For the uninitiated DimDat was a slightly derogatory name for Dimenson Data. I worked for them so many years ago, many memories have faded but the nickname has not. DimDat was the darling of the JSE in the late 90s. It even made it into the FTSE 100. It had a certain culture that I found very predictable. There is a recognition that the main people (similar to the list of people being sued) weren't that likeable. There was an arrogance there. That was more than 20 years ago, I can't comment now.
They have appealed their judgement and claimed
"The BEE structure was fully compliant with all BEE rules and was sanctioned by [law firms] Eversheds and Webber Wentzel acting for NTT, and Webber Wentzel acting for the empowerment entity," the former directors said in a statement on Wednesday.
"There is compelling evidence that NTT elected to abide by the transaction which had achieved the BEE result NTT sought and that it in fact relied on and benefitted from the transaction."
This is good news. As I wrote before
The six gentlemen in question have a lot of money. A hell of a lot of money. But then so does NTT (the shareholder of DimDat). The pyscho six are going to appeal and it will end up in the Constitutional Court at some stage – read in MANY years’ time. It must go to the constitutional court because it is the best case of fronting that I have seen. Thus far there has only been one case and that dealt with the big trains at PRASA. This will absolutely test the mettle of empowerment legislation. Fronting is fraud and hence the conditions for fraud need to be proved. But the Constitutional Court might give us some objective test for fronting and may even be forced to consider the constitutionality of BEE altogether.
This is a great segue into the Norton Rose BEE action. News24 wrote an article yesterday about this landmark case. I don't like the heading
Top law firm backs down on new BEE code interdict - but the fight isn't over
Norton Rose Fulbright SA (NRFSA) has dropped its bid to suspend the operation of a new legal sector code that came into effect in September. But the top law firm has not dropped its opposition to the code, saying it remains "unconstitutional", "unimplementable", and "will not achieve the very objectives it seeks to achieve" in its current form. But following a case management meeting on Tuesday, it said it had agreed to a proposal put forward by the Ministry of Trade, Industry and Competition not to try to interdict the code. In return, it hopes to be able to argue the merits of its application at a sooner date.
Norton Rose didn't back down, the DTIC struck an interim deal with them. This is a case of who blinked first and the government blinked. We can speculate but I don't think we are far off the mark in assuming that the DTIC knew they had no leg here. I was told, as a demonstration of how clueless their legal team is, that their attorney maintained that the sentence announcing the arrival of the legal codes doesn't mean that it's retrospective in application. The attorney's correct but it shows a clear lack of understanding of the practicalities of the BEE process. Parks and Recreation wrote
(I) hereby publish the Legal Sector Code and determine that these Codes will come into effect on the date of this publication.
Norton Rose's financial year is Jan to December. The Legal Code came into effect on the 20th of September 2024. Norton Rose went to great pains to explain that they had spent a lot of money on things that the generic codes are happy with which then amounts to nought in the new codes. They explained that they would have three months to make up everything they need to do (additional expense required and advocate briefed inter alia) to do anything on the scorecard. However they can't go back and start the BEE period from the 1st of September 2023 to end 31 August 2024, because they've been verified already on those 2023 months. And they can't wait until 30 September this year to finish a year because their certificate expires in April 2025. The next BEE scorecard would be issued in late November 2025.
It's a small thing that it shows how badly beaten up the DTIC will be. They blinked first and it's very likely that they will lose. We now don't have to wait for two years for a case, we can expect this to go to court in June this year.