CAPE TOWN – A senior executive at AYO Technology Solutions has come out to state the real reason its two former executives hastily left the company was that the board’s independent chairperson, Dr Wallace Mgoqi, had indicated that he would institute a forensic inquiry into their conduct.
It all started when the former executive Kevin Hardy allegedly blocked AYO’s acquisition of a 30percent stake in British Telecoms valued at R990million.
Hardy and Siphiwe Nodwele, the other former executive, were more interested in potential acquisition targets that were largely run by their acquaintances, according to Malick Salie, the chief investment officer at AYO.
Salie said these targets were entities that Hardy and Nodwele wanted AYO to acquire at a R4 billion price tag. By and large, this would have meant that R4bn of the R4.3bn raised from the Public Investment Corporation (PIC) would have been spent immediately on these acquisition targets.
Furthermore, Hardy and Nodwele were suspiciously reluctant to get these acquisition targets to give warranties in terms of earnings, expected AYO to overpay and were not prepared to listen to reason that many of them were overvalued and did not have strong enough cash flows, he said.
This led to a strong suspicion from the board that Hardy and Nodwele were conflicted and were possibly receiving backhanders for these deals to go through, which, in turn, led to a complete breakdown of trust between the two executives and board members, because the transactions that they were passionately targeting did not make sense.
Salie revealed that this raised a red flag at the PIC, which insisted that the AYO board was changed and that more independents were appointed to the board.
The board became predominantly independent, with a new PIC-appointed chairperson, Wallace Mgoqi, and members Dennis George, Themba Maseko and Ngoako Ramatlhodi.
“The next thing was that the AYO board called a meeting, and right up to that meeting Kevin had maintained that he was working with someone at the PIC, Victor Siyani, and the PIC did not want to do the BT transaction.
“Kevin did not want to spend R1bn to buy BT, because he wanted to use the money to buy his friends’ companies,” said Salie.
He said there was a strong suspicion that they were working on acquiring between them 9percent of Sizwe Africa Group and wanted AYO to back them instead of buying the shares directly from Sizwe – a move that would have cost AYO more with a lesser shareholding.
“At one point, Nodwele indicated to us that he had a data storage device on deals involving EOH, plus he tried to involve AYO in some rather unorthodox deals, which the board rejected. He also indicated that he could frame EOH and other people by using technology which doctored audio and video recordings,” said Salie.
“He claimed that one of his friends in IT specialised in doctoring recordings and would make it seem like it is real.
“So when the new board came into place, at the very first board meeting Hardy and Nodwele were asked to sign a conflict of interest policy and they flatly refused.
“The chairperson of the board indicated that he would institute a forensic inquiry into the conduct of Hardy and Nodwele to determine if there was a link between them and the alleged transactions,” said Salie.
The following day they both resigned, because they did not want to be subjected to the forensic audit.
Thereafter, they approached an AYO representative to ask for a settlement, initially of about R70m for Hardy and R30m for Nodwele. This demand was later revised to R60m and R20m respectively.
AYO outrightly rejected this, as it was deemed to baseless and smacked of extortion, Salie said.
Hardy and Nodwele were not available for comment.
This story first appeared on Business Report Online