Durban — The Durban High Court has ordered the KwaZulu-Natal Growth Fund’s board members to come to court and explain the reasons for cancelling dairy product firm Goodlife’s R72 million in funding.
After arguments by both parties in court on Friday Judge Elijah Nkosi said it would be better that the matter goes to trial where the board members would be cross-examined on the decision. The judge said he did not want to make a ruling based on the arguments because if the fund appealed, Goodlife would suffer financial prejudice as the matter might drag on until it reaches the Constitutional Court.
The fund's defense team led by advocate Vi Gajoo SC argued the funding was cancelled because Goodlife director Busi Gumede had opened a new bank account without the fund’s consent. She is also alleged to have removed a consultant’s account details from an invoice and placed the company accountant’s banking details.
Gajoo said this was in breach of the contract Gumede had signed with the fund. The judge appeared not to be happy with these reasons amounting to an apparent breach of contract and repeatedly asked the defense whether the fund seriously viewed them as material breaches.
He asked why the fund and applicant could not find a remedy to the problem because it was a question of just telling the applicant that it was not the way things should be done.
The judge also grilled the defense on the accountant issue, asking why the fund felt it should pay the funding directly to suppliers, and not the applicant. He asked how the applicant was going to claim VAT if the funding was to be paid to suppliers directly.
He added that he did not understand why these issues could not be rectified. The judge appeared to cast doubt on these reasons as breaches of the contract between the two parties. The judge then ruled that the matter be referred to trial on a date that would be set later.
“I don’t understand why these issues, you call them breaches, could not be rectified,” said the judge.
Goodlife's legal team led by Antonie Troskie SC said they were happy with the court decision, and regarded it as a victory.
Troskie said although they could see that the judge would rule in their client's favour, the fund would have appealed with the purpose of dragging out the matter.
The Goodlife legal team said the fund contradicted itself with these reasons for cancelling the funding because it was the fund itself that had allegedly asked the company to open a new account since it wanted to be a joint signatory to it.
Troskie said after the fund allegedly communicated with the bank via email it then informed the company that the payment would go through, which is proof that it was aware of the bank account.
On the issue of changing the bank details on the invoice, the company said it was also not true because it was a blank invoice from the consultant and the company had told the fund it would want the money to be paid to its accountant, not the consultant – since the fund itself had said it could not do due diligence on the consultant.
The company said the fund had done due diligence on its accountant and had demanded that the company hire a project manager and quantity surveyor yet it did not want to use their services and wanted to deal directly with suppliers.
The company said the agreement to pay the funding to the company's account was reached but to its shock, it received calls from suppliers saying they had been contacted by the fund asking for their banking details.
The board members listed as respondents in the court papers are the then chairperson Siphile Buthelezi, another board member (who can't be named until she appears in court for cross-examination), Khaya Thango, Ashvir Dhuki and Silas Hlophe. The paper heard that only Hlophe and the unnamed board member are still on the board and it was not clear whether the three former board members would come to court to account since they were no longer members. The company also dismissed as lies that the fund was not aware of the recorded conversation between Gumede and the board member Khaya Thango where he allegedly asked for a private meeting.
Gumede said she informed the unnamed board member who referred her to the chairperson Silas Hlophe. She said Hlophe said “akabafuni abantu abafuna ukudla bengasebenzanga (He did not want people who wanted to eat food which they did not work for)” adding that he then asked her to write him an email stating what happened, promising that he would revert back to her but never did. It was not clear what Hlophe meant by what he allegedly said to Gumede.
Last week the fund issued a statement distancing itself from what Thango had allegedly said in the recorded conversation, saying it only came to know about it after a Daily News article.
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