Johannesburg - Mobile telecommunications giant MTN has had the litigation by employees and former employees – alleging it swindled them in a multibillion-rand black economic empowerment (BEE) share scheme – removed from an open, public court.
The group’s counter-application to have the application by 382 current and erstwhile workers stayed and referred to arbitration has succeeded.
Referring to themselves as the Tsunami Group, the 382 were capital beneficiaries of the Alpine Trust.
Formed by MTN in 2002, Alpine’s shares in the group were reportedly valued at about R24 billion in 2008.
At the time, Alpine owned 13.1% of the company though Newshelf 664. Newshelf bought 309 million shares in MTN in 2002 on behalf of Alpine’s 3 260 beneficiaries. The shares were bought at R13.89 a share, R4.3bn in total.
The Tsunami Group began smelling a rat in 2008, after payout of the shares to beneficiaries. Believing they were significantly underpaid, they launched an application against MTN at the South Gauteng High Court, Johannesburg, in 2018.
Their court papers accused MTN of refusing to disclose the trust’s financial books to themselves and their experts.
They sought an order compelling MTN to “provide (us) with a full accounting of the affairs of the Alpine Trust since its inception, to date”.
These would include the trust’s annual financial statements from 2002, all documents pertaining to the distribution of shares during December 2008 and/or January 2009 and copies of accounting packs auditors used to prepare the trust’s annual financial statements.
MTN stood its ground and insisted that everything was above board and the beneficiaries were paid their dues.
Trust chairman Paul Jenkins stated in an affidavit that “the beneficiaries have not been short-changed”.
Since 2018, the case has gone back and forth at the high court.
Earlier last month, the court sat to hear an interlocutory application by the 382. They sought to be allowed to amend their original application papers.
But in what can be compared to a chess move, MTN brought a counter-application. It sought a stay of the main application brought by the Tsunami Group. The matter should instead be referred to arbitration in terms of a clause of the Alpine Trust’s contract, MTN argued in court.
This clause stipulated that disputes about the beneficiaries’ rights and obligations “shall be submitted to and decided by arbitration”.
The 382 were bound by what they signed, MTN maintained.
Acting Judge M Engelbrecht was swayed by MTN’s argument.
“On the applicants’ own version, they accepted the offer. The respondents (MTN) say, therefore, that the applicants became bound by the Trust Deed, including the arbitration clause,” said the judge in last week’s judgment.
Judge Engelbrecht said the employees could not now seek a public hearing because of the clause.
“In consequence, the applicants cannot resort to section 34 of the Constitution, as they do in submissions before me,” said the judge.
The section stated that anyone had the right to have their disputes resolved in a fair, public hearing before a court or another independent tribunal or forum.
Judge Engelbrecht said: “The applicants’ submission to arbitration constituted through their acceptance of the terms of the Trust Deed amounted to a decision by them to accept adjudication of disputes in a private forum.”
He said that while the arbitration clause did not mean courts could not hear the dispute, the employees’ application was not about setting it aside.
“The arbitration clause does not oust the jurisdiction of the courts, as section 3(2) of the Arbitration Act 42 of 1965 makes plain. The applicants have not invoked their entitlement under that provision to have the arbitration clause set aside. In the circumstances, the application for the stay and referral to arbitration fail to be granted.”
The Star