Durban - Directors of Elgin Engineering in Durban, brothers Ian and Lee Donjeany, are accused of being involved in an “elaborate corporate shell game” involving the award and subsequent cancellation of a R125 million Transnet contract to construct two fuel storage tanks in the harbour.
Transnet alleges that Elgin has launched three high court applications, each using different attorneys, in its attempts to put a company awarded the contract into business rescue and attach assets on site that Transnet says it owns.
Elgin has denied the allegations, saying they are “unfounded and based on pure speculation”.
“We are a respectable company. We remain true to our values and the laws of this country,” the company said in a written response to The Mercury.
“We are owed money and we are doing whatever we lawfully can to collect it.”
The allegations against Elgin emerged in an application before the Durban High Court in which Transnet sought to intervene in the asset attachment application, which it says it “stumbled upon by chance”.
Transnet project director Theunis Steenkamp said in his affidavit that the Donjeany brothers and their co-director in Elgin, Vincent Chetty, had made “factually and mutually destructive” statements under oath in the court applications.
Steenkamp said the contract was awarded in 2012 to a consortium comprising Intershore Africa Trading, Channel Construction and an Oman company, VJ Tanks.
But the following year, he said, the parties “purported” to cede and assign the contract from the initial consortium to one comprising Elgin and Channel Construction.
Steenkamp said this was not permissible in terms of the constitution, but Transnet’s project management team had mistakenly continued with the project until March when, “out of an abundance of caution”, the contract was terminated.
He alleged that the “corporate shell game” had been uncovered in investigations by Transnet.
The investigations allegedly revealed that:
Steenkamp said the business rescue application against Intershore had been brought by Richlist Investments, trading as SS Engineering and Recruitment Services, with the founding affidavit being deposed by by Lee Donjeany.
In that application, Lee Donjeany says Intershore has debts of R112m and owes “subcontractors” Elgin R17m and Channel R21m.
He says Intershore is owned by an independent company in Mauritius.
He also says that Transnet did not want to cancel the contract, that performance payments were up to date and that all that was required to clear its debts was for Intershore to complete the contract.
Steenkamp said in the attachment application, however, that Chetty deposed an affidavit saying Intershore owed Elgin R10m, that Transnet had cancelled the contract and Elgin wanted to attach the assets, which it claimed by virtue of a registered notarial bond.
“It is clear that as a result of Transnet’s termination of the contract, the business rescue application is doomed to failure and this (attachment) is nothing more than a contrived attempt by Elgin to remove the assets from site to protect itself,” Steenkamp said.
“Elgin cannot advance a case that there is a prospect of success in the business rescue, which requires the contract be continued, and at the same time claim that assets must be attached and removed. The two situations are factually and mutually destructive of one another.”
Steenkamp said while Elgin claimed that there had been no “initial consortium” involving VJ Tanks, documents reflecting the outcome of the tender process revealed that the consortium would not have been awarded the contract without the involvement of VJ Tanks, because it would not have had the technical expertise required.
With regard to the assets being claimed by Elgin, Steenkamp said those that did not belong to Transnet belonged to the initial consortium, not Intershore alone, and the directors were all aware of this.
In an answering affidavit filed late last week, Chetty, in dealing with whether Elgin was entitled to the assets, said Transnet had “made a mountain out of a molehill”.
“Elgin contends that the enforcement of its rights against Intershore under the notarial bond is actually none of Trans-net’s business, saving to the extent that Transnet is able to show that assets which Intershore alleged were its property were actually not.”
Chetty’s affidavit did not deal with the alleged contradictory statements nor with the allegations of a “corporate shell game”.