – who is today an influential company director – that it has found its way into the Randburg criminal court where legal history, regardless of the findings, will be made in a case of crimen injuria (criminal libel).
Fani Titi is reportedly one of the most searched people on Bloomberg. The FM called him “a corporate kingpin with a Midas touch” .
Ngwenya, who is described as “a sophisticated businessman,” is chairman/director of Cadiz Asset Management, Cadiz Corporate Solutions, Airlink Ltd, Alumicor SA, Realm Resources and Hulamin Limited. If he is found guilty, it would be the first case of a black man being convicted for using an actionable racist word against a fellow black man. Judgment in the case is expected in June.
So committed is the new Investec boss Titi to getting a conviction that he has employed advocate Barry Roux SC to be on a watching brief.
Ngwenya, whose name means crocodile in Zulu, and Titi have been friends for 20 years, having met through their common acquaintance, Congress of the People (Cope) leader Mosiuoa Lekota. How it got to this is, on the surface, straightforward. On 22 June 2016 Ngwenya mistakenly sent an SMS to his friend Titi instead of the intended recipient, Titi’s second-in-charge Aqueel Patel.
“You bloody swine of a racist. You chose a wrong Bantustan man (meaning Titi). He misled you. You will bleed you are a bloody SWINE! Sue me, I will appreciate it. He is as greedy as you. You are a fool to be used by a Qwaqwa k***** [Noseweek’s asterisks]. You bloody GREEDY racis! You will very soon know what you are dealing with. I call you a FART! You have to have an MAKANA Radio board meeting. You Bantustan boss tells me to challenge him and he will see his MOTHER! You are FUCKING THIEVES! SUE ME! (all sic.)”
Titi applied for an interim protection order in July 2016 and obtained the final protection order against Ngwenya in October that year. Titi had painstakingly pointed out that “the plural FUCKING THIEVES” was in reference to both him and Patel and the reference to his late mother was a death threat. He admitted it all had to do with a “commercial dispute”.
Noticeably, in the protection order application the “Qwaqwa” part was merely mentioned in passing. He sought the protection order in view of the “deadly attack threatened… [which] can take place at any time and at any place, including my home”.
Ngwenya broke the protection order when he stormed into Titi’s private office in Sandhurst on 23 November 2016 demanding a dividend be paid to him. This resulted in the criminal charges being brought in the Randburg Magistrate’s Court.
|Investec's Fani Titi|
But the back story to all of this is contained in several hundred documents first filed at the South Gauteng High Court, Johannesburg, in August 2017, when a civil case was opened by Titi and associates against Ngwenya. The reams of documents have been copied by Noseweek. No court date has yet been set.
In 2008 Ngwenya was chairman of the Makana Investment Corporation (MIC) which was set up to help former political prisoners – and in which he has extensive interests in a range of businesses from shipping to asset-management. Early that year Ngwenya got inside knowledge that the investment corporation wanted to sell its stake in two communication assets. The first was its 33.3% share in Makana Radio Communication (Pty) Ltd which owned Heart FM (Cape Town) and iGagasi FM (Durban); the second was its 50.1% stake in a company called Shanike Investments 42 Corporation (Pty) Ltd, referred to as Shanike, which, among its various communication assets, owned a 24.9% stake in Johannesburg’s Kaya FM which, incidentally, in 2016 was among the top ten most profitable radio stations in the country.
Ngwenya approached Titi to see if he wanted to come on board as a 50/50 partner in purchasing these assets. Titi already owned 33.3% of Makana Radio through his own company, Tsiya Radio (Pty) Ltd, while his business partner Aqueel Patel held a further 8.4% on his behalf. The other shareholder was Kagiso Media (Pty) Ltd with 24.9%. Titi had once served as the founding Chief Executive of Kagiso, making him an influential partner.
It was correctly presumed that Titi, with his connections to Investec, would help provide the finance too. The plan was that they would split the stake on offer in Makana Radio, using two special purpose vehicles (SPVs), namely Alphabet Street Properties 98 (Pty) Ltd – controlled by Titi – and Columbia Media (Pty) Ltd – controlled by Ngwenya. They would do a similar transaction in acquiring the 50.1% stake in Shanike and both deals would become known as the Alphabet Agreement and Shanike Agreement respectively.
Because of his conflict-of-interest, being chairman of MIC, Ngwenya left the negotiation up to Titi who in turn delegated much of the work to his lawyer, Zoe Banchetti, of Tugendhaft Wapnick Banchetti and Partners, who helped set up the two SPVs.
