- Former chief justice Sandile Ngcobo has eviscerated Karpowership’s Turkish owner over its “biased” and “oppressive” shareholders’ agreement with its black empowerment partners.
Powergroup SA turned to arbitration when Turkey’s Karadeniz tried to evict it from the R218-billion deal to supply emergency power to Eskom for the next 20 years.
In February, Karadeniz told Powergroup that it needed to fund its portions of a $5-million (R93-million) the Turkish parent said was needed to get the Karpowership deal over the line.
When Powergroup did not deliver the funds, Karadeniz exercised a call option in its shareholders’ agreement that allowed it to seize Powergroup’s 49% for the princely sum of R83.
- Karadeniz, Karpowership’s Turkish parent company, owns 51% of the local joint venture through a subsidiary in Malta. Powergroup, which is owned by local businesspeople – Sechaba Moletsane, Ravin Rajoo, Sureshan Moodley and George Mokoena – held 49% until recently.
But Ngcobo’s confidential ruling, delivered last week Friday, found that key clauses of the shareholders’ agreement – which only applied to Powergroup and not Karadeniz – smacked of discrimination, and were inconsistent with Powergroup’s constitutional right to equality.
“The problem here is that the Call Option as well as the Trigger Events have as their only target, Powergroup,” Ngcobo wrote in his ruling, which amaBhungane has seen. “The impugned provisions are heavily biased in favour of Karadeniz. They were obviously tailored from Karadeniz’s point of view.”
He continued: “They were not merely designed to secure contribution to additional funding but were designed to ensure maximum protection for Karadeniz against any breach of the [shareholders’ agreement] … by Powergroup while at the same time subjecting Powergroup to the most stringent and oppressive terms … This is manifestly unfair and unreasonable.”
During the arbitration hearing, Karadeniz’ lawyers argued that the one-sided clauses were necessary to ensure Powergroup did not get a “free ride” in the deal………
Author: Susan Comrie
This is an extract from a main article with more information Susan Comrie for the amaBhungane Centre for Investigative Journalism.
Read the rest of this exclusive story from the amaBhungane Centre for Investigative Journalism HERE