Fixed-line operator Telkom is being blamed for the liquidation of Square One, a company that was spun out of the listed Square One Solutions towards the end of last year.
At the end of last month, Square One was liquidated in the Johannesburg High Court, after an application by Bloemfontein-based closed corporation JE Homecare and Civils.
JE Homecare was owed about R400 000 for a cabling contract it had undertaken for Square One on behalf of Telkom.
Square One owes at least 10 creditors a total of almost R9 million, money its lawyer alleges is owed because Telkom did not pay it as agreed.
Telkom's fault
Kobus Swart, of Schwarz-North Inc Attorneys, says Square One was embroiled in a R9 million dispute with the fixed-line operator for work it had done, but had not been paid for. He says the work was around cabling projects undertaken in various regions.
“Square One was not being paid by Telkom; the company did not have the funds to go to war with Telkom.” Swart explains that the company decided not to oppose the liquidation application.
Square One was spun out of the listed entity towards the end of last year, explains Swart, and was no longer a group subsidiary. At the end of 2008, according to the company's latest available annual report, Square One Solutions owned all of Square One Pty.
Swart, who is also the attorney for Square One Solutions, says, despite the disposal, Square One had continued to fund the spun-off unit for several months. However, the listed entity decided to stop throwing money at the company, and decided not to cover its debt, he says.
Square One Solutions bought the Pty for R1.6 million in 2004, when it was called Latitude. At the time, the company said Latitude specialised in IT infrastructure services, server consolidations, data centre operations, desktop deployment and project management services.
Not paid
JE Homecare member Jaco Greyling writes in an affidavit that Telkom appointed Square One to do certain telecommunication-related civil construction and other related works in Bloemfontein.
Square One in turn appointed Hot Link to do some of the work, which then appointed JE Homecare to carry out part of the contract in March 2008, when Square One was still owned by the listed entity.
JE Homecare was contracted to dig trenches, install orange-coloured inner-duct pipes into green plastic sleeves, install inspection manholes, and close the trenches.
However, JE Homecare was not paid for the work, and it approached the courts to liquidate Square One, says Dirk Labuschagne, from L&V Attorneys, who acted for JE Homecare.
The company was placed into provisional liquidation in February, and was finally folded at the end of last month. It is not yet clear how many staff members lost their jobs as a result of the liquidation.
Ajith Bridgraj, Telkom's senior specialist for media relations, says the operator will investigate the allegations and respond shortly.
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