The former politician promises to bare all in his spat with DNA
THE shareholders of Skonkwane Holdings, Matthews Phosa, Jim McSeveny and his wife have ordered a forensic audit of their books “to call the bluff of whomever once and for all.”
“The forensic auditor should be from one of the big four to show that we are committed to good governance,” says former Mpumalanga premier Phosa and a co-founder of the troubled franchise group.
Skonkwane is undergoing a section 417 enquiry after DNA Supply Chains sought its liquidation. The group owes DNA more than R20m.
Former chairman Phosa who resigned early this year blames DNA for the troubles of his company. “The Skonkwane franchise fell apart directly and solely because of DNA Supply Chain:” Business Day quotes him.
He told the daily that the contract with DNA was cancelled because they failed to deliver on the contract.
“In terms of the law I am not allowed to comment on specifics of the matter. It is a criminal act but I will stand by what I told Business Day,” he said. He says he got special permission from the master of the court set the record straight.
“I have nothing to hide or fear and when this is all over I will talk openly about it but I just do not want to break the law.”
JSE listed DNA disputes Phosa’s claim. “We cannot be held responsible for the collapse of the company. Our role was to supply the franchisees with materials and when we did not get paid, we applied for the liquidation of the JV. As a result all Skonkwane companies went into liquidation,” says DNA chief executive Mark Kaplan.
“When we got involved this looked like an excellent business idea, it looked viable. It was supposed to create a middle class and we thought it was a worthy cause as well,” says Kaplan.
With the benefit of hindsight, Kaplan admits that it was a bad business decision.
The partnership between Skonkwane Franchises, a company owned by Phosa and a Swazi national Jim McSeveny, and DNA started last year (2002). DNA agreed to deliver hardware and provide supply chain solutions to the franchisees. The company (DNA) also bought a 10% stake in Skonkwane and at the time Phosa told Classic Business: “They are paying a couple of million for the 10% stake.”
The liquidation process has left more than a 100 franchisees in debt.
Franchisees claim that they paid money to Skonkwane Holdings for the buildings materials they received. But the money never reached DNA - the supplier.
There are further allegations of impropriety including that Skonkwane Holdings raised loans on behalf of the entrepreneurs through the Industrial Development Corporation and First National Bank. But the intended beneficiaries never saw the funds.
Phosa was chairman of Skonkwane until February this year. “I bought into it when I left parliament two years ago because I thought their focus was correct, he told Classic Business.
He said it was correct to look at the rural areas and set up new businesses which are owned and run by people who you would not meet in the street as entrepreneurs, train them, mentor and in a very genuine way empower them.
The business grew rapidly after he joined. “They had eight shops or so. And in 12 months we turned that into 24 and now we have 54, with the prospect of growing into a 100 before August this year (2002). By the time it was liquidated, the franchise group had exceeded Phosa’s prediction.
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