Ngwenya thought she (Banchetti) represented both of them, while Titi saw her as his legal aide. Ngwenya was of the belief that the deal was concluded on 3 April 2008 at a price of R48.8 million, of which R32.6m was raised through a loan from Investec. The remaining R16.2m had to be raised by both Ngwenya and Titi, split down the middle.
Ngwenya, through Columbia Media, borrowed the R8.1m directly from Titi at an interest rate of 20% per annum.
According to Ngwenya, the deal was done and dusted. From time to time either Titi or Banchetti would send over a driver with documents for him to sign – which Ngwenya duly did without reading them, while the driver waited. Ngwenya believed he’d landed a sweet deal, owning considerable stakes in several lucrative, predominately black-owned radio stations. He thought he owned 16.67% each in iGagasi FM and Heart FM and 12.5% in Kaya FM.
However, the documents he signed – and this is key to both Titi’s civil and criminal cases – tell a different story.
According to Titi the initial Alphabet Agreement did not work because Kagiso Media exercised its right to block the deal – although, according to Ngwenya, they had no reason to do so as they could not buy the remaining stake in Makana Radio due to competition laws.
So Titi’s lawyer Banchetti devised a new “elegant” plan. Instead of Alphabet and Columbia buying the Makana Radio stake, Tsiya Radio, which was already a part-owner of the asset, would buy it instead and Columbia would have a 24.5% shareholding in Tsiya Radio. The Shanike Agreement was also altered to allow Tsiya to hold the 50.1% in Shanike.
Ngwenya claims he knew nothing about these transactions although he signed the documents.
Key to Ngwenya’s gripe is that Titi and Banchetti embarked on a clandestine process to dilute his stake in the radio assets by misleading him from as early as April 2008.
In Titi’s version, Columbia Media not only took an R8.1m loan from him but also handed him a 49% equity stake which he later sold parts of to other shareholders between 2011 and 2014, for which Banchetti issued the share certificates.
A further dilution of shares took place in 2013 when Tsiya Radio raised a further R21m through a rights issue picked up by both Titi and Patel’s families, while Titi also sold an 8.5% stake of Tsiya to Banchetti for R5.2m.
The net result was that Ngwenya now owned only 8.35% of Tsiya Radio.
What sparked his renewed interest in the asset in which he had been an idle partner was when in February 2015 he became aware of a R7m dividend paid by Makana Radio.
He started asking questions such as where his cut was. As far as he was concerned all debts were settled, as he had received a dividend in December 2013. He claims he then found out that he was a shareholder of Tsiya Radio and that the company had sold its stake in Kaya FM for about R62m in 2011. He said he also found out he no longer owned 100% of Columbia Media. He asked more questions, such as: why wasn’t he invited to Tsiya shareholder meetings; why wasn’t he a director at Tsiya; where was his shareholder certificate; and why didn’t he get his 25% cut in the sale of Kaya FM?
The reason he did not get a portion of the R7m, it was now explained, was because it was used to pay debt. And he now learned that the December 2013 dividend he received was in fact not a dividend but a reimbursement of an advance he made to Tsiya Radio – a claim Ngwenya emphatically denied.
The claims of being bamboozled have been rubbished by Titi who said Ngwenya knew exactly what was going on and was in fact getting legal advice all along from the Makana Investment Corporation’s company secretary John Nassel-Henderson –which Ngwenya also denies.
After a series of meetings, email exchanges and swopping of legal documents in mid-2015, Titi said, all transactions were “properly authorised and legally executed”.
“Columbia chose not to participate in the rights issue and Columbia and Ngwenya consented to these commercial arrangements. It was unambiguously clear... that Ngwenya’s [claim that his] economic interest in Columbia was illegally diluted, holds no merit.”
Titi said he and the other shareholders were prepared to sell back their equity in Columbia Media to Ngwenya for R4.8m.
Ngwenya told Noseweek: “Titi told me about the rights issue in Tsiya but I just thought I was being told that I had an option. At that stage I was oblivious to the fact that I, through Columbia, was a shareholder in Tsiya.
In his court papers Ngwenya said: “There is no conceivable way that, in addition to the high loan premium [R8.1m at 20% per annum backed by solid assets in which Titi already had his own interest via Tsiya] I would give away 49% of the equity in my company”. He added that the provisions to hand over equity, outlined in the signed agreements, were “secreted in by Banchetti”.
At one stage Titi, realising they were at an impasse, recommended the appointment of a forensic auditor and a senior counsel or retired judge to review all legal arrangements. He suggested advocate Vincent Maleka or retired judge Lewis Skweyiya (now deceased).
He also said the entire issue was so sour that he was thinking of getting out of the investment completely. None of this happened.
