Directors of Johannesburg-based engineering company NJM Heat-Treatment and NDE Services are facing trial over allegations of fraud and B-BBEE fronting, with proceedings resuming this week at the Palm Ridge Commercial Crime Court in Gauteng.
The company’s directors and associates are facing charges including fraud and alleged contraventions of the B-BBEE Act.
The case stems from a dispute that began in 2023 after Michelle Zinyana, a shareholder in NJM, raised concerns over the company’s financial statements and alleged irregular business dealings.
Zinyana, an Amsterdam-based businesswoman who holds a 26% stake in NJM, blew the whistle on what she believed were fraudulent activities at the company after lodging a formal complaint with the Independent Regulatory Board for Auditors (IRBA) against NJM’s auditors.
She asked IRBA to investigate the auditors over allegations that they had manipulated the company’s financial records.
Following the complaint and subsequent investigations, the Hawks arrested NJM directors and associates, including Mark Douglas Smith, Alexander Elias Roditis, Vanessa Chungu, Raymond Crozier, Guy Phillip le Roux and Ronald James Hoy.
The accused appeared in court following investigations into alleged fraudulent activities. NJM, Dasmar Engineering and Thermo Jet are among the entities cited in the case.
The state alleges that the accused falsely claimed to have a valid shareholders’ agreement and engaged in fronting practices in violation of the B-BBEE Act.
The allegations further relate to contracts awarded to NJM and its associates by companies including Eskom and Sasol, with the value of the contracts estimated at about R400 million.
On Thursday, the plea and trial proceedings resumed at the Palm Ridge Commercial Crime Court, where all six accused appeared before the court.
The state called its first witness, Jack Madzivhandila, who was initially a 26% black shareholder in NJM.
Madzivhandila told the court that Zinyana’s father, Joseph Zinyana, who owns engineering company New Age Engineering Solutions, had initially bought the shares for him in NJM.
He said he entered into an agreement with Joseph Zinyana to pay for the shares through dividends he would receive from NJM.
Madzivhandila was subsequently appointed CEO of NJM, while Smith remained the managing director.
“While working at NJM as CEO with 26 percent shares within the company, I noticed that the first accused (Smith) started to sideline me on operational matters and decision-making, telling me that this was his company and that I could not tell him anything,” Madzivhandila told the court.
He said the situation continued until he realised that he had no say in the company and could not access relevant business documents.
Madzivhandila said he eventually told Joseph Zinyana that he wanted to hand back the shares because he was not receiving dividends and would struggle to pay for them.
He said that after handing back the shares to Joseph Zinyana, he remained CEO of NJM until he resigned three years later.
Madzivhandila told the court that Zinyana later became a shareholder after receiving the shares he had handed back, while NJM subsequently awarded Chungu a 25% stake, making her another black female shareholder in the company.
“Combined, Ms Zinyana and Ms Chungu held 51 percent shares at NJM, making them majority shareholders, while others held 49 percent shareholding,” Madzivhandila said.
He said the company began securing projects through its B-BBEE status.
Madzivhandila further testified that while he was a shareholder, he repeatedly asked questions and demanded access to the company’s financial statements because he wanted to play a more active role in running the business.
He alleged that Smith dismissed his concerns and told him to “go fly a kite”.
The matter returns to court on 21 October.