Despite all the drama, dividends kept rolling in to Columbia Media – at least half a dozen (although some are disputed) between 2013 and November 2016. In total it came to more than R3.5m.
Makana Radio administration staff made all the payments knowingly to Ngwenya’s personal FNB account. He claims he was never contacted by Titi or other “shareholders” about their dividend from Columbia Media.
After the racist SMS rant, Lekota tried to mediate, with little success except that it was decided Ngwenya would propose a settlement offer. Using the help of Johannesburg auditor Rob Theunissen, in August 2016 he proposed that Tsiya Radio owed him R46,236,555 which was calculated by taking into account the sale of Kaya FM and the dividend pay-outs from Kaya FM, iGagasi FM and Heart FM over several years.
Ngwenya’s settlement offer was not considered by Titi. Ngwenya, in turn, did not consider the buy-back proposed by Titi. Deadlock.
Just days after the final protection order against Ngwenya had been granted in October 2016, Tsiya needed to make a dividend payment of R589,770 to Columbia, except that this time they refused to pay it into Ngwenya’s private account.
According to Titi and various staff affidavits outlining Ngwenya’s alleged breach of the protection order, on 23 November 2016 Ngwenya arrived at the Makana Radio office at the swanky Three Commerce Square office block in Sandhurst demanding his dividend. He was “in an agitated state”, allegedly shouting that he would “kill these dogs” (later denied). Security was called, Titi was locked in the boardroom for his “safety”, while staff quickly processed the dividend. The ordeal left the staff, including Patel “terrified”. It is this final incident that resulted in the ongoing criminal case.
In the interim the high court application was lodged. The applicants are Titi, business partner Aqueel Patel and Videovision Entertainment Consortium (Pty) Ltd. The latter two were sold shares in Columbia by Titi. The respondents are Ngwenya, Columbia Media and Tsiya Radio, represented by Tugendhaft Wapnick Banchetti and Partners and Ramushu Mashile and Associates respectively.
The applicants want to: force Ngwenya and Columbia Media to accept directors of their (the applicants’) choice such as “Johannesburg advocate Steven Ress”; hold a shareholders’ meeting; and to open up a company bank account.
They also want an order against Tsiya, in which the applicants hold a controlling majority stake, to force it to stop making dividend payments to Columbia until the matter is settled.
In Titi’s affidavit, he said that Ngwenya had already misappropriated R1,970,087.14 from Columbia Media. He claims Ngwenya’s defence of having been fooled is merely a cover, as he is “a sophisticated businessman” who has served on the boards of many major companies.
“Any suggestion in these circumstances that he was misled into signing a series of agreements… and which he himself implemented... by issuing share certificates to us in Columbia, is so seriously and inherently improbable that it can be rejected as false on paper.”
In Ngwenya’s answering affidavit he said Titi had never honoured the initial agreement of investing in equal terms and that he has “thus far succeeded to dilute my investment to his own advantage”.
“It is important to note the only reason it became impossible for either Alphabet or Columbia to acquire MIC’s interest in Makana Media was because Titi and Banchetti had contrived to derail, in the first instance, and subsequently deflect the intention of the Alphabet Agreement to their own advantage. Titi’s obsession with written agreements, and his disdain for oral agreements, is evident”.
Asked to comment, Titi had not done so at the time of going to press. Noseweek asked whether he and Ngwenya ever discussed his equity in Columbia before 2015; whether Ngwenya’s claims of not being invited to shareholder meetings and so forth were true; and why he had appointed Barry Roux SC on a watching brief?
Is it a crime for a black person to use the k-word?
It would be a legal first if the Randburg Magistrate’s Court were to convict Peter-Paul Ngwenya of crimen injuria for sending an SMS to his estranged business partner Investic CEO Fani Titi, calling him a “Qwaqwa k****r”.
Use of the k-word is not illegal but it is categorised as hate speech. The first legal question is: can it be deemed hate speech if uttered by one black person to another?
South Africa’s proposed hate speech bill (nose208), would have seen Ngwenya go to jail. So draconian is the proposed bill, that merely calling someone a mompara could land you behind bars.
Currently hate speech is dealt with under the crimen injuria law.
According to the Wits Justice Project “crimen injuria refers to a deliberate injury to another’s dignity by using racially offensive or obscene language or gestures”.
South African law technically knows no colour, but context is key. Ngwenya intended to be offensive towards Titi. So the second legal question is; was he being racist?
The judgment will be significant. Legal history was made in March when Vicki Momberg was sentenced to an effective two years in prison for verbally abusing a black police officer and some call-centre agents by using the k-word a total of 48 times.
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